Public Policy Proposal - Closing the Retirement Coverage Gap

Proposed National Standards for Auto IRAs
All of the following provisions apply to individuals 18 and older and are based on a 6% default contribution rate, generally directed to a Roth IRA (traditional IRA when required).

• Companies engaging 5 or more independent workers will facilitate automatic enrollment for those who work at least 3 months.
• Employers with 5 or more employees with no retirement plan will facilitate automatic enrollment.
• Employers with a retirement plan that exclude certain employees will facilitate automatic enrollment for those employees.
• Companies and employers will annually re-enroll independent workers and employees who have previously opted out.

Addresses a Growing Coverage Gap

• Almost half of U.S. private-sector workers—about 59 million people—lack access to a retirement plan at work.¹
• Approximately 72% of employees save for retirement, compared with only 56% of independent workers.²
• Approximately 23.4 million U.S. workers rely on alternative work arrangements as their primary source of employment.³ 

Increases Participation Rates

• Automatic enrollment provides a 71% improvement in participation rates over standard opt-in programs.⁴

Builds on Existing Frameworks

• Leverages existing public/private-sector infrastructure rather than building a costly new government program.

Empowers Workers

• Participation is voluntary as workers can opt out or adjust contribution amounts at any time.

Supports Companies and Employers

• Companies and employers can easily participate, incurring no or minimal cost and can do so without assuming the fiduciary liability associated with sponsored plans.

Protects Taxpayers

• Helps address a projected $334 billion retirement-related state budget gap over the next 20 years.⁵