Targeting the Masses

Publication: The Wall Street Journal

Author: Jaime Levy Pessin

09/08/2008 - There's no shortage of retirement-savings services for the affluent. But for those who fall in the middle of the wage scale or lower, it's a different story.

Millions of workers -- roughly half the work force in the U.S. -- don't have access to a company-sponsored retirement-savings program, largely because many small businesses can't manage or won't accept the hassle and expense of maintaining 401(k) plans. And few middle- or lower-income workers are getting the advice they need not only for retirement savings but also for all their other finances.

Now, a wave of innovation is aimed at meeting these needs.

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The pending legislation would require small employers who don't sponsor a retirement-savings plan to automatically enroll their workers in individual retirement accounts, unless the workers opt out. Employees would contribute to these investment accounts through direct deposits of pretax money from their paychecks, up to the annual limit of $5,000.

Employers wouldn't match workers' contributions, nor would they have to comply with any regulatory standards or file any paperwork. The employer would merely act as a conduit, sending part of employees' pay to an IRA, says J. Mark Iwry, a retirement and savings expert at the Brookings Institution. Mr. Iwry helped develop the legislation, along with David C. John, a senior fellow with the Heritage Foundation, another Washington-based think tank.

"We can at least get the employer to make its payroll system available as a way to save," says Mr. Iwry. He and Mr. John are principals of the Retirement Security Project, which seeks ways to better prepare American workers for retirement. The project is supported by the Pew Charitable Trusts and Georgetown University's Public Policy Institute.

Read the full article Targeting the Masses on the Wall Street Journal's Web site.

Pew is no longer active in this line of work, but for more information visit the Retirement Security Project on

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