According to the latest data, about 55 million U.S. private-sector workers don’t have access to a workplace retirement-savings plan, and states want to change that.
At least 17 states researched or proposed legislation in 2014 that would require or encourage businesses to enroll workers in an individual retirement account (IRA) or a similar retirement-savings plan. That number is expected to rise to at least 30 in 2015, says Sarah M. Gill of AARP.
However, as of press time, only Illinois, in January 2015, adopted a plan. Starting in 2017, Illinois will require businesses that are at least 2 years old and have at least 25 employees to enroll in the state plan if the business doesn’t provide a retirement plan. Workers have 3 percent of their salary put into a target-date mutual fund in a Roth IRA. Workers can opt out, change their savings rate or choose a different investment from a limited number of choices.
Karen Friedman, who is the executive vice president and policy director at advocacy group Pension Rights Center, says such plans are a good idea, but they don’t go far enough. The proposals generally entail offering just an IRA, and those accounts have a low annual contribution limit. They also don’t include a matching contribution from the employer.