State-Sponsored Retirement Programs Striking a Chord

Americans give state-facilitated retirement programs an enthusiastic nod, a recent study has found. 

In the National Institute on Retirement Security (NIRS) study “Americans’ Views of State-Facilitated Retirement Programs,” NIRS Executive Director Dan Doonan and Kelly Kenneally, who has provided communications counsel to the NIRS since it was founded, report on the NIRS’ findings concerning Americans’ support for those programs. 

Setting the Table

Doonan and Kenneally say that employer-sponsored retirement programs are important “for many reasons” and “have advantages that are not available to state-facilitated programs, including employer contributions.” They do not argue that state-sponsored programs are a replacement for employer-provided plans; rather, they say that the state programs “can improve retirement savings via a paycheck deduction within a system that offers economies of scale.” Further, they express the hope that the state programs help encourage more employers to offer retirement plans. 

In general, Doonan and Kenneally write, state-facilitated programs require private-sector employers that do not offer retirement plans to provide their employees with access to retirement savings account programs overseen and administered by the state. “These state-facilitated retirement programs offer a backstop for those working in jobs where employers do not offer retirement programs like a pension plan or 401(k) account,” they say. 

And the states have been busy in helping employees to save for retirement, Doonan and Kenneally indicate, saying, “There has been a high degree of action to address the retirement challenges facing Americans by providing increased access to retirement programs” on the state level—to the tune of 46 out of 50 states in less than a decade. They observe that five states—California, Illinois, Massachusetts, Oregon and Washington—have programs that are now in operation, and an additional seven—Colorado, Connecticut, Maine, Maryland, New Jersey, New Mexico, Virginia—are setting programs up. And the governments of another 18 are considering proposals to establish one. Only four states—Alabama, Alaska, Florida and South Dakota—have not pursued any action.   

Strong Support 

The NIRS found strong support for state-sponsored retirement saving programs, and it cuts across party identification and generational lines. Overall, 72% of those studied said they think such programs are a good idea. There was no party distinction concerning support: 79% of Democrats, 69% of Republicans and 68% of Independents endorse the idea. And in what advocates of retirement saving will no doubt consider good news, support for such programs not only is high regardless of generation, but is highest in the youngest group: 

• Silent generation: 66%
• Baby Boomers: 72%
• Generation X: 65%
• Millennials: 78%

Not only is there strong support for state-sponsored programs, there is even stronger sentiment that respondents would participate if such a program was offered to them. Overall, 75% of said they would be likely to participate. Again, there was no party distinction: 83% of Democrats, 73% of Republicans and 72% of Independents said they would take part. And more than 70% of all generations had that response. 

Strong majorities also like key features of state-sponsored retirement saving programs: 

• Portability: 84%
• Low fees: 82%
• Higher returns than other safe investments: 82%
• Requirement that an employer without a plan make it possible for employees to participate in the state program: 80%
• Automatic enrollment: 76%

“State-facilitated programs coupled with action in Washington, D.C. are steps in the right direction for addressing the retirement savings shortfall facing working Americans,” Doonan and Kenneally argue.