State auto IRAs and other initiatives to help private-sector workers save for retirement are getting a lot of public support, a new report found.
About three-quarters of Americans said they like the idea of state-run plans and would be at least somewhat likely to participate in them, according to the National Institute on Retirement Security. The group worked with Greenwald Research to survey about 1,200 people nearly a year ago for the report published Thursday.
So far, 10 states have passed legislation establishing auto IRAs that require companies that have more than a certain number of workers to sign up or provide their own retirement plan coverage. Programs are now active in Oregon, Illinois, California and Connecticut.
Twenty-four percent of survey respondents in the recent NIRS report said that the programs are “a very good idea,” while 25% said they are “a pretty good idea.” Nine percent called them “a pretty bad idea,” and 3% said they were very bad. Sixteen percent didn’t have an opinion.
Support for the concept was strong among Democrats (79%), but most Republicans (69%) and independents (68%) also approved of them.
Similarly, 83% of Democrats said they would likely participate if given the option, followed by 73% of Republicans and 72% of independents.
If those findings accurately reflect attitudes across party lines, the results could lend support in Congress to a national auto IRA program. Such a measure was included in legislation earlier this year but was dropped along with other retirement provisions amid edits in October to the Build Back Better Act. The House passed the bill Thursday but it will likely face challenges in the Senate.
In the early days of the Trump administration, Congress passed a measure that overturned an Obama-era safe harbor for state auto IRAs that was designed to support the initiatives. Although that change was viewed as having a chilling effect, states moved forward with their programs, and some have faced legal challenges.
California has defeated a lawsuit brought by the conservative Howard Jarvis Taxpayers Association in district and appeals courts — but the plaintiff has asked the U.S. Supreme Court to review the case. The tax group has claimed that CalSavers is preempted by the Employee Retirement Income Security Act.
Meanwhile, CalSavers has grown to represent about $145 million across more than 200,000 funded accounts, with an opt-out rate among workers of about 30%, according to data from the state treasurer’s office.
That opt-out rate is considerably higher than the rate seen in 401(k) plans in which workers are automatically enrolled. Vanguard reported a 9% opt-out rate among its plans in 2020.
However, state auto IRAs have sought to address the coverage gap that largely affects small business, many of which have lower-income employees.
Nationwide, only about half of workers participate in retirement plans, and less than half of all people with nontraditional full-time jobs have access to a plan through work, according to a report earlier this month from The Pew Charitable Trusts.
However, 52% of employees who don’t have plans at work said they were interested in having one, while 31% had no interest and 17% were unsure, Pew found.
Among those who said they wouldn’t participate in employer-sponsored plan, more than half cited a lack of income as the reason.
The rise of state auto-IRA programs has also been good for the retirement services industry. Companies with products designed for small employers, including pooled employer plans, have reported strong new business in states such as California, Illinois and Oregon, as companies choose alternatives to the state options.
The post Public opinion favors state auto IRAs, report finds appeared first on InvestmentNews.
Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.