Research shows that state programs help private-sector retirement plan growth, according to Angela Antonelli, Executive Director of the Center for Retirement Initiatives (CRI) at Georgetown University’s McCourt School of Public Policy, who spoke July 25 at the 2023 NAPA D.C. Fly-In Forum.
“The effects of state programs are reshaping the retirement plan landscape,” Antonelli said during a panel discussion with NAPA’s Andrew Remo and retirement plan advisor Kelly Famiglietta, a partner with Charles Stephen and Company. “It’s not the public sector versus the private sector; it’s the public sector and the private sector working together to increase coverage.”
In states with auto IRAs, private-sector employers are more likely to offer their own plans, and workers are more likely to participate. It’s a public/private partnership that works, she added and is sorely needed.
Antonelli noted that more than 57 million employees lack access to a retirement plan in their workplace. The coverage gap disproportionately affects small businesses due to costs, admin, and other responsibilities. It also disproportionately affects women and people of color.
“The average retirement savings balance is $70,000 to $90,000,” she said. “The cost of not addressing the problem is estimated to be $1.3 trillion.”
She pointed to new auto IRAs offered by Minnesota, Nevada, and Vermont as examples of recent wins. She added that some were passed by Democrat legislators and signed by Republican governors, further proof of retirement planning and saving’s bipartisan nature.
“Even saving a modest amount can make a difference, and starting sooner and saving longer makes a difference.” It also allows workers to delay Social Security, resulting in a higher benefit amount.
Antonelli concluded with a look at what’s next, noting that states and supporters continue to add new programs, act in a bipartisan nature on the issue, partner with other states to gain efficiencies and streamline processes, learn from best practices, and monitor the progress the private sector makes in closing the coverage gap.
