Auto enrolment being considered in the US
04 November 2014
American states from Connecticut to California are considering creating new state-run automatic enrolment retirement plans for employees who do not currently have access to savings programmes through their employers, similar to the UK’s National Employment Savings Trust. But they are finding that the path to compulsion is far from smooth.
Thanks to Financial News for this report:
While no state has yet implemented the new types of auto-enrolment plans, nearly a dozen have bills pending, or passed, or have established task forces to study their potential. Maryland, Illinois, Wisconsin and Oregon are among the states contemplating such plans.
Sheldon Gamzon, a principal at consultancy PwC, said: “State proposals are very much in their infancy; they’ve got a long way to go before they have much traction.”
The efforts are aimed at helping employees at smaller companies who do not have access to retirement savings programmes through their employer and come amid a heightened focus on retirement savings in America.
In this year’s State of the Union address in January, President Barack Obama expressed support for the federal-level My Retirement Account , known as myRA, which is due to be launched by the end of the year. Obama highlighted the fact that about half of full-time and 75% of part-time US employees do not have access to employer-sponsored retirement plans.
The Georgetown University McCourt School of Public Policy’s Center for Retirement, which Kennedy Townsend of the Maryland scheme established earlier this year, plans to create a template to help states build compliant retirement plans.
Kennedy Townsend said states were looking to learn lessons from the UK’s experience establishing Nest. She added: “The forces that brought you Nest are the forces that are bringing us to these answers today.”