Worker Reactions to State-Sponsored Auto-IRA Programs

Employees without access to retirement plans at small to midsize firms interested in opportunities to save

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Worker Reactions to State-Sponsored Auto-IRA Programs

At least one-quarter of nongovernmental, nonagricultural full-time workers do not have access to an employer-sponsored retirement plan.

Willie B. Thomas/Getty Images


Many Americans are uncertain about how they will pay for their retirement. They worry that they will outlive their savings or that volatile financial markets will not allow those savings to grow sufficiently over time. Some feel they will have to work as long as possible because they cannot afford to retire.

For many, these worries are not unfounded. At least one-quarter of nongovernmental, nonagricultural full-time workers do not have access to an employer-sponsored retirement plan, and fewer than 15 percent of households contribute to an individual retirement account (IRA).1  Given these facts, policymakers, particularly at the state level, are examining ways to bolster retirement savings.

Many states are looking at how they might implement government-sponsored IRAs, commonly known as auto-IRAs, which provide automatic enrollment of eligible private sector workers. California, Connecticut, Illinois, Maryland, and Oregon have already passed legislation enabling them to do so. Under these plans, workers without access to a workplace retirement plan would see regular deductions from their paychecks sent to an IRA managed by a private financial services firm. Workers could opt out, and the employers’ role would usually be limited to setting up the payroll deduction and perhaps distributing informational materials. Typically, the state’s role would be limited to choosing the firm to manage the funds. Research shows that using automatic enrollment dramatically increases participation.

To help inform policymakers, The Pew Charitable Trusts surveyed more than 900 workers without access to retirement plans at small and midsize businesses (those with five to 250 employees) to see how they perceive state-sponsored auto-IRA proposals. A series of focus groups provided additional context. Among the key findings of the survey are:

  • Generally, workers like the auto-IRA concept. 
    • Participants were asked about such programs both early in the survey and then after hearing critical details. The largely positive responses were little changed. 
    • Only 13 percent said they would opt out of an auto-IRA.
    • Still, a quarter said they are unsure whether they would take part, although they would be automatically enrolled by default if they remained undecided. That means they would start saving, but these workers might be more likely than others to opt out at a later date.
  • Workers generally support both automatic enrollment (73 percent) and automatic escalation of contributions (68 percent). The automatic escalation feature raises the percentage of the employee contribution each year until it reaches a certain level. These features have been shown to increase participation and savings.
  • Workers appear to be comfortable setting an employee contribution that defaults to a starting rate of 6 percent of earnings. There was no significant difference in the percentage who said they would opt out between workers asked about an auto-IRA with a 3 percent default contribution and those asked about a 6 percent rate.
    • Slightly more of those asked about the 6 percent default said they would choose to lower the default percentage, but more of this group also said they would stay in the program as is.
  • About two-thirds support state sponsorship of auto-IRA programs after an explanation of the typical state role.
  • Whether workers had previous retirement planning experience was associated with differing levels of support of plan features, such as target date funds. Those with that kind of experience were more likely to opt out compared with those without such a history, perhaps because they had other retirement savings or wanted a more rigorous plan. 
  • Differences in attitudes across demographic groups were not large, though certain groups, such as Hispanics, millennials, and part-time workers, typically have less access to employer-sponsored plans than whites, baby boomers, and full-time workers, respectively. Support for the concept across groups suggests that auto-IRA programs could help shrink gaps in availability and enrollment in retirement savings programs. 


  1. Irena Dushi, Howard Iams, and Jules Lichtenstein, “Retirement Plan Coverage by Firm Size: An Update,” Social Security Bulletin 75, no. 2 (2015): 41–55,; Sarah Holden and Daniel Schrass, “The Role of IRAs in U.S. Households’ Saving for Retirement, 2016,” ICI Research Perspective 23, no. 1 (2017),


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