RETIREMENT 

SECURITY

Federal Action Could 

Help State Efforts to 

Expand Private Sector 

Coverage

Report to the Ranking Member, 

Committee on Health, Education, Labor, 

and Pensions, U.S. Senate

September 2015

GAO-15-556

United States Government Accountability Office
Highlights of GAO-15-556, a report to the 

Ranking Member, Committee on Health, 

Education, Labor, and Pensions, U.S. Senate

September 2015

RETIREMENT SECURITY

Federal Action Could Help State Efforts to Expand 

Private Sector Coverage

Why GAO Did This Study

Millions of U.S. workers have little or 

no savings for retirement, potentially 

adding to future strains on state and 

national safety net programs. In 

addition to federal efforts, a growing 

number of states have proposed efforts 

to expand coverage in private sector 

workplace retirement savings 

programs. Other countries have also 

implemented similar efforts. GAO was 

asked to study these state and 

international efforts. 

GAO examined: (1) recent estimates of 

coverage, including access and 

participation, as well as characteristics 

of workers who lack coverage; (2) 

strategies used by states and other 

countries to expand coverage; and (3) 

challenges states could face given 

existing federal law and regulations. 

GAO primarily used SIPP data from 

2012 (the most recent available). GAO 

also interviewed federal officials, 

national industry stakeholders, and 

officials and stakeholders in six states 

(California, Illinois, Maryland, 

Massachusetts, Washington, and West 

Virginia) and three countries (Canada, 

New Zealand, and the United 

Kingdom) selected based on the range 

of strategies used in efforts to increase 

coverage and recommendations from 

knowledgeable stakeholders.

What GAO Recommends

GAO suggests that Congress consider 

providing states limited flexibility 

regarding ERISA preemption to 

expand private sector coverage.

Agency actions should also be taken to 

address uncertainty created by existing 

regulations. Agencies generally agreed 

with GAO’s recommendation. DOL 

plans to issue a proposed rule on state 

programs by the end of 2015.

What GAO Found

About half of private sector workers in the United States—especially those who 

are low-income or employed by small firms—lack coverage from a workplace 

retirement savings program primarily because they do not have access.

According to GAO’s analysis of 2012 Survey of Income and Program 

Participation (SIPP) data, about 45 percent of private sector U.S. workers 

participated in a workplace retirement savings program—an estimate that is 

consistent with prior GAO work and other research. Using tax data to correct for 

under-reporting raised the share of workers participating to 54 percent, but still 

indicates many workers lack coverage. Among those not participating, the vast 

majority—84 percent—lacked access because they either worked for employers

that did not offer programs or were not eligible for the programs that were 

offered, for example, because they were new employees or in specific jobs that 

were excluded from the program. In particular, lower-income workers and those 

employed by smaller firms were much less likely to have access to programs. 

However, among those who had access, the majority of these workers 

participated.

Key strategies to expand private sector coverage identified in the states and 

countries GAO reviewed include encouraging or requiring workplace access, 

automatic enrollment, financial incentives, and program simplification. For 

example, pending implementation, programs in two of the states GAO studied—

California and Illinois—would require certain employers to automatically enroll 

workers in a state-run program, though workers could choose to opt-out. In the 

countries GAO studied, combining workplace access with automatic enrollment 

and financial incentives—tax preferences or employer contributions—has helped 

increase participation. Moreover, states and countries have tried to simplify 

program designs to (1) limit the responsibility and cost for employers and (2) 

reduce complexity, cost, and risk for workers. For example, some states intend to 

not only reduce burdens for employers by selecting and monitoring providers, but 

also reduce complexity for workers by limiting the number of investment options.

State and national stakeholders reported potential challenges with uncertainty 

created by the Employee Retirement Income Security Act of 1974 (ERISA) and 

agency regulations that could delay or deter state efforts to expand coverage. 

Generally, ERISA preempts, or invalidates, any state law relating to “employee 

benefit plans” for private sector workers, but different areas of uncertainty arise 

based on the details of each state effort. For example, four of the six states GAO 

reviewed intend to create payroll deduction individual retirement account (IRA)

programs that would not be considered employee benefit plans. However, due to 

uncertainty created by ERISA, it is unclear whether a state can offer such 

programs or whether some of the program features would lead a court to find that 

they are, or relate to, employee benefit plans. Stakeholders also noted 

uncertainty caused by regulations from the Departments of Labor (DOL) and the 

Treasury meant to assist workers and employers. For example, DOL’s regulation 

on payroll deduction IRAs was written before these state efforts were proposed 

and omits detail that, if included, could help reduce uncertainty. Given these 

uncertainties, states may face litigation and stakeholders noted that state

programs could lose tax preferences if they were ruled preempted by ERISA.

View GAO-15-556. For more information, 

contact Charles A. Jeszeck at (202) 512-7215 

or jeszeckc@gao.gov.

United States Government Accountability Office
Letter 1

Background 4

Gaps in Access Leave Many Low-Income and Other Workers 

without Workplace Retirement Savings Program Coverage 14

States and Other Countries Use Similar Key Strategies to Expand 

Retirement Coverage 25

States Face Potential Challenges with Legal Uncertainties That 

Could Delay or Deter Their Efforts to Expand Coverage without 

Federal Action 41

Conclusions 50

Matter for Congressional Consideration 51

Recommendation for Executive Action 51

Agency Comments and Our Evaluation 51

Appendix I Objectives, Scope, and Methodology 54

Appendix II Description of Efforts to Simplify Administration and Investment 

Management of Workplace Retirement Savings Programs 62

Appendix III Description of Selected National Legislative Efforts to Expand 

Workplace Retirement Savings Program Coverage Identified 

by GAO 70

Appendix IV Description of State Efforts to Expand Workplace Retirement Savings 

Program Coverage Identified by GAO 73

Appendix V Country Efforts 80

Appendix VI Technical Appendix for Data Analysis 83

Contents

Page i GAO-15-556 Options to Expand Coverage
Appendix VII Comments from the U.S. Department of Labor 102

Appendix VIII GAO Contact and Staff Acknowledgments 104

Related GAO Products 105

Tables

Table 1: Description of Key Tax-Advantaged Workplace 

Retirement Savings Programs 5

Table 2: Summary of Efforts to Expand Workplace Retirement 

Savings Program Coverage for Private Sector Workers in 

Selected States 27

Table 3: Features in Selected State and Country Efforts to Reduce 

Complexity, Cost, and Investment Risk for Workers in 

Workplace Retirement Savings Programs 37

Table 4: Other Issues Cited by Stakeholders that Cause Legal 

Uncertainty for State Efforts to Increase Workplace 

Retirement Savings Programs 49

Table 5: Estimated Number of Private Sector Workers 

Participating or Not in a Workplace Retirement Savings 

Program by Characteristic, 2012 57

Table 6: Other Actions State Efforts Would Take to Reduce 

Administrative Burden for Employers Offering Access to 

Workplace Retirement Savings Programs 67

Table 7: Description of Key Features of Selected Federal 

Legislative Proposals to Expand Workplace Retirement 

Savings Program Coverage 70

Table 8: Description of State Efforts to Increase Coverage of 

Workplace Retirement Savings Programs Identified by 

GAO 75

Table 9. Percentages of Workers of Different Types Participating 

and Not Participating in Retirement Programs, and Odds 

and Odds Ratios Derived from Them 93

Table 10. Percentages of Workers of Different Types Whose 

Employers Do and Do Not Offer Retirement Programs, 

and Odds and Odds Ratios Derived from Them 94

Page ii GAO-15-556 Options to Expand Coverage
Table 11. Percentages of Workers of Different Types Who Are 

Eligible and Ineligible for the Retirement Programs Their 

Employers Offer, and Odds and Odds Ratios Derived 

from Them 96

Table 12. Percentages of Workers of Different Types Participating 

and Not Participating in Retirement Programs, and Odds 

and Odds Ratios Derived from Them, for Workers Whose 

Employers Offer Retirement Programs for Which They 

Are Eligible 97

Table 13. Summary Table of Unadjusted and Adjusted Odds 

Ratios Reflecting Differences in Participating, Comparing 

Self-Reported Data and “Corrected” Census Data (in 

Parentheses) 99

Figures

Figure 1: Share of Private Sector Workers Participating in a 

Workplace Retirement Savings Program, 2012 16

Figure 2: Building Blocks of Workplace Retirement Savings 

Program Coverage 17

Figure 3: Percentages of Private Sector Workers Not Participating 

in a Workplace Retirement Savings Program by Reason 

Given, 2012 18

Figure 4: Effect of Income on Likelihood of Workplace Retirement 

Savings Program Coverage after Controlling for Other 

Factors 19

Figure 5: Share of Private Sector Workers Participating in a 

Workplace Retirement Savings Program by Income 

Quartile, 2012 20

Figure 6: Effect of Firm Size on Likelihood of Employer Offering a 

Workplace Retirement Savings Program after Controlling 

for Other Factors 21

Figure 7: Participation Rate in Workplace Retirement Savings 

Programs among Eligible Workers by Various 

Characteristics, 2012 24

Figure 8: Other Countries’ Efforts to Expand Coverage in 

Workplace Retirement Savings Programs 30

Figure 9: Actions Selected States Intend to Take to Reduce 

Employers’ Administrative Burden and Cost for 

Workplace Retirement Savings Programs 35

Page iii GAO-15-556 Options to Expand Coverage
Figure 10: Selected State Efforts to Increase Workplace 

Retirement Savings Program Coverage Face Multiple 

Issues that Could Cause Legal Uncertainty 42

Figure 11: States GAO Identified as Taking Some Effort to Expand 

Coverage in Workplace Retirement Savings Programs 74

Abbreviations

AGI Adjusted gross income

CPS Current Population Survey

DB Defined benefit

DC Defined contribution

DOL Department of Labor

EBSA Employee Benefits Security Administration

ERISA Employee Retirement Income Security Act of 1974

IRA Individual Retirement Account

IRC Internal Revenue Code

MEP Multiple Employer Plan

myRA My Retirement Account

NEST National Employment Savings Trust

PPA Pension Protection Act of 2006

PRPP Pooled Registered Pension Plans

SIMPLE Savings Incentive Match Plan for Employees

SIPP Survey of Income and Program Participation

SBA Small Business Administration

SCF Survey of Consumer Finances

SSA Social Security Administration

Treasury Department of the Treasury

U.K. United Kingdom

VRSP Voluntary Retirement Savings Plan

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page iv GAO-15-556 Options to Expand Coverage
441 G St. N.W.

Washington, DC 20548

September 10, 2015

The Honorable Patty Murray

Ranking Member

Committee on Health, Education, Labor, and Pensions

United States Senate

Dear Senator Murray:

As workers live longer and face potential changes to future Social 

Security benefits, participating in a workplace retirement savings program 

is increasingly important to help ensure their retirement income security.1

However, as we recently reported, 29 percent of households age 55 and 

older do not have any retirement savings or a defined benefit pension.2

While some workers may choose not to participate in a workplace 

retirement savings program, a considerable number may not have the 

option either because their employer does not offer one or because the 

worker is not eligible to participate. Research has shown that other 

workers may not participate because of inertia—their employer’s program 

requires workers to make an active decision to participate rather than 

automatically enrolling workers and allowing them to opt out. Although a 

growing number of employers have adopted automatic enrollment, a 

considerable number of programs still do not offer this feature and prior 

1

In this report, “workplace retirement savings programs” include employee benefit plans, 

such as 401(k) plans, and employer provided Individual Retirement Accounts (IRAs), such 

as payroll deduction IRAs. The term does not include IRAs individuals may establish on 

their own outside the workplace. 

2

GAO, Retirement Security: Most Households Approaching Retirement Have Low 

Savings, GAO-15-419 (Washington, D.C., May 12, 2015). Outside of workplace retirement 

savings, other retirement savings include assets accrued through IRAs that individuals 

may establish on their own. Defined benefit plans are employee benefit plans that provide 

retirement benefits based on formulas that generally take into account an employee’s 

salary and years of service. 

Letter

Page 1 GAO-15-556 Options to Expand Coverage

 
research shows that the overall coverage rate has not increased 

substantially.3

In response to the large share of the workforce that continues to lack 

coverage, there are mounting concerns that millions of workers will not 

have sufficient savings for retirement, adding to already significant 

burdens on state and national safety nets.4 To address these issues, 

some federal and state legislators and the President have proposed 

efforts to expand workplace retirement savings program coverage in 

recent years. In addition, other countries face similar concerns and some 

have developed strategies to increase coverage that may offer lessons 

for the United States.

You asked us to review issues related to efforts to expand coverage in 

workplace retirement savings programs. This report examines:

1. recent estimates of workplace retirement savings program coverage, 

including eligibility and participation, and characteristics of workers 

who lack coverage;

2. strategies used by states and other countries to expand coverage 

among private sector workers; and

3. potential challenges states could face given existing federal law and 

regulations.

To develop estimates of retirement savings program coverage, we 

obtained data from the Survey of Income and Program Participation 

(SIPP) and output provided by the Census Bureau, which replicated our 

analysis using SIPP data linked to taxpayer data. In addition, we reviewed 

relevant literature and conducted interviews with experts and agency 

officials. We used data from the SIPP core survey and the topical module 

3 For more information on automatic enrollment, see GAO, Retirement Savings: Automatic 

Enrollment Shows Promise for Some Workers, but Proposals to Broaden Retirement 

Savings for Other Workers Could Face Challenges, GAO-10-31 (Washington, D.C.: Oct. 

23, 2009). For prior research on trends in coverage, see: Craig Copeland, “EmploymentBased Retirement Plan Participation: Geographic Differences and Trends, 2012,”

Employee Benefit Research Institute, Issue Brief No. 392, November 2013; and Alicia H. 

Munnell and Dina Bleckman, “Is Pension Coverage a Problem in the Private Sector?”

Center for Retirement Research at Boston College, April 2014, No. 14-7.

4 For more information on GAO’s analysis of states’ fiscal outlook, see: GAO, State and 

Local Governments’ Fiscal Outlook: 2014 Update, GAO-15-224SP (Washington, D.C., 

Dec. 2014).

Page 2 GAO-15-556 Options to Expand Coverage

 
on retirement and pension coverage fielded from January to April 2012, 

the most recent data available. The survey collected data on about 

52,000 individuals, including detailed information on work history, 

demographics, assets, and income. Using this data, we identified private 

sector workers, performed cross-tabulations, and developed an empirical 

model that included key demographic and occupational characteristics.5

We examined the reliability of SIPP and Census data by interviewing the 

appropriate agency officials, reviewing documentation, and conducting 

selected data checks. Based on these assessments, we determined that 

the data were reliable for our purposes. (A more detailed description of 

our scope and methodology is provided in app. I.)

To identify strategies to expand private-sector workplace retirement 

savings program coverage and the potential challenges states could face 

given existing federal law and regulations, we obtained information about 

recent state efforts6 and conducted case studies in six states—California, 

Illinois, Maryland, Massachusetts, Washington, and West Virginia. We 

selected these states, in part, to provide some parity based on the two 

broad categories of state efforts we identified—automatic IRA- and other 

voluntary account-type programs. As part of the case study reviews, we 

reviewed available documentation and interviewed industry 

representatives, state officials, and other stakeholders about advantages, 

disadvantages, and challenges of the strategies in selected state efforts. 

We also studied efforts to expand coverage in three countries that have 

5 To correct for self-reported error in the survey data, we compared a respondent’s 

answer about participation in a workplace retirement savings program to information on 

their W-2 about contributions to a workplace retirement account. Specifically, the SIPP 

asks if the respondent’s employer has any kind of pension or retirement plan for anyone in 

their company or organization. The W-2 includes contributions to the following workplace 

retirement savings programs: 401(k), 403(b), 408(k) and (p) (i.e., SEP and SIMPLE IRAs), 

457, and 501 plans. If the respondent said “no, they do not participate,” but they had 

positive contributions on their W-2 going to a workplace retirement savings program, we 

recoded them as a yes. Alternatively, if the respondent said “yes, they do participate” but 

there is no contribution evident in the W-2, we did not recode them as a no because we 

cannot rule out the possibility that their employer offers a defined benefit plan or defined 

contribution plan in which only the employer contributes.

6 In this report, we use “state efforts” to refer to a range of activities that may have 

occurred in a state, including the introduction, action on or enactment of legislation, an 

executive action, or a study. We obtained information about recent state efforts from 

interviews with state government officials and knowledgeable industry representatives, as 

well as a review of legislative databases and other relevant websites. See appendix IV for 

the states we identified and a more detailed description of our methodology.

Page 3 GAO-15-556 Options to Expand Coverage

 
voluntary workplace retirement savings programs—Canada, New 

Zealand, and the United Kingdom. We chose these countries based on 

their potential comparability to the United States. In addition, we 

examined one specific effort within the Australian superannuation 

program to address challenges specific to small businesses. As part of 

our review, we examined available documentation and analyzed the 

countries’ systems based on strategies used to increase coverage and 

the potential effectiveness in the United States. We interviewed 

knowledgeable stakeholders and government officials from each country, 

as well as academics, about each strategy’s strengths, weaknesses, 

tradeoffs, and applicability of lessons learned for the United States. We 

did not conduct an independent legal analysis to verify the information 

provided about the laws, regulations, or policies of the countries selected 

for this study, but rather relied on secondary sources and interviews with 

knowledgeable officials in each country.

We conducted this performance audit from June 2014 through September 

2015 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Workers have a variety of options to save for retirement. While personal 

savings accounts and home equity can be used in retirement, many 

workers who save for retirement do so in tax-advantaged accounts 

available through their workplace. Their employers may sponsor an 

employee benefit plan, such as a 401(k) plan,7 or make arrangements for 

employees to contribute to Individual Retirement Accounts (IRAs), such 

7 Congress has established tax incentives to encourage employers to sponsor employee 

retirement plans, referred to in the Employee Retirement Income Security Act of 1974 

(ERISA) as pension plans, and employees to participate in them. Employer contributions 

to qualified plans are a tax-deductible business expense, and, in general, contributions 

and investment earnings on those contributions are not taxed as income until the 

employee withdraws them from the plan.

Background

Page 4 GAO-15-556 Options to Expand Coverage

 
as payroll deduction IRAs, to help employees save for retirement.8 (See 

table 1.)

Table 1: Description of Key Tax-Advantaged Workplace Retirement Savings Programs

Type of Tax-Advantaged Program Description 

Employee Benefit Plans Employers can sponsor two broad types of retirement plans, referred to in the Employee 

Retirement Income Security Act of 1974 (ERISA) as pension plans: 

• Defined benefit (DB) plans, which promise a specified monthly benefit at retirement

generally based on an employee’s years of service and on salary, regardless of the 

performance of the plans’ investments.

• Defined contribution (DC) plans, in which benefits are based on contributions and the 

performance of the investments in participants’ individual accounts. The dominant type of 

DC plan is a 401(k) plan but other types include 403(b) plans (for public education 

organizations, some non-profits employers, cooperative hospital service organization and 

self-employed ministers), and 457 plans (for governmental and certain non-governmental 

employers). In 2012, U.S. employers sponsored over 516,000 401(k) type plans 

providing access to more than 63 million workers with more than $3.5 trillion in plan 

assets.a Unlike DB plans, in which plan participants are eligible for a specific payment for 

life, 401(k) plan participants typically must make their own, sometimes complex, choices 

about their account balance both before and during retirement. For example, participants 

need to decide how much to contribute, how to invest, and how to spend down savings in 

retirement. 

8 Congress authorized individual retirement accounts—popularly known as IRAs—which 

(1) provide a way for individuals not covered by a pension plan to save for retirement, and 

(2) give retiring workers or individuals changing jobs a way to preserve assets from 

employer-sponsored retirement plans by allowing them to roll over, or transfer, plan 

balances into IRAs.

Page 5 GAO-15-556 Options to Expand Coverage

 
Type of Tax-Advantaged Program Description 

Employer-provided IRAs Employers can make arrangements for employees to contribute to IRAs to help them save for 

retirement. Two types of these IRAs are:

• Payroll Deduction IRAsb: Through a payroll deduction IRA program, individuals may 

establish either traditional or Roth IRAs and make contributions by authorizing payroll 

deductions, which are forwarded by the employer to their IRAs.

c If the employer is 

minimally involved as set out in Department of Labor (DOL) regulations, these programs 

are not considered pension plans under ERISA, and employers are not, therefore, plan

fiduciaries. Traditional IRAs allow individuals to make contributions of earned income with 

taxes deferred on the contributions and the investment earnings until distributed at 

retirement. Once distributions are taken, they are generally taxed as ordinary income.d

Roth IRAs, enacted as part of the Taxpayer Relief Act of 1997, allow eligible individuals 

to make nondeductible contributions and later receive tax-free distributions.e

• Savings Incentive Match Plan for Employees (SIMPLE) IRAs: SIMPLE IRAs are a 

means by which employers with 100 or fewer employees can more easily provide a 

retirement savings program to their employees compared to providing a 401(k) or DB 

plan. Under such a program, eligible employees can direct a portion of their salary, within 

limits, to a SIMPLE IRA and employers must either (1) match the employees’ contribution 

up to 3 percent of the employee’s compensationf

or (2) make nonelective contributions of 

2 percent of each employee’s salary for all employees making at least $5,000 for the 

year.g The employee salary reduction contribution limit for 2015 is $12,500. Employers 

can elect to permit catch-up contributions for those at least age 50, which in 2015 are 

limited to $3,000.h

Source: GAO review of select laws and regulations. | GAO-15-556

a U.S. Department of Labor, Employee Benefits Security Administration, Private Pension Plan 

Bulletin: Abstract of 2012 Form 5500 Annual Reports, Version 1.2 (Washington, D.C.: January 2015).

b For more information see GAO, Private Pensions: Better Agency Coordination Could Help Small 

Employers Address Challenges to Plan Sponsorship, GAO-12-326 (Washington, D.C.: March 5, 

2012) and GAO, Individual Retirement Accounts: Government Actions Could Encourage More 

Employers to Offer IRAs to Employees, GAO-08-590 (Washington, D.C.: June 4, 2008).

c The dollar limit on all IRA contributions is adjusted annually for cost-of-living increases. 26 U.S.C. §§ 

408(o)(2), 408A(c)(2) and 219(b)(5). For 2015, the combined maximum contribution for all traditional 

and Roth IRAs in total is $5,500. Individuals age 50 and older are eligible to make additional catch-up 

contributions of $1,000. 26 U.S.C. § 219(b)(5)(B). Taxpayers age 701⁄2 and older can contribute to a 

Roth IRA only. 26 U.S.C. §§ 219(d)(1) and 408A(c)(4). Any contribution exceeding the annual limit or 

made by an ineligible taxpayer is subject to a 6 percent excise tax on the amount of excess 

contributions. 26 U.S.C. § 4973(a).

d 29 U.S.C. § 408.

e 29 U.S.C. § 408A.

f 26 U.S.C. § 408(p)(2)(A)(iii) and (C)(ii).

g 26 U.S.C. § 408(p)(2)(B)(i). For employees who participate in other employer plans during the year, 

the overall total salary reduction contribution limit for all plans is $18,000 in 2015.

h 26 U.S.C. § 414(v)(2)(B)(ii) and (C).

Workers may also choose to save on their own in an IRA to increase their 

retirement savings. However, our recent work shows that approximately 

Page 6 GAO-15-556 Options to Expand Coverage
95 percent of money contributed to traditional IRAs in 2008 was from 

rollovers, primarily from employee benefit plans.9

Despite the various options available for employers to offer a workplace 

retirement savings program, our prior work and other research shows a 

persistent gap in coverage among private sector workers.10 While 

estimates of participation rates can vary depending on the nature of the 

study sample (e.g., whether it includes full and part-time workers or is 

based on household or firm-level data), research consistently indicates

that many workers do not participate in a workplace retirement savings 

program. For example, one study using household data from the Current 

Population Survey (CPS) shows that the participation rate of private 

sector workers has declined slightly from about half of full- and part-time 

workers in the late 1990s to 43 percent in 2012.11 Similarly, another study 

using CPS data found that the participation rate among private sector 

workers ages 21 to 64 has fluctuated over the time period from 2000 to 

2012 from a high of about 47 percent in 2000 to a low of about 39 percent 

in 2012.12 In addition, a study using firm-level data from the 2014 National 

Compensation Survey reports that 48 percent of private sector workers 

participate in a retirement plan.13

9 Investment Company Institute, The U.S. Retirement Market, Second Quarter 2012 

(September 2012). http://www.ici.org/info/ret_12_q2_data.xls. See, GAO, 401(k) Plans: 

Labor and IRS Could Improve the Rollover Process for Participants, GAO-13-30 

(Washington, D.C., March 7, 2013). “Rollover” generally refers to a distribution from a 

401(k) plan that an individual moves into another employee benefit plan or IRA, in order to 

avoid the funds being considered income and, thereby, immediately subject to income tax. 

Amounts taken from IRAs are generally referred to as “withdrawals,” but may also be 

referred to as “distributions.”

10 See, for example, GAO-10-31, GAO, Private Pensions: Alternative Approaches Could 

Address Retirement Risks Faced by Workers but Pose Trade-offs, GAO-09-642

(Washington, D.C.: July 24, 2009), and GAO, Private Pensions: Low Defined Contribution 

Plan Savings May Pose Challenges to Retirement Security, Especially for Many LowIncome Workers, GAO-08-8 (Washington, D.C.: Nov. 29, 2007).

11 Alicia H. Munnell and Dina Bleckman, “Is Pension Coverage a Problem in the Private 

Sector?” Center for Retirement Research at Boston College, April 2014, No. 14-7.

12 Craig Copeland, “Employment-Based Retirement Plan Participation: Geographic 

Differences and Trends, 2012,” Employee Benefit Research Institute, Issue Brief No. 392, 

November 2013.

13 U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits in the United 

States – March 2014, USDL-14-1348.

Page 7 GAO-15-556 Options to Expand Coverage

 
The President and some members of Congress have proposed various 

efforts over the years to expand workplace retirement savings program 

coverage among private sector workers.14 These efforts generally strive 

to overcome obstacles for employers to offer workplace retirement 

savings programs or for workers to participate. In particular, our prior 

research found that small employers may be reluctant to offer these 

programs because of administrative burden and potential fiduciary risk.15

Some workers, on the other hand, may lack the financial literacy or 

resources to participate.

To foster retirement saving among the portion of the workforce who have 

been offered an employee benefit plan but do not participate, some 

employers have adopted automatic enrollment policies for their defined 

contribution plans.16 Under automatic enrollment, eligible workers are 

enrolled into the plan, unless they explicitly choose to opt out, as opposed 

to the more traditional method in which workers must take action to join a 

plan. Employers who have adopted automatic enrollment must also 

establish default contribution rates and default investment vehicles for 

workers who do not specify these choices.17 Employers may also adopt 

automatic escalation policies, which increase contribution rates on a 

predetermined schedule—even without active decisions by employees—

typically up to a pre-defined maximum contribution rate. The Internal 

Revenue Code (IRC) and the Employee Retirement Income Security Act 

of 1974 (ERISA) were amended by the Pension Protection Act of 2006 

(PPA) to facilitate the use of automatic enrollment, and Department of 

14 For example, the President has included the automatic IRA in each budget proposal 

since 2009.

15 GAO-12-326.

16 For more information on automatic enrollment, see GAO-10-31and GAO-09-642. For 

background on automatic enrollment and the automatic IRA, see: J. Mark Iwry and David 

C. John, Pursuing Universal Retirement Security through Automatic IRAs, testimony 

before the Subcommittee on Long-Term Growth and Debt Reduction, Committee on 

Finance, United States Senate, 109th Cong. June 29, 2006.

17 29 U.S.C. § 1104(c)(5). For a related GAO study on Qualified Default Investment 

Alternatives, see GAO, 401(k) Plans: Clearer Regulations Could Help Plan Sponsors 

Choose Investments for Participants, GAO-15-578 (Washington, D.C.: Aug. 25, 2015).

Efforts to Expand 

Workplace Retirement 

Savings Program 

Coverage in the United 

States

Automatic Enrollment

Page 8 GAO-15-556 Options to Expand Coverage

 
Labor (DOL) and the Department of the Treasury (Treasury) promulgated 

implementing regulations.18

To encourage low- and middle-income individuals and families to save for 

retirement, the IRC was amended by the Economic Growth and Tax 

Relief Reconciliation Act of 2001 to allow a credit against federal income 

taxes of up to $2,000 for qualified retirement savings.19 Eligibility for the 

Saver’s Credit is based on workers’ adjusted gross income (AGI) and 

contributions to employee benefit plans and IRAs with the credit phasing 

out at certain income limits, depending on the size of the household. 

Since the adoption of the Saver’s Credit, bills have been introduced to 

further encourage low-income workers to save for retirement, including 

making the tax credit refundable and increasing the rate of the tax credit 

for retirement contributions.

18 Pub. L. No. 109-280, §§ 621, 624 and 902, 120 Stat. 780, 978-79, 980, 1033-39 

(codified as amended at 26 U.S.C. §§ 401(k)(13) and (m)(12), and 414(w), and 29 U.S.C. 

§ 1104(c)), Default Investment Alternatives Under Participant Directed Individual Account 

Plans, 72 Fed. Reg. 60,452 (codified at 29 C.F.R. § 2550.404c-5) and Automatic 

Contributions Arrangements, 74 Fed. Reg. 8,200 (Feb. 24, 2009). Beginning in 1998, 

Treasury and Internal Revenue Service (IRS) rulings and other guidance first allowed

employers to automatically enroll newly hired and current employees in 401(k), 403(b), 

and 457 retirement savings plans (Rev. Rul. 98-30, 1998-1 C.B. 1273. and Rev. Rul. 

2000-8, 2000-2 C.B. 617; Rev. Rul. 2000-35, 2000-2 C.B. 138; Rev. Rul. 2000-33, 2000-1 

C.B.142). A number of considerations inhibited more widespread adoption of automatic 

enrollment, including concerns such as liability in the event that the employee’s 

investments under the plan did not perform satisfactorily, and concerns about state laws 

that prohibit withholding employee pay without written employee consent. PPA and 

subsequent regulations further facilitated the adoption of automatic enrollment by 

providing incentives for doing so and by protecting plans from fiduciary and legal liability if 

certain conditions are met. In addition, in September 2009, Treasury announced IRS 

actions designed to further promote automatic enrollment and the use of automatic 

escalation policies. Rev. Rul. 2009-30, 2009-2 C.B. 391, and Notice 2009-65, 2009-2 C,B, 

413. More recently, the IRS has further facilitated adoption of automatic enrollment and 

escalation features by providing for new correction procedures under its employee plans 

compliance resolution system. Rev. Proc. 2015-28, 2015-16 I.R.B. 920.

19 Pub. L. No. 107-16, § 618, 115 Stat. 38, 106-08 (codified as amended at 26 U.S.C. § 

25B). The Saver’s Credit phases out at different earnings thresholds based on tax-filing 

status. For example, in 2015, the credit phases out completely for those who are married 

and filing a joint return if they earn more than $61,000. For more information on the 

Saver’s Credit see GAO, Automatic IRAs: Lower-Earning Households Could Realize 

Increases in Retirement Income, GAO-13-699 (Washington, D.C.: Aug. 23, 2013) and 

GAO, Private Pensions: Some Key Features Lead to An Uneven Distribution of Benefits, 

GAO-11-333 (Washington, D.C.: March 30, 2011). 

Saver’s Credit

Page 9 GAO-15-556 Options to Expand Coverage

 
In January 2014, the President directed Treasury to create the My

Retirement Account (myRA) program, a new retirement savings account 

for Americans looking for a simple, safe, and affordable way to start 

saving. Individuals who voluntarily open myRA accounts will be able to 

set up recurring payroll deduction contributions that will be invested in 

nonmarketable retirement savings bonds only available to participants in 

the program.20 The savings bond is backed by the Treasury, will not go 

down in value, and will earn interest equal to the rate of return provided in 

a fund offered in the federal employee retirement plan.21 The retirement 

savings bonds will mature at the earlier of 30 years from the date the 

bond is first issued or when the total value of the bond reaches $15,000. 

At that time balances will be transferred to a private-sector Roth IRA.

22

Participants are not charged fees for myRA accounts—administrative 

costs are paid by the Treasury. myRA accounts follow Roth IRA rules, so 

contributions are made with after-tax income but may be withdrawn taxfree at any time. Moreover, not all Americans will be eligible to participate 

due to IRA contribution limits based on modified adjusted gross income.23

Unlike some commercial IRA accounts, myRA does not impose minimum 

balance or minimum contribution requirements—individuals will be able to 

open accounts with no start-up cost and can choose to automatically 

contribute any amount each payday.

20 Effective December 15, 2014, Treasury issued a final rule that made it possible for it to 

offer the retirement savings bond for myRA program. Regulations Governing Retirement 

Savings Bonds, 79 Fed. Reg. 74,023 (Dec. 15, 2014) (codified at 31 C.F.R. §§ 347.0-

347.52).

21 The myRA investment will earn interest at the same variable rate as the Government 

Securities Investment Fund in the Thrift Savings Plan for federal employees. 31 C.F.R. § 

347.40. Treasury officials noted that such a rate tends to keep up with inflation because it

is tied to the weighted average of Treasury securities of a duration beyond 4 years—which 

already reflects expectations about and historically has kept pace with or exceeded 

inflation.

22 79 Fed. Reg. 74,023. myRA accounts follow Roth IRA rules. Accordingly, contributions 

are made with after-tax income and may be withdrawn tax-free at any time. In addition, 

earnings may be withdrawn at any time and may be withdrawn tax-free if the distribution is 

“qualified.” A distribution is “qualified” if it is made at least 5 years after the owner’s first 

contribution to the Roth IRA (counting from January 1 of the year of the first contribution), 

and the distribution is made for a qualifying reason, including after the owner is age 59 1⁄2. 

Because myRA accounts are Roth IRAs, their funds can actually be withdrawn and rolled 

into another Roth IRA at any time. 26 U.S.C. § 408A(d)(2)(A)(i) and (B).

23 26 U.S.C. § 408A(c)(3) and 26 C.F.R. § 1.408A-3. Annual income limits may change 

from year to year, but annual income limits in 2015 were $129,000 for individuals and 

$191,000 for couples. 

myRA

Page 10 GAO-15-556 Options to Expand Coverage

 
Members of Congress have also introduced bills over the years to foster 

retirement savings among those who work for employers that do not 

sponsor employee benefit plans. One group of proposals would establish 

“automatic IRAs” for workers not covered by an employee benefit plan.24

Under an automatic IRA, employers would be required to make available 

an arrangement in which employees would be automatically enrolled and 

contributions would be made through automatic payroll deduction, with an 

opt-out provision for participants.25 In addition, some bills would allow for 

more widespread adoption of multiple employer plans by enabling 

employers without a common interest to sponsor such plans.26 Appendix 

III provides a description of the bills we identified.

In the United States, employers are generally not required to provide 

employee benefit plans, including pension plans, to any employees. 

When they do, however, employee benefit plans are generally regulated 

at the federal level, providing employers with largely uniform nationwide 

standards.27 Most significantly, plans are subject to the requirements of 

ERISA, which are generally enforced by DOL’s Employee Benefits 

Security Administration (EBSA) and various provisions of the Internal 

Revenue Code (IRC), which is enforced by the Internal Revenue Service

(IRS).

28 ERISA was enacted to, among other things, protect the interests 

of plan participants and their beneficiaries and set minimum standards for 

most private sector pension plans, including rules for fiduciary conduct 

and prohibited transactions.

29 The IRC and ERISA define prohibited 

24 For more information on automatic IRAs see GAO-13-699 and GAO-10-31.

25 Many of the state efforts we identified include features similar to the automatic IRA 

model. See appendix IV for a summary of the 29 state efforts we identified.

26 For more information on multiple employer plans see GAO, Private Sector Pensions: 

Federal Agencies Should Collect Data and Coordinate Oversight of Multiple Employer 

Plans, GAO-12-665 (Washington, D.C.: Sept. 13, 2012).

27 29 U.S.C. § 1144. With certain exceptions, ERISA supersedes any and all state laws as 

they relate to any employee benefit plan covered under ERISA.

28 Additionally, ERISA provides for the establishment of the Advisory Council on 

Employee Welfare and Pension Benefit Plans to advise and make recommendations to

the Secretary of Labor with respect to carrying out the functions under ERISA. 29 U.S.C. § 

1142.

29 29 U.S.C. §§ 1001b(a) and 1003(a), respectively.

Legislative Proposals

Federal Regulation of 

Employee Benefit Plans 

and Individual Retirement 

Accounts

Page 11 GAO-15-556 Options to Expand Coverage

 
transactions and list exemptions to them.30 In addition DOL may grant 

exemptions.31 To carry out its responsibilities under ERISA, EBSA 

promulgates regulations and issues various forms of guidance. The IRS is 

primarily responsible for ensuring that plans meet certain requirements for 

tax-favored treatment.

32

ERISA and relevant provisions of the IRC establish minimum 

requirements and standards for private-sector employee benefit plans. 

ERISA establishes minimum participation, vesting, and funding standards 

for plans.33 For example, ERISA limits the age and the length-of-service 

that employers can require employees to meet to be eligible for a plan. To 

qualify for tax benefits under IRC, plans must also meet minimum 

participation, vesting, and funding standards.34 An employer may also 

establish a plan that excludes certain groups of employees as long as the 

ERISA and IRC requirements are met.35 For example, an employer may 

establish and maintain a plan that excludes workers in certain job 

categories or geographic locations.36

Lastly, IRS is responsible for enforcing IRA tax requirements but IRS and 

DOL share responsibility for overseeing prohibited transactions relating to 

IRAs that are not ERISA-covered plans.

ERISA includes a provision stating that ERISA supersedes any and all 

state laws as they “relate to” any employee benefit plan covered under 

30 26 U.S.C. § 4975 and 29 U.S.C. §§ 1106 and 1108(b).

31 29 U.S.C. § 1108(a).

32 26 U.S.C. §§ 401-461.

33 29 U.S.C. §§ 1052, 1053, and 1082, respectively.

34 26 U.S.C. §§ 410, 411 and 412, respectively.

35 Employers may establish a retirement plan that “excludes” certain groups of employees 

in the sense that when voluntarily offering a retirement plan to some group or groups of 

employees, an employer may choose not to offer that plan or any retirement plan to 

another group or groups of employees.

36 In addition, even when a plan would otherwise be available to them, employees may be 

ineligible to participate under a plan’s provisions if they are under age 21 or have worked 

less than one year, which is defined as less than 1,000 hours in any 12-month period. 29 

U.S.C. § 1052.

ERISA Preemption

Page 12 GAO-15-556 Options to Expand Coverage

 
ERISA.37 This ERISA preemption provision has a relatively small number 

of exceptions38 and reflects a policy judgment that nationwide uniformity 

respecting employee benefit plans outweighs the value of state 

differentiation. In addition to statutory provisions, “state laws”

encompasses decisions, rules, regulations, and any other state action 

having the effect of law.39

Based on statutory interpretation and its review of the legislative history of 

ERISA, in 1983 the Supreme Court held that a state law “relates to” an 

employee benefit plan and is preempted “if it has a connection with or 

reference to such a plan.” 40 The Court has emphasized that state law 

may be preempted even if not specifically designed to affect such plans.41

Furthermore, even if a state law is not in conflict with ERISA but is, in fact, 

consistent with it because, for example, it promotes retirement security, it 

is not spared from ERISA preemption if it “relates to” an employee benefit 

plan.42 The broad scope of ERISA’s preemption provision has permitted 

large employers to provide pension plans to their employees without

having to establish multiple plans or plan policies depending on differing 

requirements from state to state. In addition, ERISA’s preemption 

provision helps to ensure that participants are protected by several 

safeguards. For example, ERISA establishes minimum participation and 

vesting standards, imposes fiduciary duties on plan sponsors, and 

authorizes DOL to enforce its requirements.

A 1995 Supreme Court case, however, raised some question regarding 

the Court’s prior attempts to construe “relate to” and the expansiveness of 

ERISA. Furthermore, in 2010 a federal appeals court appeared to limit the 

scope of ERISA preemption when it upheld a local law requiring, among 

37 29 U.S.C. § 1144(a).

38 29 U.S.C. § 1144(b).

39 29 U.S.C. § 1144(c)(1).

40 Shaw v. Delta Airlines, Inc., 463 U.S. 85, 96-97 (1983).

41 Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987). 

42 Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 740 (1985).

Page 13 GAO-15-556 Options to Expand Coverage

 
other things, that covered employers make a certain level of health care 

expenditures43 on behalf of their employees.44

About half of private sector workers did not participate in a workplace 

retirement savings program in 2012. While some workers chose not to 

participate, we found that most workers who did not have coverage 

lacked access to such programs.45 Among those not participating, the 

majority worked for an employer that did not offer a program or they were 

not eligible for the programs that were offered. In particular, lower income 

workers and those employed by smaller firms were much less likely to 

have access to programs, after controlling for other factors. In addition to 

lacking access, certain workers, such as lower income, service sector, 

and younger workers, were also less likely to participate in programs 

even when provided access. However, the majority of these workers 

participated when they had workplace access.

Roughly half of private sector workers participate in a workplace 

retirement savings program, according to 2012 data. Specifically, selfreported SIPP data indicate that 45 percent of all private sector workers 

were participating in a program.46 However, prior research using SIPP 

data linked with W-2 tax records has shown that some individuals under43 The ERISA preemption provision covers “employee benefit plans,” which includes 

employee welfare benefit plans, such as employer-sponsored health care benefits, as well 

as pension plans. 29 U.S.C. §§ 1002(3) and 1003(a).

44 Golden Gate Rest. Ass’n v. City & County of San Francisco, 546 F.3d 639 (9th Cir. 

2008), cert. denied, 561 U.S. 1024 (2010). A similar law in Maryland, however, was found 

by another federal appeals court to be preempted by ERISA. Retail Indus. Leaders Ass’n 

v. Fielder, 475 F.3d 180 (4th Cir. 2007).

45 For purposes of this report, we use the term coverage to broadly refer to whether or not 

workers had access to a workplace retirement savings program (i.e., their employer 

offered a program for which the worker was eligible) and chose to participate. For 

specificity, we use distinct terms for participation, employer offer, and worker eligibility 

when reporting estimates from our data analysis. Figure 2 summarizes the use of these 

terms.

46 The SIPP survey question generally asks about any retirement programs offered on the 

respondent’s job. Specifically, it asks “Does your (job/business) have any kind of pension 

or retirement plans for anyone in your company or organization?” If the workers responds 

“yes” but indicates they are not included, a series of follow-up questions are asked about 

the reason(s) they are not included, some of which correspond to eligibility. See appendix 

I for a more detailed description.

Gaps in Access 

Leave Many LowIncome and Other 

Workers without 

Workplace 

Retirement Savings 

Program Coverage

Lack of Coverage Is 

Driven by Gaps in Access

Page 14 GAO-15-556 Options to Expand Coverage

 
report their participation.47 To address this issue, we examined similarly 

linked data to correct for under-reporting and the resulting participation 

rate increased to 54 percent (see fig. 1).48 While the W-2 adjusted data 

show a moderate increase in participation, both measures indicate that 

many workers lack coverage in a workplace retirement program.49 Our 

findings are similar to estimates from our prior work and other studies.50

For example, the prior research that linked 2006 SIPP data with W-2 tax 

records shows, using this approach, that the measure of participation 

among private sector workers increased from 45 percent to 58 percent.51

A more recent update to this study found that participation further 

increased to 62 percent in 2012, although the age range of this study 

differed from our work—this study examined private sector workers ages 

21 to 64, while we focused on private sector workers ages 18 and over.52

Other more recent data from the 2014 National Compensation Survey, a 

47 Irena Dushi, Howard Iams, and Jules Lichtenstein, “Assessment of Retirement Plan 

Coverage by Firm Size, Using W-2 Tax Records,” Social Security Bulletin, Vol. 71, No. 2, 

2011.

48 If a respondent reported they did not participate in a plan, but actually had positive 

contributions to a workplace retirement program reported on their W-2, they were reclassified as participating. The data did not allow us to correct for the possibility that some 

participants may report they are participating when in fact they did not. This use of linked 

data is similar to the approach used in research by the Social Security Administration,

which found that survey respondents tend to under-report participation. See Dushi, et. al. 

2011. 

49 Further, as described in this report’s following section, the effects of different factors on

participation were very similar regardless of whether we used the self-reported data or the 

data corrected using the W-2 tax records.

50 For example, we previously reported that many workers do not participate in retirement 

savings programs. However, from 1998 to 2009, working women’s access to and 

participation in employer-sponsored retirement plans has improved relative to men. See: 

GAO, Retirement Security: Women Still Face Challenges, GAO-12-699 (Washington, 

D.C.: July 2012).

51 Dushi, et. al., 2011.

52 Irena Dushi, Howard Iams, and Jules Lichtenstein, “Retirement Plan Coverage by Firm 

Size: An Update,” Social Security Bulletin, Vol.75 , No. 2, 2015.

Page 15 GAO-15-556 Options to Expand Coverage

 
firm level survey conducted by the Bureau of Labor Statistics, show that 

48 percent of private sector workers participated in a retirement plan.53

Figure 1: Share of Private Sector Workers Participating in a Workplace Retirement 

Savings Program, 2012

Among workers who are not participating, we found that the gap in 

coverage is mainly due to a lack of access rather than a failure to 

participate. The vast majority of workers who do not participate–84 

percent—reported they did not have access to a workplace retirement 

program. Access depends on two essential factors: (1) The employer 

53 Bureau of Labor Statistics, “Employee Benefits in the United States – March 2014,” 

USDL-14-1348, July 2014. In addition to the research described above, a study using 

2012 CPS data found that 43 percent of all private sector workers ages 25 to 64 

participated in a plan. See Alicia Munnell and Dina Bleckman, “Is Pension Coverage a 

Problem in the Private Sector?” Center for Retirement Research at Boston College, Issue 

Brief No. 14-7, April 2014. Using the same data for private sector workers ages 21 to 64, 

another study found that just over 39 percent participated in a plan. See Craig Copeland, 

“Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 

2012,” Employee Benefit Research Institute Issue Brief, No. 392, November 2013.

Page 16 GAO-15-556 Options to Expand Coverage

 
must offer a program, and (2) the worker must be eligible to participate 

(see fig. 2).54

Figure 2: Building Blocks of Workplace Retirement Savings Program Coverage

Of these two factors, we found that the lack of access was primarily due

to employers not offering a retirement program. Specifically, among those 

who do not participate, 68 percent reported they worked for an employer 

that did not offer a program, and another 16 percent reported they were 

not eligible for the program their employer offered (see fig. 3).55 Only 16 

percent of those who did not participate reported being eligible and not 

participating.

54 A worker may not be eligible, in effect, for a workplace retirement savings program 

offered by their employer based on several factors, including age, number of hours 

worked, location, or job category.

55 For purposes of this study, we categorized respondents as being ineligible if they said 

they did not participate in a program their employer offers due to those in their type of job 

not being allowed in the program, not working enough hours, weeks, or months per year, 

their age, or not working long enough for this employer.

Page 17 GAO-15-556 Options to Expand Coverage

 
Figure 3: Percentages of Private Sector Workers Not Participating in a Workplace 

Retirement Savings Program by Reason Given, 2012

Certain types of workers, such as those with lower incomes, are much 

less likely to have coverage compared to other workers. Lower-income 

workers, in particular, are much less likely to have access to workplace 

retirement programs and to choose to participate when programs are 

available. Compared to workers in the lowest income quartile, our 

analysis found workers in the highest income quartile were nearly 4 times 

as likely to work for an employer that offers a program, after controlling for 

other factors.

56 The gap in access exists across the income distribution 

and is even larger when it comes to eligibility—workers in the third and 

fourth quartiles were, respectively, 4.4 and 7.5 times as likely to be 

eligible for a program offered by their employer than workers in the lowest 

56 We examined the likelihoods, or odds, of the following outcomes: 1) participating in a 

retirement program (among all private sector workers), 2) having an employer that offers a 

retirement program (among all private sector workers), 3) being eligible (among those 

offered programs), and 4) participating in a program (among those who are eligible). The 

regression models we used to estimate these likelihoods included variables for the 

following characteristics of workers: income, occupation, education, age, gender, marital 

status, race/ethnicity, size of the firm they worked for, whether they worked full-time or 

part-time, whether they worked for the full year or only part of the year, and whether they 

were or were not union members. For a detailed description of these results, see appendix 

VI.

Lower Income Workers 

and Those Employed by 

Smaller Firms Are Much 

Less Likely to Have 

Coverage

Page 18 GAO-15-556 Options to Expand Coverage

 
income quartile. In addition, lower-income workers had a lower likelihood 

of participating even when they were eligible (see fig. 4).57

Figure 4: Effect of Income on Likelihood of Workplace Retirement Savings Program Coverage after Controlling for Other 

Factors

Note: This figure shows the difference in the likelihood, or odds, of the following outcomes by income 

quartile, after controlling for other factors: 1) having an employer that offers a retirement program, 2) 

being eligible (among those offered a program), and 3) participating in a program (among those who 

are eligible). We used separate regressions to estimate these likelihoods to compare the size of the 

effects of various factors at each stage. Odds ratios are plotted on a multiplicative, rather than 

additive, scale.

The combined effects of lower access and lower participation result in 

large gaps in coverage across income groups (see fig. 5). Overall, 

approximately 14 percent of workers in the lowest income quartile 

participated in a program compared to 57 percent and 76 percent of those 

in the third and fourth income quartiles, respectively. Similarly, according 

to the W-2 adjusted data, 22 percent of workers in the lowest income 

57 Odds ratios from the regression analysis using the public use SIPP data and W-2 

adjusted data were similar in size and significance. As shown in figure 4, odds ratios 

comparing the likelihood of participation among those eligible for the second, third, and 

highest income quartiles compared to those in the lowest income quartile were 1.2, 2.2, 

and 4.4, respectively. Corresponding odds ratios from the W-2 adjusted data were 1.3, 

2.4, and 5.4. Overall, the results of our regression analysis of participation using the selfreported measure in the public use data and the W-2 adjusted measure were very similar 

in the size and significance of variables included in our analysis.

Page 19 GAO-15-556 Options to Expand Coverage

 
quartile participated in a program compared to 67 percent and 84 percent 

of those in the third and fourth income quartiles.

Figure 5: Share of Private Sector Workers Participating in a Workplace Retirement 

Savings Program by Income Quartile, 2012

Note: Each income quartile represents about 25.5 million private sector workers.

In addition to income, working for a small or mid-size firm is one of the 

most important factors associated with a lack of coverage. In particular, 

workers at smaller firms were much less likely to have coverage than 

workers at larger firms because their employer did not offer a program. 

Workers at the largest firms were more than 9 times as likely to have an 

employer that offered a program compared to those who worked for firms 

with 50 or fewer workers, after controlling for other factors. Even outside 

the smallest firms, the difference in the likelihood of an employer offering 

a program was considerable when comparing mid-size and larger firms 

(see fig. 6). As we have previously reported, smaller firms face challenges 

in offering programs, such as the perceived complexity and risk of 

establishing and administering a program.58 Moreover, smaller and newly 

58 See GAO-12-326.

Page 20 GAO-15-556 Options to Expand Coverage

 
formed firms have higher rates of “churn”—business formation and 

dissolution—and are less likely to offer a program initially. Certain 

characteristics associated with small employers may also contribute to 

the challenges of starting and maintaining a program. For example, small 

employers are more likely to encounter higher rates of worker turnover. In 

addition, small employers’ operating revenue can be uncertain from year 

to year.

Figure 6: Effect of Firm Size on Likelihood of Employer Offering a Workplace 

Retirement Savings Program after Controlling for Other Factors

Note: Odds ratios are plotted on a multiplicative, rather than additive, scale.

Outside of whether an employer offers a program, firm size had little to no 

effect on eligibility or participation. Workers at small or mid-size firms that 

offer a program were just as likely to be eligible as workers at larger firms 

with up to 1,000 workers, after controlling for other factors. And workers 

at the largest firms—more than 1,000 workers—were only slightly more 

likely than workers at the smallest firms—50 or fewer workers—to be 

eligible. Similarly, among those who were eligible, workers at the largest 

firms were only slightly more likely to participate compared to workers at 

the smallest firms, although this effect was only statistically significant 

Page 21 GAO-15-556 Options to Expand Coverage
using the W-2 adjusted data.59 Overall, about 23 percent of workers at 

firms with 50 or fewer workers participated in a program compared to 60 

percent of workers at firms with more than 1,000 workers. Corresponding 

participation rates from the W-2 adjusted data were 31 percent and 68 

percent, respectively.

In addition to income and firm size, other characteristics were also 

significantly associated with whether a worker has coverage, after 

controlling for other factors. For example:

• Part-time: Part-time workers were less likely to have coverage, 

primarily due to a lack of access. Specifically, compared to part-time 

workers, full-time workers were about 2.6 times more likely to be 

eligible for a program offered by their employer. Full-time workers 

were also more likely to work for an employer that offers a program, 

but the difference in likelihood was considerably smaller—by a factor 

of 1.2. Among those who were eligible, full-time workers were only 

slightly more likely to participate than part-time workers; however this 

result was not significant using the W-2 adjusted data.60

• Occupation: Workers in management, business, science, and arts 

occupations were nearly twice as likely to work for an employer that 

offers a program compared to workers in service occupations. Those 

in service sector occupations were also less likely to participate in 

programs when they had access.61 However, occupation was not 

associated with whether workers were eligible for programs offered by 

their employers.

• Age: Compared to older workers, younger workers were generally 

less likely to be eligible for a program and to participate when eligible. 

59 The odds ratios from the regression analysis using self-reported participation and the 

W-2 adjusted data were similar—1.2 and 1.3, respectively—but the result was only 

statistically significant for the latter.

60 Using the W-2 adjusted data, part-time status did not affect participation for workers 

who were eligible. While the odds ratio associated with full-time status was the same—

odds ratio of 1.1—using self-reported participation or the W-2 adjusted data, the result 

was only statistically significant for the self-reported data. 

61 Service sector workers were less likely to participate when they had access according 

to both the self-reported and W-2 adjusted data. Service sector occupations include 

cleaning, food preparation, hospitality, personal care and other services. 

Page 22 GAO-15-556 Options to Expand Coverage

 
For example, among those eligible, workers ages 18 to 24 were 

roughly one-half as likely to participate as workers ages 25 to 34.62

This pattern holds when comparing progressively older age categories 

of workers with younger workers, with the exception of workers ages 

65 and older. Workers ages 65 and older were less likely to have 

access to a program compared to workers ages 25 to 34, but were no 

less likely to participate if they were eligible.

Among workers who are least likely to participate—such as lower income, 

service sector, and younger workers—the majority did so when they had 

workplace access. The share of workers in the lowest and 2nd income 

quartiles who participated when eligible was 63 percent and 74 percent, 

respectively (see fig. 7). Corresponding figures from the W-2 adjusted 

data were 68 percent and 79 percent. Similarly, the participation rate for 

eligible service sector workers was 70 percent (74 percent according to 

W-2 adjusted data). Among the categories of workers we examined, the 

lowest participation rate among eligible workers was for those ages 18 to 

24, but still more than half, 54 percent, participated (59 percent according 

to W-2 adjusted data).

62 Under ERISA, plans may provide that workers otherwise eligible to participate in a plan 

are excluded from participating if they are younger than age 21 or have not been an 

employee for at least 1 year. GAO is currently conducting research on private sector 

employer-sponsored retirement plans’ use of eligibility and vesting requirements and a 

report on that work is forthcoming. Results for the effect of age on participation were 

consistent between the self-reported and W-2 adjusted data. The odds ratios from the 

self-reported and W-2 adjusted data were 0.46 and 0.43, respectively.

Given Access, Most 

Workers Participate

Page 23 GAO-15-556 Options to Expand Coverage

 
Figure 7: Participation Rate in Workplace Retirement Savings Programs among 

Eligible Workers by Various Characteristics, 2012

Page 24 GAO-15-556 Options to Expand Coverage
In the six states we studied, proposals were made and, in some, laws 

enacted in an effort to expand coverage that would combine workplace 

access to a retirement savings program with automatic enrollment and 

financial incentives63 —an approach that has helped increase worker 

participation in countries we studied.64 For example, the United Kingdom 

(U.K.) implemented reforms that require private sector employers to 

automatically enroll eligible workers in a workplace retirement savings 

63 Our discussion under this objective focuses on laws enacted or the most recent 

legislative efforts we identified in the six states we reviewed: California, Illinois, Maryland, 

Massachusetts, Washington and West Virginia. We selected these six states for case 

studies because they were identified as having “leading” state efforts by relevant 

government officials and knowledgeable industry representatives. As part of our review of 

these states, we analyzed state legislative materials and gathered testimonial evidence 

from knowledgeable industry representatives. While some of these states have enacted 

laws, none have fully implemented programs. Overall, we identified 29 states in which 

there has been some legislative effort to expand coverage in workplace retirement savings

programs in recent years to mitigate future burdens on state social safety nets posed by 

retirement insecurity, including 11 states that have authorized studies to consider what, if 

anything, should be done to expand coverage. (See app. IV.) State officials and 

stakeholders noted that efforts to increase workers’ access to workplace retirement 

savings programs will likely reduce the size of the currently uncovered population and help 

alleviate some pressure on social safety nets related to elder poverty. Furthermore, a

stakeholder in one state noted that the state’s economy is becoming increasingly 

dependent on retirees’ income and spending. In these ways, state stakeholders saw 

legislative efforts that increase personal retirement savings as positive steps to building 

assets and protecting the state’s fiscal condition. During the course of our work, we were 

also made aware that New York City has shown interest in expanding private sector 

coverage for New York City residents who lack access to a retirement program at work. 

64 We reviewed 3 countries: Canada, New Zealand, and the United Kingdom. We did not 

conduct an independent legal analysis to verify the information provided about the laws, 

regulations, or policies of the countries selected for this study, but rather relied on 

secondary sources and interviews with knowledgeable officials in each country. In 

addition, the fact that a legal feature was successful in one or more of the countries we 

visited, which may have significantly different cultures, histories, and legal systems than 

the United States, does not necessarily indicate that it would be successful in the United 

States.

States and Other 

Countries Use Similar 

Key Strategies to 

Expand Retirement 

Coverage

States and Countries We 

Reviewed Often Combine 

Workplace Access, 

Automatic Enrollment, and 

Financial Incentives

Page 25 GAO-15-556 Options to Expand Coverage

 
program, allowing workers to contribute to individual accounts and 

receive financial incentives in the form of employer contributions and tax 

preferences.65 A government study published in March 2015 found that 

since implementation of these reforms began in October 2012, various 

stakeholders generally perceived them as successful to date by bringing 

millions of new people into retirement savings programs, with significantly 

fewer individuals opting out than predicted.66 In fact, the government 

reported that by the end of 2014 more than 5 million workers had been 

automatically enrolled and only 12 percent of workers had opted out in 

2014.67 Similar to the U.K. and other countries, state efforts68 we 

reviewed in the United States would use a range of approaches to 

combine workplace access, automatic enrollment, and financial incentives 

to expand coverage.

The six state efforts we reviewed would expand workplace access for 

uncovered workers in two ways. Some of the states are encouraging

small employers to offer workplace access by creating state-run programs 

or state-facilitated marketplaces by which employers can voluntarily offer 

workers access to a retirement savings program and payroll deduction. 

For example, Massachusetts is developing a state-run 401(k) plan69 that 

not-for-profit employers with fewer than 20 employees in the state can 

adopt. Similarly, Washington plans to create a state-facilitated 

marketplace that would list a variety of qualified providers from which 

65 Automatic Enrolment in workplace pensions was introduced in the United Kingdom 

under the Pensions Act 2008 to address widespread under-saving for retirement.

66 Implementation started in 2012 with large employers in the United Kingdom and will 

continue into 2018 as the requirement starts to apply to small employers. 

67 The United Kingdom’s Department for Work and Pensions (DWP) initially anticipated an 

opt-out rate of approximately a third of all individuals automatically enrolled in the 

program. However, opt-out rates were between 9 and 10 percent in 2013, and 

approximately 12 percent in 2014. Given the success of automatic enrollment in the U.K., 

DWP has revised anticipated opt-out rates from 28 percent to 15 percent by 2018. 

68 As noted earlier, throughout this report we use “state efforts” to refer to a range of 

activities that may have occurred in a state, including the introduction of a bill, executive 

action, studies, or the enactment of legislation. 

69 ERISA defines a pension plan as established and maintained by an employer, 

employee organization, or both. 29 U.S.C. § 1002(2). At least one court has held that an 

entity that maintains a plan and the plan participants must have a common economic or 

representational interest, unrelated to the provision of benefits. MDPhysicians & 

Associates, Inc. v. State Bd. Ins., 957 F.2d 178,185 (5th Cir. 1992), cert. denied, 506 U.S. 

861 (1992).

Workplace Access

Page 26 GAO-15-556 Options to Expand Coverage

 
employers with fewer than 100 employees could choose to offer their 

workers. Laws or bills in other states, such as California, Illinois, and 

Maryland, would require employers with more than a certain number of 

employees, and which do not already offer an employee benefit plan to 

make their payroll systems available for workers to contribute via payroll 

deduction.70 To ensure these employers are able to find a reasonable 

option to meet this requirement, these states would create state-run 

programs. (See table 2.)

Table 2: Summary of Efforts to Expand Workplace Retirement Savings Program Coverage for Private Sector Workers in 

Selected States

California Illinois Massachusetts Maryland Washington

West 

Virginia

Recent 

approach

State-run program State-run program State-run program State-run program Statefacilitated 

marketplace

State-run 

program

Statusa Enacted, 

conducting 

feasibility study b

Enacted, developing 

implementationc Enacted, developing implementation 

Not enacted Enacted Not 

enacted 

Savings 

vehicle d Payroll deduction IRA

Payroll deduction 

IRA

Employee benefit plan 

(401(k) plan)

Payroll deduction IRA

for worker

contributions

Employee benefit 

plan (profit sharing) 

for employer 

contributions

Payroll 

deduction IRA 

and SIMPLE 

IRAe

Employee 

benefit

plan or 

IRA

Target 

employer 

size

Employers with 5 

or more employees

Employers with 25 

or more employees

Not-for-profit

employers with not 

more than 20 

employees

Employers with 5 or 

more employees

Employers

with fewer 

than 100

employeesf

Employers 

with no 

more than 

100

employees

Employer 

participation

Certain employers 

are required to 

automatically enroll

eligible employeesg

Certain employers 

are required to

automatically enroll 

eligible employees

Voluntary Certain employers 

are required to 

automatically enroll 

eligible employees

Voluntary Voluntary

70 For example, the law in Illinois exempts employers with fewer than 25 employees and 

the law in California exempts employers with fewer than 5 employees.

Page 27 GAO-15-556 Options to Expand Coverage

 
California Illinois Massachusetts Maryland Washington

West 

Virginia

If required, 

exempted 

employers

Employers that 

already offer a 

qualified plan or 

automatic 

enrollment payroll 

deduction IRA

Employers in 

business for 2 years 

or less, or that 

already offer any 

qualified plan

N/A Employers in 

business for 2 years 

or less, or that 

already offer an

employer sponsored 

planh

N/A N/A

Source: GAO analysis of state laws and bills, and testimonial information from knowledgeable industry representatives. | GAO-15-556.

Note: We selected these six states for case studies because they were identified as having “leading”

state efforts by relevant government officials and knowledgeable industry representatives. For states 

that have enacted laws, we have included a description of that enacted law in this table. For the two 

states that have not enacted legislation, Maryland and West Virginia, we described each state’s most 

recent substantive legislative effort that we identified. In recent years, all six states may have 

attempted a variety of efforts to expand retirement savings coverage (see app. IV).

a While some states have enacted legislation, none have fully implemented programs. As described 

later in this report, implementation of these efforts is contingent on their legal feasibility.

b In addition to requiring a feasibility study, California law requires enactment of a subsequent 

authorizing statute that expresses approval for the program to be fully implemented before the 

program may be opened for enrollment.

c The Illinois law also prohibits implementation of the program if the IRA arrangements offered under 

it fail to qualify for the preferential tax treatment afforded IRAs.

d We characterized the savings vehicles for each state as they are characterized in the laws or bills 

involved. We note, however, that ERISA provides that only employers may establish or maintain 

pension plans and some federal courts have read this to mean that the entity that maintains a plan 

and plan participants must be tied by a common economic or representational interest, unrelated to 

the provision of plan benefits. In addition, it is an open question whether or not any or all accounts 

characterized as IRAs will meet the legal criteria for IRAs set out in federal statute. 26 U.S.C. §§ 408 

and 408A.

e The law requires that there be a diverse array of private plan options available to employers, 

including life insurance plans designed for retirement purposes, Savings Incentive Match Plan for 

Employees (SIMPLE) IRA-type plans that provide for employer contributions, and payroll deduction 

IRAs to which employers do not contribute.

f Legislation explicitly includes self-employed individuals and sole proprietorships in the target 

employer group.

g Legislation provides for phased application of this requirement. Eligible employers are also required 

to allow open enrollment for employees who may voluntarily want to participate, and to periodically reenroll employees who opt out.

h Legislation excludes employers that over the previous two years terminated an employer-sponsored 

retirement plan or ceased to offer an automatic deduction IRA.

State stakeholders told us that state efforts to expand coverage in 

workplace retirement savings programs were designed to provide 

workplace access because research and experience by employee benefit 

plans in the United States has shown that workers are more likely to save 

Page 28 GAO-15-556 Options to Expand Coverage
for retirement if their employer offers a retirement savings program.71

DOL and the Small Business Administration (SBA) note that payroll 

deduction—an amount of salary taken from a worker’s paychecks—

allows workers to save smaller amounts each pay period instead of 

waiting until the end of the year to set aside money in an IRA. And a 

study prepared for SBA concluded that the biggest step small employers 

could take to increase worker retirement savings was to offer them 

access to a plan.72 Workplace access enables workers to take advantage 

of payroll deduction for retirement savings. Federal and state officials and 

state stakeholders noted that using payroll deductions makes contributing 

easy for most workers, helping them develop a habit of saving.

The countries we reviewed have also taken steps to encourage or require 

employers to provide workplace access for uncovered workers that use 

similar approaches as state efforts (see fig. 8). As part of the U.K.’s effort, 

the government created the National Employment Savings Trust (NEST) 

to provide employers with a reasonable option to meet the requirement to 

provide workers access. This approach is similar to efforts in California, 

Illinois, and Maryland, and to some state efforts without an employer 

requirement that still create a state-run program, such as Massachusetts 

and West Virginia.73 In addition, New Zealand and Canada would 

encourage or require certain employers to offer workplace access.74

71 For example, a West Virginia official noted that the state has seen how offering access 

has been successful for public sector workers in the state’s section 457 deferred 

compensation plan.

72 Department of Labor’s Employee Benefits Security Administration and Internal Revenue 

Service, Choosing a Retirement Solution for Your Small Business, (Washington, D.C., 

2012); Accessed on June 22, 2015: http://www.dol.gov/ebsa/pdf/choosing.pdf; and Kobe, 

Kathryn. Small Business Retirement Plan Availability and Worker Participation, Written for 

the Small Business Administration, Office of Advocacy, (Washington, D.C., March 2010).

73 While certain features of the programs we reviewed in states and other countries 

appear similar, we also recognize that there are important social, legal, and economic 

differences among these countries that could affect the success of their efforts.

74 Canada would encourage employers in federally-regulated industries and most 

provinces to offer Pooled Registered Pension Plans (PRPP) through a licensed provider, 

while Quebec requires employers with five or more workers in the province that do not 

already offer a workplace retirement savings program to offer access to a licensed 

Voluntary Retirement Savings Plan (VRSP). Stakeholders noted that this effort would 

complement the existing industry, rather than crowd out plan providers, because it is 

designed to address the needs of middle income workers who are not saving enough to 

have adequate retirement income and are not currently offered a plan.

Page 29 GAO-15-556 Options to Expand Coverage

 
Instead of creating a state-run program for employers, though, New 

Zealand and Canada license service providers to offer programs that 

meet established criteria—an approach similar to the marketplace in 

Washington State.

Figure 8: Other Countries’ Efforts to Expand Coverage in Workplace Retirement Savings Programs

a Employee eligibility criteria and requirements are described in appendix V. Eligible employees are 

not required to participate and have the right to opt out.

In combination with workplace access, each of the six state efforts we 

reviewed would require or allow employers to automatically enroll workers 

in a workplace retirement savings program to increase participation. 

Specifically, efforts in California, Illinois, and Maryland would require 

eligible employers that do not offer an employee benefit plan to 

automatically enroll their workers in the state-run program. In addition, 

state officials told us that the program for not-for-profit employers in 

Massachusetts would require employers who adopt the state plan to use 

automatic enrollment. In each of these programs, workers would have the 

Automatic Enrollment

Page 30 GAO-15-556 Options to Expand Coverage
ability to opt out. For example, California’s Secure Choice program would 

require that employers enroll workers, but an official said workers would 

have a 90-day opt out period. In West Virginia, on the other hand, 

employers who would sign up to participate in the state-run program 

would have the option of automatically enrolling their workers, but it is at 

the employer’s discretion. Similarly, Washington would provide an online 

marketplace with multiple vehicles—a SIMPLE IRA, payroll deduction 

IRA, and myRA—and employers that choose to use the marketplace 

would be encouraged, but not required, to automatically enroll workers.75

State officials and stakeholders emphasized the importance of automatic 

enrollment in increasing participation and contributions, which can, in 

turn, help reduce costs. For example, in California, members of the 

Secure Choice program’s board said that automatic enrollment helps 

increase participation and promote better outcomes by nudging workers 

to save. A representative from the Maryland task force also said that 

without automatic enrollment fewer workers would participate, and the 

burden to provide financial education would increase. Similarly, our prior 

work and other research show that automatic enrollment is effective in 

overcoming workers’ inertia and considerably increases participation.76

For example, we previously found that automatic enrollment has 

considerably increased participation in programs adopting this feature, 

with some participation rates reaching as high as 95 percent.77 In addition 

to expanding participation, state officials and stakeholders we interviewed 

said that automatic enrollment can reduce the costs of managing 

programs as the overall amount of savings increase.

Government officials and stakeholders in the countries we reviewed also 

emphasized the importance of automatic enrollment in increasing 

participation. According to the former Retirement Commissioner in New 

Zealand, automatic enrollment has been essential to the success of their 

75 The Washington law also includes life insurance plans that are designed for retirement 

purposes. 

76 See, for example: GAO-10-31; GAO-12-699; GAO-13-699; Jack VanDerhei and Craig 

Copeland, The Impact of PPA on Retirement Savings for 401(k) Participants, 2008, Issue 

Brief 318 (Washington D.C.: Employee Benefit Research Institute, June 2008); and Jeffrey 

W. Clark, Stephen P. Utkus, and Jean A. Young, Automatic Enrollment: The Power of the 

Default.(Vanguard Research, January 2015).

77 GAO-10-31.

Page 31 GAO-15-556 Options to Expand Coverage

 
KiwiSaver program and, without it, they would need a massive education 

campaign. Similarly, other government officials in New Zealand said that 

automatic enrollment is critical because too many people—even those 

who want to save—will not actively seek out participation. Government 

officials and stakeholders in the U.K. and Canada also highlighted the 

importance of automatic enrollment in increasing participation. According 

to a report to Parliament submitted by the largest organization 

representing unionized workers in the U.K., initial opt-out rates have been 

lower than expected, and their experience has shown the value of 

harnessing inertia to improve outcomes for workers. Moreover, the 

program was designed to further reduce opt-outs because it requires 

automatic re-enrollment of those who opted-out after 3 years.78

Government officials in Canada said that the PRPP program utilizes 

automatic enrollment to increase participation, but it is unclear how 

successful it will be because the program is voluntary for employers.

While all six state efforts we reviewed anticipate using tax-advantaged 

vehicles to encourage participation, state officials and others said Roth 

IRAs, in particular, could help partially address concerns over limited tax 

benefits for lower-income workers. Financial incentives for participation in 

retirement savings programs include preferential tax treatment and 

employer contributions and multiple stakeholders noted that such 

incentives encourage worker participation. The state efforts we reviewed 

all seek to incentivize participation by using vehicles—employersponsored 401(k) plans or workplace-based IRAs—that typically qualify 

for preferential tax treatment. But they do not allow for other financial 

incentives, such as employer contributions, or do so only to a limited 

extent.79 In the absence of other financial incentives, some states, such 

as Illinois and California, are using or considering a Roth IRA vehicle to 

address concerns that lower-income workers may realize little or no 

current tax benefit from savings. Treasury officials and stakeholders said 

a Roth IRA may be beneficial for workers who have little or no current tax 

78 Three years after employers automatically enrolled their workers they would be required 

to re-enroll those who opted out, except for any workers who opted out in the previous 12 

months.

79 Secure Choice programs in California and Illinois are structured as payroll deduction 

IRAs, which do not allow for employer contributions. Efforts in Maryland, Massachusetts, 

Washington, and West Virginia may allow employer contributions at the employer’s

discretion.

Financial Incentives

Page 32 GAO-15-556 Options to Expand Coverage

 
liability but may pay higher taxes in the future.80 Moreover, Treasury 

officials said that Roth IRAs can benefit workers with limited resources by 

allowing them to withdraw contributions tax free under certain 

circumstances. In light of these issues, Illinois enacted the Secure Choice 

program, which uses a Roth IRA vehicle, and California’s Secure Choice 

board commissioned a feasibility study to examine this issue.

Government officials and stakeholders in the countries we reviewed 

pointed to the importance of additional financial incentives, such as 

employer and government matching contributions, in increasing 

participation. For example, New Zealand’s KiwiSaver used a one-time 

“kick-start” contribution of $1,000 New Zealand Dollars (NZD), about $650 

U.S. dollars (USD), as well as matching employer contributions and tax 

benefits, as financial incentives to encourage worker participation in the 

program.81 The former Retirement Commissioner in New Zealand and 

other stakeholders noted that the kick-start has been very popular and 

effective because it is so easily understood by participants, while the tax 

incentive is less well-understood. Government officials attributed the 

higher than expected rate of participation, particularly for those opting in 

to KiwiSaver, to the success of the financial incentives. Similarly, in the 

U.K., the automatic enrollment requirement includes matching 

contributions from the employer and government—employers are 

currently required to contribute 1 percent for a specified range of 

earnings, which will gradually increase to 3 percent in 2018, while the 

government contribution will increase from 0.2 percent to 1 percent. One 

academic noted that these matching contributions are very important for 

low-income workers who can only afford a modest contribution rate.

80 Rather than deducting current contributions, Roth IRAs allow workers to make after-tax 

contributions and later withdraw their savings, including both principal and earnings, tax 

free.

81 The kick-start contribution was available to new members of KiwiSaver until May 21, 

2015. After this date, new members are no longer eligible for this payment.

Page 33 GAO-15-556 Options to Expand Coverage

 
In addition to the key strategies discussed above, state efforts would take 

steps to simplify the overall design and implementation of their programs 

to reduce employer burden and complexity for workers. Specifically, in 

order to mitigate some of the challenges of setting up workplace 

retirement savings programs, state officials seek to (1) limit the 

responsibility and cost for employers, and (2) reduce complexity, cost, 

and investment risk for workers. These efforts would simplify program 

administration and investment management with the goals of lowering 

fees and encouraging broad employer adoption and worker participation. 

However, state officials also noted that this may elevate the role of the 

state in administering these programs and create implementation 

challenges, including how to fund them. Since no state effort has been 

implemented to date, states may be able to draw lessons from 

experiences in the countries we reviewed, as well as other state 

programs. (See appendix II for a full description of the actions states and 

other countries have taken to reduce administrative burden and cost for 

employers.)

To reduce administrative burden and cost for employers, states plan to 

take a number of actions that could offload or help employers with typical 

employer duties in workplace retirement savings programs (see fig. 9).

States Can Learn from 

Other Countries’

Experiences Implementing 

another Key Strategy—

Simplifying Administration 

and Investment 

Management

Page 34 GAO-15-556 Options to Expand Coverage
Figure 9: Actions Selected States Intend to Take to Reduce Employers’ Administrative Burden and Cost for Workplace 

Retirement Savings Programs

Note: See appendix II for a more detailed description of these steps for states and countries we 

reviewed—California, Illinois, Maryland, Massachusetts, Washington, West Virginia, Canada, New 

Zealand, and the United Kingdom.

a While all of the state efforts allow small employers of varying sizes to choose whether to participate 

in the state program, states define “small employer” differently. For example, states that are 

considering requiring employers to offer workplace access, such as California and Illinois, have 

exempted the smallest employers from the requirement—the law in Illinois exempts employers with 

fewer than 25 employees and the law in California exempts employers with fewer than 5 employees.

b Typical employer actions in this graphic are not meant to describe employer duties prescribed by the 

Employee Retirement Income Security Act of 1974 for fiduciaries of employee benefit plans.

Other countries have taken similar steps to reduce administrative burdens 

and costs for employers. For example, the U.K. government created 

NEST to ensure that all employers, particularly small employers, would 

have access to a low-cost program, with the added benefit of diminishing 

Page 35 GAO-15-556 Options to Expand Coverage
the burden on employers of choosing an appropriate provider. NEST 

stakeholders said the existence of a low-cost program with a universal 

public service obligation82 reduces the burden on small employers who 

might otherwise expend considerable time and effort in identifying a 

provider willing to serve them at an acceptable cost. Among other things, 

NEST’s governing board selects and monitors providers, takes on 

fiduciary liability for management of the program’s investments, and does 

not charge employers to set up and use NEST.83 Lastly, NEST is 

responsible for sending out welcome packages to new participants with 

information on how to access the website and create accounts.84

In addition to addressing challenges for employers, state and country 

efforts we reviewed address issues of complexity, cost, and investment 

risk for workers through a variety of approaches (see table 3).

82 NEST has a public service obligation to accept any employer (and any qualifying 

worker) who wishes to use it.

83 The U.K. government required that employers contribute, but decided to phase in 

contribution levels to reduce the burden for employers. Specifically, minimum employer 

contributions are being implemented in three phases from 2012 to 2018. Starting in 

October 2012, employers contributed 1 percent of qualifying earnings. Employer 

contribution levels will increase in October 2017 and finally in October 2018, when 

employers will need to remit required minimum contributions of 3 percent.

84 NEST also has online tools such as communication templates and electronic member 

options for opt-outs to make it easier for employers. In 2012, NEST issued an updated 

pension “jargon buster” to help make pensions’ terminology understandable for

individuals.

Page 36 GAO-15-556 Options to Expand Coverage

 
Table 3: Features in Selected State and Country Efforts to Reduce Complexity, Cost, and Investment Risk for Workers in 

Workplace Retirement Savings Programs

Strategy Description

Potential Issues Cited by 

Stakeholders Experience in Other Countries 

Default 

contribution rate

Set default rate at an 

appropriate level to 

increase savings without 

causing too many workers 

to opt out (e.g., 3 percent 

for Illinois’ Secure Choice).

• Default rate may not be 

sufficient to ensure 

adequate income. 

• To better ensure adequacy, 

California’s Secure Choice 

program may include 

automatic escalation.

• In New Zealand, KiwiSaver’s default 

contribution rate has changed several times 

and is currently set at 3 percent. Stakeholders 

said it was initially reduced from 4 percent to 2 

percent because some workers perceived the 

higher rate as unaffordable. However, most 

workers have remained at the default rate, 

which stakeholders said may not be sufficient.

• The U.K. is phasing in an increase in the 

contribution rate for workers from 0.8 percent 

to 4 percent by 2018.

Structure 

investment 

options to limit 

choice and 

increase scale

Provide a diversified lowcost default fund and limit 

the number of investment 

options or pool funds into a 

single, professionally 

managed account. 

• State efforts would limit 

worker choice to some 

degree. However, providing 

more choice would increase

the program’s burden to 

educate workers.

• In the U.K., the National Employment Savings 

Trust (NEST) uses a low-cost target date 

default fund and limits the number of 

additional investment options to five with 

varying levels of risk. One academic said that 

NEST’s approach has dramatically driven 

down fees. In addition, a consumer advocate 

indicated that the limited number of 

investments also benefits participants by 

simplifying investment decisions.

Investment 

return guarantee

Provide some level of 

guaranteed return to 

minimize investment risk. 

The California Secure 

Choice board

commissioned a feasibility 

study in January 2015 

which will examine options 

for providing a guaranteed 

investment option.

• Cost of guarantee could 

reduce the overall rate of 

return.

• Other strategies may 

provide more cost-effective 

ways to reduce risk, such as 

using a target date 

approach and shifting to 

low-risk assets as workers 

near retirement. 

• The U.K.’s NEST default investment option is 

more conservatively invested during the initial 

period to avoid capital loss. This approach 

aims to normalize the habit of savings before 

introducing risk. 

• New Zealand’s KiwiSaver default investment 

fund is conservatively invested to avoid capital 

loss. Government officials and stakeholders 

said, due to inertia, some workers may remain 

in the conservative fund even when it is more 

suitable for them to invest in options that 

provide the opportunity for higher risk and 

returns.

Portability Provide workers with a 

single account they can 

maintain when changing 

jobs (or working at multiple 

jobs) with participating 

employers.

• Full portability would be 

limited to within the state.

• Increased portability may 

present a disadvantage for 

some employers who view 

their program as a retention 

tool.

• Programs we reviewed in Canada, New 

Zealand, and the U.K., to varying extents, 

allow workers to maintain the same account 

when they change jobs. 

• In New Zealand, workers are only allowed to 

have one KiwiSaver account which can be 

maintained when changing jobs. Government 

officials said that the centralized role of Inland 

Revenue, the country’s tax office, in 

processing payroll deductions facilitates 

portability.

Page 37 GAO-15-556 Options to Expand Coverage
Strategy Description

Potential Issues Cited by 

Stakeholders Experience in Other Countries 

Limit on fees Establish a limit on defined 

fees (e.g., 75 basis points 

for investment management 

fees in Illinois’ Secure 

Choice program, 100 basis 

points in total annual fees in 

Washington’s marketplace).

• Some providers may not 

participate if fee limit is too 

low.

• Setting fee limit too high 

could reduce competitive 

pressure to lower fees.

• In addition to competitive pressure from NEST 

to lower fees, U.K. officials said the 

government decided to set a fee limit of 75 

basis points for employer programs. However, 

one academic said that the fee limit may be 

hard to change once established and further 

noted that it is preferable to impose a broader 

responsibility on the governing board to 

ensure value for money.

Source: GAO analysis of state legislative records, documentation, and testimonial evidence from knowledgeable U.S. and international industry representatives. | GAO-15-556

While successful implementation of these efforts by states will likely 

increase coverage for many private sector workers, some workers in 

those states may remain uncovered. In particular:

• Workers at employers that continue to not offer access to a 

workplace retirement savings program: While all the states that we 

reviewed would allow small employers of varying sizes and selfemployed workers to choose whether to offer access to the state 

program to avoid creating a burden for these employers, many 

stakeholders felt this would leave some key worker populations 

uncovered. For state efforts that would create a voluntary program for 

all employers who are eligible to offer it to their workers, such as 

Massachusetts’ not-for-profit program, stakeholders said many 

employers would still likely not choose to offer workplace access. 

Specifically, one national industry representative said, by definition, 

the employers targeted by state programs have already chosen not to 

offer retirement programs to their workers. Similarly, state and 

national stakeholders felt that the absence of a requirement for 

employers to offer workers access to workplace retirement savings 

programs would significantly lessen any expansion of coverage. Yet 

even those state efforts that would require eligible employers to offer 

workplace access, such as Illinois’ and California’s Secure Choice 

programs, would apply only to employers above a certain employee 

size threshold, 25 and 5 employees, respectively. According to one 

academic, there could be many employers under that size threshold. 

In addition, there are many self-employed workers who may continue 

not to have access to a workplace retirement program. For example, 

while California’s target population is 6.3 million workers who lack 

access to an employer-sponsored plan, California Secure Choice 

board members estimated that there are an additional 2 million 

uncovered Californians who are contractors or self-employed. For this 

While Implementation of 

State Efforts Would Likely 

Increase Coverage, Some 

Private Sector Workers 

May Remain Uncovered

Page 38 GAO-15-556 Options to Expand Coverage
reason, California officials said that the Secure Choice program may 

allow self-employed workers to opt in.

• Ineligible workers: National industry stakeholders said that the state 

efforts would not cover some of the traditionally ineligible 

populations—including part-time and temporary workers—at 

employers that already offer qualifying employee benefit plans.85

Some state efforts that would require employers of a certain size to 

offer workplace access, such as California and Illinois, exempt those 

employers that already offer employee benefit plans, for which 

existing law allows employers to determine which populations are 

eligible. By contrast, Maryland’s proposed program would cover 

workers who are ineligible for the employee benefit plan offered by 

their employer, but only if the employer has 5 or more workers eligible 

for the state program.

Workers who choose not to participate: Since none of the state efforts 

we studied would require workers to contribute—all of these efforts 

allow workers to either opt in or opt out—some workers will choose 

not to participate. As noted above, state efforts that would require the 

use of automatic enrollment will likely achieve broader increases in 

participation than efforts that allow workers to choose whether to opt 

in. For example, one industry study found that 41 percent of those 

surveyed postponed saving for retirement in order to pay down 

student loan debt.86 In addition, a member of the California Secure 

Choice board said that some workers may not understand the value of 

earning investment returns on savings. To help address this, a 

California official said that the marketing materials for Secure Choice 

would need to clearly explain the benefits of participation.

85 For example, qualified pension plans may require employees to attain the age of 21 or 

complete a year of service, whichever is later, before participating. 29 U.S.C. § 1052(a). A 

year of service means not less than 1,000 hours in a 12 month period. In addition, some 

stakeholders noted that certain unionized workers, such as some employed in the service 

sector, may not have a workplace retirement program and could also be excluded if their 

employer already offers a program to other workers.

86American Institute of Certified Public Accountants, “New AICPA Survey Reveals Effect, 

Regrets of Student Loan Debt,” 2013, accessed May 25, 2015, 

http://www.aicpa.org/Press/PressReleases/2013/Pages/AICPA-Survey-Reveals-EffectsRegrets-Student-Loan-Debt.aspx. For more on the effect of student loan debt on the 

financial security of older Americans, see GAO, Older Americans: Inability to Repay 

Student Loans May Affect Financial Security of a Small Percentage of Retirees,

GAO-14-866T (Washington, D.C.: Sept. 10, 2014).

Page 39 GAO-15-556 Options to Expand Coverage

 
• Workers with very low earnings who cannot afford to participate: 

Several stakeholders noted that it may be difficult for very low income 

workers to afford contributions. For example, a representative from 

the California Secure Choice board said that lower income workers 

may need the money for more immediate expenses. Our prior work 

indicates that while Social Security retirement benefits replace a 

higher percentage of earnings for lower income workers, this alone 

may not ensure an adequate retirement income.87 In Canada, a 

representative of an association representing program providers said 

that the PRPP program is targeted to middle income workers, while 

lower income workers who are eligible for other federal government 

income supplements in retirement. Moreover, a representative of an 

employer group noted that the government is motivated to provide 

programs to ensure a minimum level of income in retirement because 

Canadian provinces assume responsibility for the welfare of their 

citizens, and increased purchasing power can have a positive impact 

on the overall economy. In particular, outside of PRPP, Canada 

provides a targeted benefit, Guaranteed Income Supplement, which 

supplements the Canadian universal Old Age Security program to 

ensure low income seniors have a minimum level of income in 

retirement.

87 See GAO, Retirement Income: Ensuring Income throughout Retirement Requires 

Difficult Choices, GAO-11-400 (Washington, D.C.: June 7, 2011). In addition, people age 

65 and older with low income and few assets may qualify for Supplemental Security 

Income (SSI), a means-tested program to provide cash assistance to people who are 

disabled, aged, or both. According to the Congressional Budget Office, the share of 

people age 65 and older who receive SSI is expected to fall from about 5 percent in 2011 

to about 4 percent over the following 10 years. See: Congressional Budget Office, 

Supplemental Security Income: An Overview, December 2012.

Page 40 GAO-15-556 Options to Expand Coverage

 
States face legal uncertainty that could result in legal challenges in 

connection with efforts to expand coverage in workplace retirement 

savings programs for private sector workers, which will continue if no 

action is taken by Congress or relevant agencies, including DOL and 

Treasury.88 For over a decade legal uncertainty has influenced the 

design of state efforts. More recently, four of the six states we studied 

have enacted legislation to increase coverage in workplace retirement 

savings programs and legislators in other states have introduced similar 

bills or have studied potential solutions to expand coverage.89 However, 

state and national stakeholders said these efforts face potential 

challenges because of legal uncertainties created by existing federal 

law—ERISA—and various agency regulations, depending on the type of 

program state efforts intend to create (see fig. 10).

88 As indicated throughout this objective, the findings related to the potential legal 

challenges states could face given existing federal law and regulation arose chiefly out of 

discussions with state and national stakeholders about state efforts and our review of 

relevant documentation of those efforts. State efforts may or may not ultimately 

experience legal challenges and the outcomes of any challenges will depend on the facts 

and circumstances of how each program is implemented. 

89 At least one state not selected for review, Oregon, enacted legislation to increase 

coverage in workplace retirement savings programs. Oregon’s governor signed the 

program into law on June 25, 2015. Among other things, employers would be required to 

automatically enroll their workers into the program established by the Oregon Retirement 

Savings Board unless the employer offers a qualified retirement plan. See appendix IV for 

more information on Oregon’s program. 

States Face Potential 

Challenges with Legal 

Uncertainties That 

Could Delay or Deter 

Their Efforts to 

Expand Coverage 

without Federal 

Action

Page 41 GAO-15-556 Options to Expand Coverage

 
Figure 10: Selected State Efforts to Increase Workplace Retirement Savings Program Coverage Face Multiple Issues that 

Could Cause Legal Uncertainty

Note: This figure reflects the position of state efforts with respect to multiple areas of legal uncertainty 

identified through our review. Circle size indicates the number of states chosen for case studies that 

stakeholders noted were potentially affected by the issue causing uncertainty. For example, 

stakeholders from all 6 states reported that preemption under the Employee Retirement Income 

Security Act of 1974 (ERISA) is a concern, while for only one state (Maryland) was the current legal 

uncertainty regarding the structure of multiple employer plans (MEPs) mentioned as a concern (see 

table 4). To read this figure, follow the line from a state to see which legal uncertainties were 

identified in connection with each state effort. For example, Massachusetts was identified as a state 

that could face uncertainties related to ERISA preemption and comingling of assets. We selected 

these six states for case studies because they were identified as having “leading” state efforts by 

relevant government officials and knowledgeable industry representatives. For states that have 

enacted programs or marketplaces, we have focused on the issues potentially affecting those 

enacted programs in this figure. For the two states without enacted programs, Maryland and West 

Virginia, we identify the issues potentially affecting the state’s most recent substantive legislative 

effort or other recent approaches stakeholders discussed. In addition to the 6 states we chose for 

case studies that are categorized in the graphic, some of the other 23 states we identified—listed in 

appendix IV—may experience these same issues causing similar uncertainties, depending on the 

type of programs these state efforts intend to create.

Page 42 GAO-15-556 Options to Expand Coverage
a Some states have considered using a MEP structure, but state and national stakeholders thought a 

state’s ability to use this structure was uncertain because of conflicting Department of Labor (DOL) 

and Department of the Treasury (Treasury) regulations and concerns with MEP administration.

b If certain state efforts based on payroll deduction Individual Retirement Accounts (IRAs) are not 

determined to be employee benefit plans, according to some state and national stakeholders and 

government officials, there will be concerns about the inapplicability of certain worker protections and 

DOL oversight.

c Generally, ERISA preempts any state law relating to any employee benefit plan for private sector 

workers (29 U.S.C. § 1144(a)), which some stakeholders and DOL officials note causes significant 

uncertainty for these state programs.

d Stakeholders questioned the legal feasibility of providing participants with guaranteed returns for 

payroll deduction IRAs.

e It is uncertain whether states can pool assets of plans for private sector workers with those of public 

sector workers in a group trust without running afoul of relevant Treasury regulations regarding 

commingling of assets, or raising concerns under ERISA’s fiduciary provisions.

While stakeholders noted multiple issues causing legal uncertainties for 

state efforts, the most prevalent and pervasive was ERISA preemption. 

Specifically, ERISA preempts, or invalidates, any and all state laws that 

“relate to” any private-sector employee benefit plan.90 Generally, the 

“relate to” provision in ERISA could be applicable to state laws that either 

directly regulate employee benefit plans or, in some cases, only indirectly 

affect such plans. For example, a state law that mandates the way in 

which employee benefit plans are administered may be determined to 

“relate to” such plans and may, therefore, be preempted. In this way, 

ERISA’s preemption provision enables employers to establish uniform 

plans and administrative schemes, preventing them from having to 

comply with different requirements for employees located in different

states. Whether ERISA preempts a state law has historically been 

determined by federal courts,91 so states may face litigation. One 

national stakeholder indicated that it might be beneficial for a state to 

implement a program and go through resulting litigation to resolve some 

of the areas of legal uncertainty and clear the way for other states to 

implement similar programs. However, other state and national 

stakeholders were concerned about the potential consequences for 

workers and employers should an implemented program later be 

90 29 U.S.C. § 1144(a).

91 Stakeholders pointed to decisions by federal appeals courts that may provide some 

precedent for state questions regarding ERISA preemption. Retail Indus. Leaders Ass’n v. 

Fielder, 475 F.3d 180 (4th Cir. 2007) (striking down state law requiring certain employers 

to spend at least 8 percent of their total payroll on employees’ health insurance) and 

Golden Gate Rest. Ass’n v. City & County of San Francisco, 546 F.3d 639 (9th Cir. 2008), 

cert. denied, 561 U.S. 1024 (2010) (upholding a similar state law).

ERISA Preemption

Page 43 GAO-15-556 Options to Expand Coverage

 
preempted. Noted implications for employers and workers included that 

the state program might lose its preferential tax treatment or create risk 

for employers that choose to offer the programs. Given these implications 

of uncertainty regarding ERISA preemption, state efforts to expand 

access to millions of workers and address the retirement savings shortfall 

may be delayed or deterred.

Based on our interviews with state and national stakeholders and 

government officials, none of the state efforts we reviewed are immune 

from legal uncertainty caused by ERISA preemption, but the type of 

uncertainty differs depending on the details of the state efforts.

• Employee benefit plan programs. For states that are attempting to 

use an employee benefit plan, such as a 401(k) plan or SIMPLE IRA, 

DOL officials told us that it is unclear whether a state could create a 

program without being preempted by ERISA because it is unclear 

what level of state effort would “relate to” employee benefit plans.92

For example, Massachusetts is the furthest along implementing an 

effort that would create a 401(k) plan that not-for-profit employers with 

20 or fewer employees could adopt, but national stakeholders had 

mixed opinions about whether its program will be preempted if legally 

challenged. Among other things, a Massachusetts official said that the 

state plans to take on administrative responsibilities and oversight of 

the program’s service providers and will charge employers who 

choose to offer the program, but employers will still be plan 

fiduciaries.93

• Payroll deduction IRA programs. Partly to avoid uncertainty caused 

by ERISA preemption, four of the six states we examined would 

create programs using payroll deduction IRAs because by complying 

with relevant DOL regulations such IRAs are not employee benefit 

92 National stakeholders said that states that may be considering multiple employer plans 

would experience similar uncertainty. Multiple employer plans are a type of employee 

benefit plan covering employees of more than one employer. See GAO-12-665. 

93 The Massachusetts official told us that each participating employer would be 

considered to have created its own plan, characterizing the state’s effort as development 

of a volume submitter 401(k) plan, which is a type of employee benefit plan that is typically 

pre-approved by the Internal Revenue Service. 

Page 44 GAO-15-556 Options to Expand Coverage

 
plans and are not subject to ERISA.94 However, programs relying on 

payroll deduction IRAs could run into similar preemption uncertainty 

as state efforts with employee benefit plans because the DOL 

regulation does not address some key questions. First, the regulation 

was promulgated primarily to provide guidance to employers and, as 

DOL officials noted, it does not specify whether a state can offer 

payroll deduction IRAs to private sector workers. In addition, DOL 

officials said the regulation does not address whether certain program 

features states intend to use would cause the programs to be 

considered employee benefit plans.95 For example, some states 

would like to capitalize on the potential advantages of using automatic 

enrollment for workers and requiring certain employers to offer 

workplace access to retirement savings programs. If these features 

cause the programs to be considered employee benefit plans, 

stakeholders said there would be uncertainty regarding preemption.

To address this uncertainty, state and national stakeholders thought DOL 

and Treasury should provide guidance and one thought DOL should 

clarify its regulation on payroll deduction IRAs.96 On July 13, 2015, the 

President announced that DOL will propose a set of rules by the end of 

the year to provide a clear path forward for states to create retirement 

savings programs. DOL officials said the agency’s role is limited under 

ERISA without further Congressional action—it can revise and 

94 Payroll deduction IRAs are not considered employee benefit plans under ERISA so long 

as (1) there are no employer contributions, (2) employee participation is completely 

voluntary, (3) without endorsing the program, the employer limits its involvement to 

permitting the program to be publicized and providing for contributions to be made through 

payroll deduction, and (4) the employer receives only reasonable compensation for any 

services rendered in connection with the program. 29 C.F.R. § 2510.3-2(d). This, 

combined with Interpretive Bulletin 99-1, provided a roadmap in the form of a “safe harbor” 

to make it easier for employers to offer payroll deduction IRA arrangements that will not 

create employee benefit plans. Interpretive Bulletin 99-1; Payroll Deduction Programs for 

individual Retirement Accounts, 64 Fed. Reg. 33,000 (June 18, 1999) (codified at 29 

C.F.R. § 2509.99-1). If an employer maintains neutrality with respect to an IRA sponsor in 

all its communications, it will not be viewed as endorsing the program. In addition, 

employers may reduce any administrative burden by selecting as few as one IRA sponsor 

to receive payroll contributions, and may be reimbursed by the IRA sponsor for the actual 

costs of operating the program.

95 Some state laws, including those in California and Illinois, specify that the state cannot 

implement the program if it is determined to be an ERISA-covered employee benefit plan.

96 On May 18, 2015, 26 Senators sent a letter to the President requesting that he ask DOL 

and Treasury to remove any potential uncertainty with respect to the application of federal 

law to state efforts by clarifying a number of issues and providing guidance. 

Page 45 GAO-15-556 Options to Expand Coverage

 
promulgate regulations but there is nothing in ERISA that would allow it to 

waive preemption for state efforts. In one case, Illinois law explicitly 

requires the state to request an opinion or ruling from DOL on the status 

of the program with respect to ERISA before the program can be 

implemented. An Illinois stakeholder said that the state does not have to 

wait for a DOL opinion to implement the program, but implementation 

would stop if DOL sent a letter saying the Illinois program had to comply 

with ERISA.97 While Illinois and other states may reach out to DOL for an 

opinion, in June 2015, DOL officials told us they had not received any 

such requests. Even if they did, DOL officials said the department does 

not have a formal process for issuing such opinions, and the opinion 

would not necessarily be binding in court. As a result, DOL’s opinion may 

not give states the level of certainty regarding preemption they need to 

proceed.

Similarly, state and national stakeholders said state experimentation with 

various approaches could help determine which work best for expanding 

coverage in workplace retirement savings programs, so some have called 

for increased flexibility with respect to ERISA preemption. Given the need 

of many workers to increase their retirement savings, and limitations on 

DOL’s ability to provide flexibility regarding ERISA preemption, 

stakeholders have suggested a number of ways to address uncertainty 

and facilitate state efforts to expand coverage in workplace retirement 

savings programs:

• Amend ERISA’s preemption provision. Some stakeholders 

suggested Congress could amend ERISA’s preemption provision by 

adding an exception for state efforts that expand coverage in 

workplace retirement savings programs.

• Pilot program. DOL officials told us a pilot program proposed in the 

Fiscal Year 2016 President’s Budget Submission, issued February 2, 

2015, could help identify actions states could take to effectively 

97 The Illinois law states: “The Board shall request in writing an opinion or ruling from the 

appropriate entity with jurisdiction over the federal Employee Retirement Income Security 

Act regarding the applicability of the federal Employee Retirement Income Security Act to 

the Program. The Board may not implement the Program if the IRA arrangements offered 

under the Program fail to qualify for the favorable federal income tax treatment ordinarily 

accorded to IRAs under the Internal Revenue Code or if it is determined that the Program 

is an employee benefit plan and State or employer liability is established under the federal 

Employee Retirement Income Security Act.” 820 Ill.Comp. Stat. 80/95 (2015).

Page 46 GAO-15-556 Options to Expand Coverage

 
expand coverage in workplace retirement savings programs and 

determine if new, or changes to, DOL regulations or guidance are 

needed.98 Under this proposal DOL would select a small number of 

states to implement different approaches to increasing coverage in 

workplace retirement savings programs. As part of such a pilot 

program, DOL officials said the department would need statutory 

authority from Congress to temporarily waive ERISA preemption for 

the pilot program timeframe in the selected states. They said some of 

the appropriations DOL may receive pursuant to the program, should 

it be authorized, could be used to fund start-up costs for state efforts 

given the potential implementation challenges noted by states. A key 

part of the pilot program would also involve data collection on state 

efforts to provide government and experts an opportunity to see which 

strategies will actually increase coverage before making more 

permanent changes to permit state efforts.99

• Safe harbor. DOL and a national stakeholder said Congress could 

authorize DOL to establish a regulatory safe harbor for certain state 

efforts. DOL officials said the pilot program could even be considered 

a less permanent version of a safe harbor—albeit limited to a small 

number of states. To address other areas of legal uncertainty under 

ERISA, Congress has sometimes authorized DOL to prescribe safe 

harbors setting out conditions under which entities can operate 

without running afoul of the law. For example, PPA provided for DOL 

to prescribe by regulation a safe harbor for plans adopting automatic 

enrollment that, among other things, invest plan contributions in a 

98 Office of Management and Budget, Fiscal Year 2016 Budget of the U.S. Government

(Washington, D.C., Feb. 2, 2015). Accessed on Feb. 12, 2015 at 

www.whitehouse.gov/omb/budget/overview. To better support state efforts, the 

President’s Budget Submission would set aside $6.5 million at DOL, along with waiver 

authority, to allow a limited number of states to implement state-based automatic 

enrollment IRAs or 401(k)-type programs. 

99 While DOL’s Congressional Budget Justification specifies that funding would also allow 

management of grants by DOL’s Chief Evaluation Office, which evaluates the 

performance and effectiveness of programs and activities, DOL officials told us that its 

oversight strategy still needs to be determined. Our previous work found gaps in payroll 

deduction IRA oversight and asked Congress to consider whether payroll deduction IRAs 

should have some direct DOL oversight. See GAO-08-590. DOL officials noted that they 

were unsure whether the pilot program would effectively grant DOL oversight authority 

over payroll deduction IRAs should those states that would use them be included in the 

program. 

Page 47 GAO-15-556 Options to Expand Coverage

 
qualified default investment alternative (QDIA).100 DOL promulgated a 

regulation describing the type of investments that qualify as QDIAs.101

In addition to the uncertainty caused by ERISA preemption, state and 

national stakeholders and government officials shared other issues 

causing legal uncertainty. For example, DOL officials were concerned 

with states offering payroll deduction IRA programs because they would 

presumably fall outside of ERISA and DOL regulation. They said the 

protections provided by ERISA are important for employee benefit plan 

participants and that DOL has already developed a proven regulatory 

framework. Stakeholders said other legal uncertainty is caused by 

conflicting DOL and Treasury policies related to multiple employer plans, 

and questions about whether certain Treasury regulations allow states to 

implement a guaranteed return, or pool assets to achieve scale. For these 

other issues, states will continue to face uncertainty under existing DOL 

and Treasury regulations (see table 4).

100 120 Stat 980, § 624(a) (codified at 29 U.S.C. § 1104(c)(5)).

101 Final regulations issued by DOL specify four types of QDIAs. Default Investment 

Alternatives Under Participant Directed Individual Account Plans, 72 Fed. Reg. 60,452 

(Oct. 24, 2007) (codified at 29 C.F.R. § 2550.404c-5(c)(4)). They are (1) a product with a 

mix of investments that takes into account an individual’s age (such as a target-date fund), 

(2) an investment service that allocates assets according to an individual’s age (such as a 

managed account), (3) a product with a mix of investments that takes into account the 

characteristics of the group of employees as a whole, rather than each individual (such as 

a balanced fund), or (4) a capital preservation fund that the sponsor may use as a QDIA 

for the first 120 days of an individual’s participation to simplify administration if the worker 

opts out of the plan.

Other Issues Causing Legal 

Uncertainty

Page 48 GAO-15-556 Options to Expand Coverage

 
Table 4: Other Issues Cited by Stakeholders that Cause Legal Uncertainty for State Efforts to Increase Workplace Retirement 

Savings Programs

Protection for workers in Individual 

Retirement Accounts (IRAs)

For state efforts that would create programs with payroll deduction IRAs, state and 

national stakeholders and government officials expressed concern about the 

inapplicability of the regulatory, oversight, and enforcement framework that the 

Department of Labor (DOL) has already developed for employee benefit plans—

regarding disclosures, handling of employee contributions, and service provider 

arrangements, among other things.a Given these concerns, stakeholders said states 

may have to develop their own regulatory structure to protect participants in the state 

program.

Multiple Employer Plan (MEP) Structure State and national stakeholders thought a state’s ability to use a MEP was uncertain 

because DOL and Department of the Treasury (Treasury) regulations conflict regarding 

the ability of multiple unrelated employers to use a MEP structure. GAO has previously

reported that while the Internal Revenue Service (IRS) has granted preferential tax 

treatment to some MEPs, DOL has taken the view that under ERISA only employers 

may establish or maintain a plan, and employers who sponsor a MEP must share control 

of the plan and an employment based common nexus or other organizational 

relationship unrelated to the provision of benefits.b In addition, stakeholders cited certain 

concerns with MEP administration, which need to be addressed to protect workers 

against losses and fraud before states can be certain about the legal feasibility of using 

this structure.

Guarantee Some stakeholders questioned whether providing participants with guaranteed returns, 

a feature proposed in California’s law, would prevent the program from qualifying as an 

IRA. Guarantee and other annuity-like features may make these accounts look like 

defined benefit plans in which the state program, not the individual workers, bears the 

investment risk. California’s legal feasibility study will answer these questions before the 

program can be implemented.

c

Commingling assets with other state 

programs

Some states may attempt to achieve scale by capitalizing on the size of retirement plans 

for public workers and pooling funds for both programs, but stakeholders said it remains 

to be seen whether this approach will be approved pursuant to relevant Treasury 

guidance regarding the commingling of funds from public and private sector programs.d

A Massachusetts official told us Massachusetts plans to utilize this approach, but as of 

June 2015 was still waiting for final Treasury approval. 

Source: GAO summary of interviews with state and national stakeholders and government officials. | GAO-15-556.

a DOL administers and enforces Title I of the Employee Retirement Income Security Act of 1974 

(ERISA). DOL has issued guidance to employers related to payroll deduction IRAs regarding when 

such an arrangement would not be an employee benefit plan subject to DOL’s jurisdiction. As long as 

employers follow guidelines set by DOL for managing payroll deduction IRAs, employers are not 

subject to the fiduciary requirements in ERISA Title I that apply to employee benefit plans, such as 

401(k) plans. Similarly, for state efforts that would use Savings Incentive Match Plan for Employees 

(SIMPLE) IRAs, DOL noted that because these are IRAs, they are not subject to the full range of 

ERISA protections.

b DOL Advisory Opinion 2012-04A, May 25, 2012. GAO. Private Sector Pensions: Federal Agencies 

Should Collect Data and Coordinate Oversight of Multiple Employer Plans. (Washington, D.C., Sept. 

13, 2012). GAO-12-665.

c California’s Secure Choice board decided to put in place a two-step procurement process to 

separate the legal analysis and market feasibility study required by enacted legislation. In addition, 

the California law prohibits implementation of the program if the IRA arrangements offered fail to 

qualify for favorable tax treatment ordinarily accorded to IRAs.

d IRS Rev. Rul. 2011-1, 2011-1 C.B. 251.

Page 49 GAO-15-556 Options to Expand Coverage
Millions of workers in the United States have little or no retirement 

savings, an issue exacerbated by the lack of access to workplace 

retirement savings programs for many of them. Without this coverage, a 

significant number of Americans face the prospect of financial insecurity 

in retirement, and federal and state safety net programs face the potential 

for bearing increased financial burdens. Despite several major changes to 

federal law during the last few decades, federal action has not spurred 

such an increase in coverage. Recognizing this need to increase 

coverage, and thereby increase retirement savings, some states have 

undertaken efforts that would require or encourage employers to expand 

access to workplace retirement savings programs. However, the existing 

framework of federal law and regulation was not designed to foster a 

state role in providing coverage to private sector workers, and the 

resulting uncertainties about the application of that framework raise 

questions about the future and success of such efforts. Changes at the 

federal level—Congressional action combined with revised regulations 

and guidance within the authority of relevant agencies, particularly DOL—

could help address these uncertainties. These actions would require 

difficult policy choices and involve weighing the benefits of uniformity and 

consistency provided by ERISA preemption against the potential value of 

state efforts to adopt innovative approaches to address the lack of 

sufficient retirement savings by their citizens. Moreover, along with the 

known regulatory challenges already identified by state officials and 

experts we interviewed, other areas of uncertainty could emerge through 

the experience of states implementing these programs.

Congress has several options for legislative action, each of which 

highlight some of the difficult policy choices and trade-offs that would 

need to be considered. For example, amending the ERISA preemption 

provision to add exceptions for any of the state efforts discussed here 

would provide states with certainty about which types of efforts they could 

undertake. It might also set a precedent for additional exceptions that 

could diminish the nationwide uniformity and stability the preemption 

provision is intended to create. Alternatively, a pilot program could permit 

states to test, with DOL involvement, innovative approaches to increasing 

coverage. However, by their very nature, pilot programs involve a limited 

number of states and therefore would not create certainty for states not 

included in the pilot that wish to expand coverage. Pilot programs are 

generally temporary in nature so even included states may not have the 

benefit of long-term certainty about the feasibility of their efforts. Finally, 

through the creation of a statutorily authorized safe harbor, DOL could 

identify a small number of options available to states that would not run 

afoul of ERISA’s preemption provision, thereby retaining some degree of 

Conclusions

Page 50 GAO-15-556 Options to Expand Coverage
ERISA uniformity for employers. However, the development of a safe 

harbor option that would appeal to states and employers while retaining 

key protections for workers could be challenging, and little is known about 

the relative effectiveness of any particular model to actually increase 

coverage and retirement savings.

To address the legal uncertainty stemming from ERISA preemption of 

state laws while maintaining the advantages of ERISA for both employers 

and workers, Congress should consider providing states limited flexibility 

to pursue efforts to increase coverage under workplace retirement 

savings programs. To do this, Congress could, for example, direct or 

authorize the Secretary of Labor, in consultation with the Secretary of the 

Treasury, to (1) promulgate regulations prescribing a limited safe harbor 

under which state workplace retirement savings programs with sufficient 

safeguards would not be preempted and would receive tax treatment 

comparable to that provided to private sector workplace retirement 

savings programs, or (2) create a pilot program under which DOL could 

select a limited number of states to establish workplace retirement 

savings programs subject to DOL and Treasury oversight. In either case, 

any such initiative should ensure that state programs include adequate 

participant protections and are subject to agency oversight, appropriate 

reporting requirements, and meaningful evaluation.

To facilitate state efforts to expand coverage in workplace retirement 

savings programs, we recommend that the Secretary of Labor and

Secretary of the Treasury consider their authority and review and revise, 

if necessary, existing regulations and guidance causing uncertainty for 

state efforts. For example, the Secretary of Labor could direct the 

Employee Benefits Security Administration’s (EBSA) Assistant Secretary 

to revise Interpretive Bulletin 99-1 to clarify whether states can offer 

payroll deduction Individual Retirement Accounts (IRAs) and, if so, 

whether features in relevant enacted state legislation—such as automatic 

enrollment and/or a requirement that employers offer a payroll 

deduction—would cause these programs to be treated as employee 

benefit plans.

We provided a draft of this report to DOL, Treasury, the Pension Benefit 

Guarantee Corporation (PBGC), and the Social Security Administration 

(SSA) for their review and comment. PBGC and SSA did not provide 

comments. DOL provided written comments, which are reproduced in 

Matter for 

Congressional 

Consideration

Recommendation for 

Executive Action

Agency Comments 

and Our Evaluation

Page 51 GAO-15-556 Options to Expand Coverage
appendix VII. DOL also provided technical comments, which we have 

incorporated where appropriate. Treasury provided oral and written 

technical comments, which we have incorporated where appropriate. 

Treasury generally agreed with the findings, conclusions, and 

recommendation of this report. 

In its written comments, DOL generally agreed with the findings and 

conclusions of the report. They noted that inadequate retirement savings 

has a detrimental impact on the well-being of older Americans and 

increases the burden on state and federal retirement income support 

programs. In addition, DOL noted that many of the states engaged in 

efforts to address this issue by expanding coverage in workplace 

retirement savings programs have questions about preemption by ERISA.

DOL generally agreed with the recommendation of the report. To address 

uncertainty facing state efforts, EBSA is initiating a regulatory agenda 

entitled “Saving Arrangements Established by States for NonGovernmental Employees,” which will appear in the Fall 2015 SemiAnnual Regulatory Agenda. EBSA expects to publish a Notice of 

Proposed Rulemaking by the end of 2015. We agree that DOL should 

review and revise existing regulations and guidance to accomplish all that 

can be done administratively to facilitate state efforts to expand coverage

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of Labor, 

the Acting Director of the PBGC, the Acting Commissioner of the Social 

Security Administration, the Secretary of the Treasury, and other 

interested parties. In addition, the report will be available at no charge on 

the GAO website at http://www.gao.gov.

Page 52 GAO-15-556 Options to Expand Coverage
If you or your staff have any questions about this report, please contact 

me at (202) 512-7215 or jeszeckc@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix VIII.

Sincerely yours,

Charles A. Jeszeck

Director, Education, Workforce, 

and Income Security

Page 53 GAO-15-556 Options to Expand Coverage
Appendix I: Objectives, Scope, and 

Methodology

Our objectives for this study were to examine: (1) recent estimates of 

workplace retirement savings program coverage, including eligibility and 

participation, and characteristics of workers who lack coverage, (2) 

strategies used by states and other countries to expand coverage among 

private sector workers, and (3) potential challenges states could face 

given existing federal law and regulations. 

To answer our research objectives, we used several different 

approaches. We examined data on private sector workers. We reviewed 

relevant research, selected state and federal legislation,1 and federal 

laws, regulations, and guidance. In addition, we interviewed state, 

national, and international industry stakeholders and government officials, 

including those at the Department of Labor’s (DOL) Employee Benefits 

Security Administration, the Department of the Treasury (Treasury), the 

Pension Benefit Guaranty Corporation, and the Social Security 

Administration (SSA). Section 1 describes the information sources and 

empirical methods we used to examine workplace access and 

participation across various characteristics of workers. Section 2 

describes the methodology by which we identified state efforts and 

selected case studies, and reviewed the strategies they use and the 

potential challenges they could face. Section 3 describes similar 

methodology for our international review.

To answer this question, we obtained information from the Survey of 

Income and Program Participation (SIPP) along with taxpayer data from 

W-2 filings, reviewed relevant literature, and conducted interviews with 

academics, industry stakeholders, and agency officials.

SIPP is a nationally representative survey conducted by the U.S. Census 

Bureau. This panel survey is conducted generally every 4 years and 

1 To provide context, we compiled a list of national legislative efforts proposed in recent 

years to expand coverage. We compiled this list through interviews with federal agency 

officials and knowledgeable industry representatives and targeted searches of legislative 

databases. See appendix III for additional information on our methodology and the 

selected list of federal legislative proposals. 

Appendix I: Objectives, Scope, and 

Methodology

Section 1: Examining 

Estimates of Retirement 

Program Access and 

Participation and 

Characteristics of Workers 

Who Lack Coverage

SIPP and IRS/SSA data

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Appendix I: Objectives, Scope, and 

Methodology

resurveys participants every 4 months in a series of “waves” for the 

duration of their panel. Within each wave, Census administers a core 

survey consisting of questions that are asked at every interview, and 

several modules relating to a particular topic. We used data from the core 

survey and the topical module on retirement and pension coverage 

fielded from January-April 2012, the most recent data available. The 

survey collected data on about 52,000 individuals, including detailed 

information on work history, demographics, assets, and income.

In comparison to other nationally representative surveys, SIPP has

several main advantages. First, SIPP collects separate information on 

defined benefit (DB) and defined contribution (DC) plans. Other surveys, 

such as the Current Population Survey, do not distinguish between 

income from and participation in DB and DC plans. Second, the SIPP 

sample is larger than comparable surveys, such as the Survey of 

Consumer Finances (SCF). Consequently, it is possible to produce point 

estimates for demographic subcategories with a higher degree of 

reliability. Further, in comparison to SCF, which oversamples wealthy 

households, SIPP oversamples lower-income households—arguably an 

important component of an analysis of income security. 

Despite its advantages, SIPP has two limitations for our analysis. First, as 

with most survey data, SIPP data are self-reported. This can be 

problematic for the reporting of data on income sources and retirement 

program participation. For example, respondents might incorrectly report 

that they participate in a workplace retirement savings program when they 

do not. Second, despite the fact that SIPP differentiates between 

participation in a DB or DC plan, it does not contain full information on 

whether an individual’s employer offers a DB plan.2

Previous research has also found evidence of under-reporting of 

retirement program participation by comparing self-reported survey 

responses to W-2 tax records.3 Specifically, W-2 records include 

information on contributions to tax-advantaged retirement programs. By 

2 The survey contains catch-all questions for whether an individual’s employer offers a DC 

plan, but it does not contain similar questions for DB plans. Specifically, those who are not 

included in their employer’s plan are not asked whether their employer offers a DB plan.

3 Irena Dushi, Howard Iams, and Julie Lichtenstein, “Assessment of Retirement Plan 

Coverage by Firm Size, Using W-2 Tax Records,” Social Security Bulletin, Vol. 71, No. 2, 

2011.

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Methodology

comparing the SIPP data to W-2 tax records, researchers can identify 

under-reporting of program participation. Similar to the approach used in 

prior research, we worked with Census to create a W-2 adjusted indicator 

of participation. If a respondent reported they did not participate, but 

actually had positive contributions to a workplace retirement program 

reported on their W-2, they were re-classified as participating. The data 

did not allow us to correct for the possibility that some participants may 

report they are participating when in fact they did not. Specifically, if the 

respondent said “yes, they do participate” but there is no contribution 

evident in the W-2, we did not recode them as a no because we cannot 

rule out the possibility that their employer offers a defined benefit plan or 

defined contribution plan in which only the employer contributes.

We conducted a data reliability assessment of selected SIPP variables by 

conducting electronic data tests for completeness and accuracy, 

reviewing documentation on the dataset, or interviewing knowledgeable 

officials about how the data are collected and their appropriate uses. For 

the purposes of our analysis, we found the variables we ultimately 

reported on to be sufficiently reliable. 

We compared our estimates to estimates provided by Census using the 

SIPP data linked to tax records on retirement program contributions. 

Census replicated our analysis using the public use SIPP data with 

consistent results. Further, the results of our regression analysis of 

participation using the self-reported measure in the public use data and 

the W-2 adjusted measure were very similar in the size and significance 

of variables included in our analysis.

In our sample we included respondents who are age 18 and older 

working in private sector jobs. For all SIPP analyses, we used SIPP 

individual-level weights to compute point estimates. Table 5 provides an 

overview of the number of private sector workers participating in 

workplace retirement savings programs using the W-2 adjusted data.

Data Reliability

Methods for Examining 

Retirement Program Coverage

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Methodology

Table 5: Estimated Number of Private Sector Workers Participating or Not in a Workplace Retirement Savings Program by 

Characteristic, 2012

Participating Not participating Total

Income Lowest quartile 5,625,260 19,944,105 25,569,365

2nd quartile 11,293,685 14,199,960 25,493,645

3rd quartile 17,053,194 8,590,707 25,643,901

Highest quartile 21,381,170 4,194,392 25,575,562

Firm size More than 1,000 employees 30,280,100 14,053,868 44,333,968

501 to 1,000 employees 3,110,245 1,711,840 4,822,085

101 to 500 employees 8,087,690 4,999,187 13,086,877

51 to 100 employees 3,590,040 3,435,478 7,025,518

50 or fewer employees 10,267,361 22,746,663 33,014,024

Work hours Part time 10,684,855 20,833,892 31,518,747

Full time 44,651,910 26,111,815 70,763,725

Occupation Management, business, science, and arts 23,766,398 9,151,051 32,917,449

Service 5,299,478 13,165,601 18,465,079

Sales and office 14,701,802 12,473,433 27,175,235

Natural resources, construction, and maintenance 4,270,927 5,348,277 9,619,204

Production, transportation, and material moving 7,320,757 6,784,747 14,105,504

Age 18-24 2,816,783 10,407,552 13,224,335

25-54 41,120,368 29,170,859 70,291,227

55-64 9,693,698 5,219,684 14,913,382

65 and older 1,722,527 2,131,002 3,853,529

Source: GAO analysis of 2012 data from the Survey of Income and Program Participation (SIPP) and the U.S. Census Bureau. | GAO-15-556.

To determine the extent to which private sector workers are covered by 

workplace retirement savings programs and the characteristics of those 

who lack coverage, we reviewed relevant literature and interviewed 

researchers, stakeholders, and agency officials to discuss relevant 

research methodologies and findings. This review informed our analysis 

of SIPP and Census data. Specifically, we examined the likelihoods, or 

odds, of the following outcomes: 1) participating in a retirement program 

(among all private sector workers), 2) having an employer that offers a 

retirement program (among all private sector workers), 3) being eligible 

(among those offered programs), and 4) participating in a program 

(among those who are eligible). The regression models we used to 

estimate these likelihoods included variables for the following 

characteristics of workers: income, occupation, education, age, gender, 

marital status, race/ethnicity, size of the firm they worked for, whether 

they worked full-time or part-time, whether they worked for the full year or 

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Appendix I: Objectives, Scope, and 

Methodology

only part of the year, and whether they were or were not union members. 

We examined regression results from the SIPP public-use data and the 

linked W-2 data. As described in the body of this report and appendix VI, 

the results were very similar in the size and significance of variables 

included in our analysis for both measures of participation.

To understand factors that may be associated with access to workplace 

retirement programs and inform the methodology for our study, we 

conducted a literature review. A formal literature search was conducted 

by a GAO reference librarian using the Proquest database. In addition, 

we coordinated with the Congressional Research Service and 

Congressional Budget Office to identify relevant studies, and checked 

with DOL and SSA officials as to whether they would recommend any 

additional materials. Finally, during interviews with outside researchers, 

we asked for recommendations for other noteworthy studies. We 

performed these searches and identified articles from June 2014 to 

September 2014.

Our review primarily focused on studies from the last five years (2009-

2014). The team reviewed article abstracts and identified those which 

were most relevant to our research objectives and developed detailed 

spreadsheet summaries of study goals, methodology, and findings.

To review the strategies used in state efforts4 to expand private sector 

retirement coverage and the potential challenges they could face given 

existing federal law and regulations, we compiled a list of recent state 

efforts and conducted case studies in six states.

To provide context on the number and type of recent state efforts we (1) 

developed a list of recent efforts in 29 states by reviewing industry 

4 We use “state efforts” to refer to a range of activities that may have occurred in a state, 

including the introduction of a bill, executive action, studies, or the enactment of 

legislation.

Literature Review and 

Interviews

Section 2: Examining 

Strategies Used in State 

Efforts to Expand 

Coverage and the 

Potential Challenges 

States Could Face Given 

Existing Federal Law and 

Regulations

List of State Efforts

Page 58 GAO-15-556 Options to Expand Coverage

 
Appendix I: Objectives, Scope, and 

Methodology

websites and publications, interviewing federal officials and 

knowledgeable industry representatives, and conducting targeted 

searches of legislative databases; (2) confirmed the completeness of the 

list of states we identified at multiple points during the process with 

knowledgeable stakeholders; and (3) described the strategies in these 

state efforts. See appendix IV for a full description of our methodology 

and results.

We selected a limited number of state efforts for case studies in October 

2014 to provide non-generalizable examples of the types of efforts 

underway to expand coverage. To do so, we asked officials from DOL 

and Treasury and representatives from the Pension Rights Center, the 

American Society of Pension Professionals and Actuaries, and the 

retirement issues group AARP to recommend “leading” state efforts. They 

recommended eight states: California, Connecticut, Illinois, Maryland, 

Massachusetts, Oregon, Washington, and West Virginia. From those 

eight states, we selected six for case studies based on the following 

criteria: 

• States that enacted, or were expected to enact, legislation that leads 

to implementation of a substantive effort to expand coverage. 

• Some parity in the numbers of states from each of the two broad 

categories of state efforts we initially identified—automatic IRA- and 

other voluntary account-type programs. 

• State efforts with some differences in how the broad categories were 

approached. 

Based on these criteria, we selected California, Illinois, Maryland, 

Massachusetts, Washington, and West Virginia. We did not select 

Oregon because the state’s Retirement Savings Task Force had just 

completed a study that recommended the program have certain 

characteristics,5 but any legislative proposal that might utilize those 

recommendations would not be available until 2015 at the earliest. We did 

not select Connecticut because its recent legislation and historical context 

were similar to other states we selected.

5 Oregon Retirement Savings Task Force, Report and Recommendations of the Oregon 

Retirement Savings Task Force: Created and Tasked Pursuant to HB 3436 (2013). (Sept.

15, 2014)

State Case Studies

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Methodology

To conduct case studies in the six states, we reviewed applicable GAO 

and academic research and legislative documentation on each state’s 

effort. Where available, we reviewed status updates and final reports by 

the state government or appointed task force or board. In addition, we 

interviewed national industry stakeholders and academics with knowledge 

of state efforts, and key stakeholders in the states including, where 

applicable, elected state officials, state government officials, board or task 

force members, and employer, worker, and industry representatives. We 

asked about key features of the state efforts and advantages, 

disadvantages, and challenges of the strategies in the state efforts. We 

conducted some of these interviews in person in California, Illinois, and 

Washington.

To examine strategies used by other countries to expand coverage and 

identify lessons learned for the United States, we studied efforts in three 

countries that have voluntary workplace retirement systems—Canada, 

New Zealand, and the United Kingdom (U.K.).6 Our review provides nongeneralizable examples of the types of efforts underway to expand 

coverage outside the U.S. We conducted an initial review of workplace 

retirement savings programs in Organisation for Economic Co-operation 

and Development (OECD) countries and consulted with knowledgeable 

industry stakeholders at the OECD and World Bank, among others. Given 

this information, we selected countries that met the following criteria:

• Private sector, workplace retirement savings programs are an 

important pillar of the country’s retirement system.

• The country has well-developed financial markets.

• Reforms designed to increase coverage have been implemented or 

are in the process of being implemented.

6 In addition, through a discussion with a knowledgeable international stakeholder we 

identified a specific program within the Australian superannuation system, the Small 

Business Superannuation Clearing House, which may help inform efforts to address 

administrative burdens for small employers in the United States. To learn more about this 

program, we completed a limited review of available documentation and interviewed a few 

targeted officials and stakeholders.

Section 3: Examining 

Strategies Used in Other 

Countries’ Efforts to 

Expand Coverage

Page 60 GAO-15-556 Options to Expand Coverage

 
Appendix I: Objectives, Scope, and 

Methodology

• Reforms use similar strategies as state efforts we identified. 

Specifically, the reforms use a voluntary approach or require 

employers to offer a program but allow workers to opt out.

• It was identified through our research and the consensus of 

knowledgeable external stakeholders as having strong potential for 

yielding useful lessons for the United States.

• It is not duplicative. Where similar programs exist in multiple countries 

we will select the one that best addresses the other selection criteria.

As part of our review, we examined available documentation and 

analyzed the selected countries’ systems based on strategies used to 

increase coverage and the potential effectiveness in the United States. In 

particular, we examined eligibility and enrollment features, as well as 

measures targeted to workers who tend to lack coverage (e.g., those who 

work for small employers or are self-employed). We interviewed 

knowledgeable industry stakeholders and government officials from each 

country, as well as academics and national stakeholders based in the 

United States, about each strategy’s strengths, weaknesses, tradeoffs, 

and lessons learned for the United States. 

We did not conduct an independent legal analysis to verify the information 

provided about the laws, regulations, or policies of the countries selected 

for this study. Instead, we relied on appropriate secondary sources, 

interviews, and other sources to support our work. We submitted key 

report excerpts to agency officials in each country for their review and 

verification, and we incorporated their technical corrections as necessary. 

We note also that the fact that a legal feature was successful in one or 

more of the countries we visited, which may have significantly different 

cultures, histories, and legal systems than the United States, does not 

necessarily indicate that it would be successful in the United States.

We conducted this performance audit from June 2014 through September

2015 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Page 61 GAO-15-556 Options to Expand Coverage
Appendix II: Description of Efforts to Simplify 

Administration and Investment Management of 

Workplace Retirement Savings Programs

States we reviewed would attempt to use employers’ existing payroll 

processes to reduce administrative burden for employers, but some 

stakeholders said this may create challenges that could be mitigated 

based on state experience with other programs. For example, Maryland’s 

Task Force found that the best way to minimize administrative burden on 

small employers is to use their existing payroll process.1 While some 

stakeholders were concerned with employers’ payroll deduction 

capabilities, research shows that the majority of employers already use 

electronic payroll services.2 Because of this, state and national 

stakeholders told us that deducting and remitting contributions from a 

worker’s paycheck would not substantially increase the burden or cost for 

most employers. However, California stakeholders noted that using 

employers’ existing payroll processes would create a large state role in 

educating employers about their responsibilities and collecting payroll 

deductions. For example, the California Secure Choice program would

need to be able to accept contributions from millions of small employers 

and one stakeholder noted that the program would likely have to deal with 

privacy issues if employers use tax identification information to remit 

payments.3 However, some states hoped to utilize the experience of state 

agencies that accept payroll deduction for other employer deductions and 

1 Governor’s Task Force to Ensure Retirement Security for All Marylanders, 1,000,000 of

Our Neighbors at Risk: Improving Retirement Security for Marylanders (Annapolis, MD, 

February 2015).

2 In a report prepared for AARP in August 2009, Optimal Benefit Strategies, LLC, 

summarized two industry surveys covering the use of manual payroll processing. Both 

surveys reported that less than 10 percent of employers did not use electronic payroll 

services. One survey reported that 9 percent of employers with 10 to 19 employees and 

fewer than 4 percent of employers with more than 20 employees do not use electronic 

payroll services. The other survey found that 3 percent of employers with between 10 and 

49 employees do not use electronic payroll services. See Optimal Benefit Strategies, LLC. 

Most Small Employers Face Low Costs to Implement Automatic IRAs. (Aug. 19, 2009).

3 For example, 2012 research found that two thirds of the 6.3 million private sector 

workers in California whose employer does not sponsor a retirement plan work for small 

employers with less than 100 employees. See Rhee, Nari. 6.3 Million Private Sector 

Workers in California Lack Access to a Retirement Plan on the Job. Center for Labor 

Research and Education, University of California, Berkeley. (Berkeley, CA, June 2012).

Appendix II: Description of Efforts to Simplify 

Administration and Investment Management 

of Workplace Retirement Savings Programs

Reducing Administrative 

Burden and Cost for 

Employers

Use Employers’ Existing 

Payroll Processes 

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Appendix II: Description of Efforts to Simplify 

Administration and Investment Management of 

Workplace Retirement Savings Programs

payments. For example, board members said that the California Secure 

Choice program may utilize the services of the state’s Employment 

Development Department that already collects employment taxes from 

employers in the state. While implementation details still need to be 

decided, board members hoped to capitalize on the department’s 

connection with California employers, infrastructure for processing payroll 

deductions, and experience with enforcing employer requirements. 

Similarly, Illinois’ Department of Revenue currently oversees employers’ 

payroll deposits for taxes, so Illinois stakeholders thought that the Illinois 

Secure Choice program might be able to leverage its administrative and 

enforcement experience. 

Government officials and stakeholders in New Zealand noted that this 

approach has worked well for KiwiSaver. Inland Revenue, New Zealand’s 

tax collection agency, is the interface between employers and providers, 

which officials said simplifies the administrative role for employers. 

Employers do not have to engage with various KiwiSaver providers a 

worker may select nor administer worker requests for opting out. 

Employers simply send a worker’s contributions to Inland Revenue and 

the agency sends the worker’s contribution to their KiwiSaver provider. 

In recognition of resource limitations for small employers, all of the state 

efforts would allow small employers of varying sizes to choose whether to 

participate in the state program. While stakeholders and research indicate 

that payroll deduction is readily accessible for the majority of employers, 

some of the smallest employers may not yet have migrated to an 

electronic payment system. As a result, each of these state efforts allows

the smallest employers to choose whether to participate in the program. 

In particular, states that are considering requiring employers to offer 

workplace access have exempted the smallest employers from the 

requirement, but would allow them to choose to offer access to the 

program. For example, Illinois law exempts employers with fewer than 25 

employees and California law exempts employers with fewer than 5 

employees.4 Stakeholders did note a drawback to allowing small 

employers—as well as self-employed workers—to choose whether to 

offer the state program. Specifically, if too few employers choose to offer 

4 Illinois law also exempts employers that already offer a qualified plan or have been in 

business for less than 2 years. California law exempts employers that already offer a 

qualified plan or automatic enrollment payroll deduction IRA.

Allow Small Employers to 

Choose Whether to Participate 

and Other Efforts to Recognize 

Resource Limitations of Small 

Employers 

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Appendix II: Description of Efforts to Simplify 

Administration and Investment Management of 

Workplace Retirement Savings Programs

a purely voluntary program, it may not be able to achieve the scale 

necessary to ensure that costs are reasonable.5

 

In contrast, some of the countries we studied required even small 

employers to offer workplace access but they took other actions to 

recognize the resource limitations of small employers, including phasing 

in the employer requirement and creating specific programs that support 

small employers. For example, in the U.K. the employer requirement to 

offer access and automatically enroll workers is being phased in gradually 

between October 2012 and February 2018 based on employer size, 

which provides smaller employers additional time to prepare for meeting 

the new requirements.6 However, without any other action by the 

government, U.K officials concluded that small employers may find it 

difficult to meet the automatic enrollment requirements because of a 

supply gap—the Pensions Commission concluded that existing providers 

would find it unprofitable to serve employers that did not previously offer 

workers access, the overwhelming majority of which had fewer than 15 

5 For example, Massachusetts stakeholders noted that the level of take-up by employers 

of the state’s voluntary program for not-for-profit employers with not more than 20 

employees will likely be lower than if the program was required. For this and other 

reasons, they expected employer costs to be about the same as those for existing 

employee benefit plans for retirement—an annual amount larger than $2,000, which one 

not-for-profit stakeholder representative noted was higher than anticipated. They did feel 

that the advantages of the plan for participants would encourage employers to offer it. 

They expected investment management fees for participants to be lower and that the 

quality of the pooled, professionally managed investments would entice employers to offer 

this plan. 

6 The government considered excluding some very small employers from the automatic 

enrollment requirements, but ultimately decided against exclusion in order to ensure 

broader workplace access to retirement plans. The phase-in began in October 2012, when

employers with 120,000 or more employees became subject to the automatic enrollment 

requirements. The final phase of implementation will begin when the smallest employers 

(fewer than 50 employees) will be required to automatically enroll employees (between 

June 2015 and April 2017).

Page 64 GAO-15-556 Options to Expand Coverage

 
Appendix II: Description of Efforts to Simplify 

Administration and Investment Management of 

Workplace Retirement Savings Programs

employees, at a reasonable cost to workers.7 To address the supply gap, 

it created the National Employment Savings Trust (NEST) to ensure that 

all employers, particularly small employers, would have access to a lowcost program, with the added benefit of diminishing the burden on 

employers of choosing an appropriate provider (see text box 1). Similarly, 

the Australian government recognized the specific needs of small 

employers by creating a Small Business Superannuation Clearing House 

in 2010 to simplify administrative requirements and lessen the 

administrative burden on small employers. The Clearing House is a free 

service that allows eligible employers to make one payment at least 

quarterly on behalf of all of the employer’s workers. The Clearing House

then disburses the payments to each of the worker’s choice of fund (see 

text box 2). 

Text Box 1: The United Kingdom’s National Employment Savings Trust (NEST) has a 

public service obligation to accept any employer (and any qualifying worker) that wishes to 

use it, and in this way serves all those employers and workers who are unable to find 

another provider of a retirement savings program. The existence of a low-cost program

with a universal public service obligation reduces the burden on small employers who 

might otherwise expend considerable time and effort in identifying a provider willing to 

serve them at an acceptable cost. In addition, there are no charges for employers to set 

up and use NEST. Finally, NEST has worked with the major payroll software providers in 

the United Kingdom to integrate their platforms with NEST in order to reduce data 

compliance burdens on employers. NEST representatives thought that this effort could 

make NEST even easier to use for small employers.

Source: GAO summary of interviews with NEST representatives and the Department for Work and Pensions review, Making Automatic 

Enrolment Work, October 2010

7 The Pensions Commission also noted that a large number of accounts of individuals are 

unprofitable, particularly those of lower earners. As a result, a NEST representative said 

the target market for NEST was always anticipated to be lower income workers and those 

who are more likely to switch jobs because these types of accounts have a lower 

economic value for commercial providers. While this representative thought that a good 

chunk of larger employers would have employees that fit this description, NEST 

anticipated that the vast majority of employers it would eventually serve would be very 

small. Because these employers had not yet been phased in to the employer requirement, 

as of December 2014 the NEST representative estimated NEST had enrolled less than 2 

percent of the total number of employers it will eventually bring on.

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Text Box 2: Australian officials explained that the Small Business Superannuation 

Clearing House was set up to help employers make contributions on behalf of their 

workers as required by the Australian Superannuation system. They thought that these 

contributions could represent a heavy administrative burden for small employers because 

workers are allowed to choose the provider to which they want the employer to send their 

contributions, employers must make payments at least quarterly, and superannuation 

providers all have slightly different forms and payment delivery methods. Created in 2010, 

the purpose of the Small Business Superannuation Clearing House was to simplify 

administrative requirements, lessening the administrative burden for small employers—

those with 19 or fewer workers or, from July 1, 2015, those with total income of less than 

$2 million Australian dollars (AUD) (about $1.4 million USD). Employers log onto the 

Clearing House’s website and are required to complete a one-time registration, after which 

their involvement is low. As of July 31, 2015, about 120,000 employers are registered to 

use the service, approximately 15 percent of those eligible. The majority of employers who 

use the service generally have between 3 and 19 workers. The government has found that 

these employers typically do not have payroll software. Officials said that employers who 

use the Clearing House say it saves them time and gives them peace of mind because 

use of the system guarantees they have met their obligation. The Clearing House is 

funded through government appropriations and costs the government about $6 million 

AUD annually.

Source: GAO summary of interviews with Australian Stakeholders

States would also take other actions to reduce administrative burden for 

employers and may be able to learn from other countries’ implementation 

experiences, especially those of NEST in the U.K., and their own 

experiences with other state savings programs, including college savings 

plans and public pension plans (see table 6).

Other Actions to Reduce 

Administrative Burden for 

Employers

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Administration and Investment Management of 

Workplace Retirement Savings Programs

Table 6: Other Actions State Efforts Would Take to Reduce Administrative Burden for Employers Offering Access to 

Workplace Retirement Savings Programs

State Actions Description 

Experience in Other Countries and Other State 

Programs

Selecting and 

monitoring providers

• Most state programs, including Illinois, California, 

and Massachusetts, would specify that the 

program’s governing body will select and monitor 

providers for the program. 

• Washington’s program would require a state agency 

to approve providers, reducing some employer 

responsibilities in selecting and monitoring 

providers, although employers would still need to 

select from those providers—they would be required 

to access the marketplace website and pick the 

option they want to offer workers. 

In the United Kingdom (U.K.), its NEST program’s 

governing board selects and monitors providers. In 

Canada and New Zealand, service providers are 

licensed by the government to offer qualifying plans. 

For example, financial institutions that want to 

provide Pooled Registered Pension Plans (PRPPs) 

for employers in federally regulated industries in 

Canada are required to be licensed by the federal 

Office of the Superintendent of Financial 

Institutions. 

Provide educational 

materials and 

disclosures for 

workers

States plan to reduce administrative burden for 

employers related to worker outreach by providing 

information and educational materials. For example, 

state stakeholders thought the following information 

should be provided to workers:

• What they are investing in and how fees are 

charged 

• Explanation that they can access savings in event of 

a hardship

• Explanation that their employer’s role is limited—

employers are not liable for investment returns

• How the program compares to products on the retail 

market 

California and Illinois stakeholders noted that these 

materials would have to be customized to overcome 

language and cultural barriers.

In the U.K., NEST is responsible for sending out 

“welcome” packages to new participants with 

information on how to access the website and 

create accounts. NEST also has online tools 

including communication templates and electronic 

member options for opt-outs to make it easier for 

employers. In 2012, NEST also issued a pension 

“jargon buster” to help make pensions 

understandable to individuals. 

In addition, experience from other state programs 

might help states prepare educational materials and 

disclosures for workers. For example, California 

stakeholders noted that its college savings plan 

program and health care exchange had gained 

valuable experience in marketing and outreach to 

increase worker participation. Similarly, a 

stakeholder in Massachusetts noted that the 

Treasurer’s office has experience meeting ERISA’s 

participant disclosure requirements because it has 

tried to comply with ERISA for its deferred 

compensation plan for public workers even though it 

was not required.

Limit employer 

liability

State efforts may take actions to limit employer liability 

related to the state programs. For example, some states

would: 

• Include specific language in legislation 

acknowledging that employers would not be liable 

for investments in the program nor for making 

investment-related decisions.

• Use payroll deduction IRAs, instead of employee 

benefit plans, which stakeholders believe exposes 

employers to less potential liability than employee 

benefit plans. 

In the U.K., NEST is a not-for-profit entity that is the 

trustee for the program and takes on fiduciary 

liability for management of the program’s 

investments. KiwiSaver providers in New Zealand

and PRPP providers in Canada all take on trustee 

or fiduciary liability. In addition government 

agencies in these countries provide some level of 

oversight over providers. 

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Appendix II: Description of Efforts to Simplify 

Administration and Investment Management of 

Workplace Retirement Savings Programs

State Actions Description 

Experience in Other Countries and Other State 

Programs

Reduce or eliminate 

employer 

administrative costs, 

including employer 

contributions

Stakeholders noted that reducing administrative costs for 

employers could encourage employers to voluntarily 

offer the program. Washington plans to completely 

eliminate employer administrative costs by requiring all 

costs be paid through participant fees, limited to 1 

percent. 

In addition, some state efforts use payroll deduction 

IRAs, which do not allow for employer contributions. 

Other states that would use employee benefit plans 

allow voluntary employer contributions.

In New Zealand, the government subsidizes small 

employer administrative costs. The tax agency 

administers the program but does not charge 

employers that use its services. 

The U.K. decided to require that employers 

contribute, but phased in contribution levels to 

reduce the burden. Specifically, minimum employer 

contributions are being implemented in three 

phases from 2012 to 2018. Starting in October 

2012, employers contributed 1 percent of qualifying 

earnings. Employer contribution levels will increase 

in October 2017 and finally in October 2018, when 

employers will need to remit required minimum 

contributions of 3 percent. 

Source: GAO summary of information from interviews with state and country stakeholders and relevant research. | GAO-15-556.

These actions to reduce administrative burden for employers elevate the 

state’s role in the programs, which could create implementation 

challenges, including how to fund state actions. Stakeholders generally 

noted the importance of the state’s acceptance of some of the employer’s 

administrative duties and liability in encouraging employers to offer 

workplace access.8 However, this state role is particularly important for 

efforts that would require eligible employers to participate, such as in 

California, Illinois, and Maryland. While enabling legislation provides the 

intent and the direction of these state programs, the state effort’s 

governing body will have to make many decisions to develop and 

implement the programs, including how to educate employers about their 

responsibilities.9 In three of the four states we studied that had enacted

such legislation—Massachusetts, California, and Illinois—the states have

already taken or planned at least 2 years to study options and design 

8 We have previously reported on the burdens small employers face in starting and 

administering plans. See GAO, Private Pensions: Better Agency Coordination Could Help 

Small Employers Address Challenges to Plan Sponsorship, GAO-12-326 (Washington, 

D.C., March 5, 2012). 

9 While programs seek to minimize employer duties, participating employers will need to 

take some action. To avoid confusion, stakeholders noted that states plan to educate

employers about the details of the program and their responsibilities for worker outreach. 

For example, the Massachusetts Treasurer’s office is working on a checklist to educate 

employers about their responsibilities with respect to the program which will include nondiscrimination testing and timely remittance of contributions, among other things.

Page 68 GAO-15-556 Options to Expand Coverage

 
Appendix II: Description of Efforts to Simplify 

Administration and Investment Management of 

Workplace Retirement Savings Programs

their programs.10 In addition, stakeholders noted that the six states we 

reviewed would likely incur potentially significant startup and ongoing 

costs and saw potential challenges in determining how to fund those 

costs.11 For example, a California official expects the feasibility study and 

related legal analysis will cost $1 million, but total startup costs could be 

much larger. Since the feasibility study has to be funded without a state 

appropriation, the state official said that an immediate challenge was to 

raise the necessary funds for the feasibility study so they could better 

determine cost estimates for developing the program and ongoing 

administration. The U.K. recently dealt with this issue when it created 

NEST and received a loan from the government. A NEST representative

said it had spent about 300 million British pounds (GBP) (about $459 

million USD) over the last 2.5 years to (1) develop systems infrastructure 

and architecture; (2) enroll employers; and (3) fund the program in the 

first few years while contributions are very low. For the latter, the NEST 

representative said that current members are contributing 2 percent of 

their generally low wage—at these rates contributions could be 20 GBP 

(about $31 USD) a month—so NEST does not receive revenue from 

these accounts to pay back the loan and, in fact, runs into a cash flow 

shortfall. In these early years, NEST is running a slightly higher shortfall 

than expected because the income levels of members are lower than 

expected.

10 According to stakeholders in Washington State, the implementation phase for the 

marketplace effort is expected to begin in July 2015 with the goal of full implementation by 

2017.

11 Stakeholders in Illinois, Maryland, and West Virginia expected to be able to borrow 

money from the state to fund startup costs, which would be paid back through participant 

fees once the programs are implemented. Stakeholders in Washington estimated that 

designing and implementing the marketplace would cost about $200,000, but expected to 

incur additional costs to conduct marketing and outreach since the program is voluntary 

for employers and workers. They discussed the possibility of providing financial incentives 

to employers to participate. Stakeholders in Illinois and Washington said they may also 

secure private funds from foundations to help pay for implementation costs.

Page 69 GAO-15-556 Options to Expand Coverage

 
Appendix III: Description of Selected National 

Legislative Efforts to Expand Workplace 

Retirement Savings Program Coverage 

Identified by GAO

To provide federal context, we interviewed federal agency officials and 

knowledgeable industry representatives, and we conducted targeted 

searches of legislative databases. Then from all bills in the 113th

Congress and the 114th Congress categorized in the Legislative 

Information System as having retirement as a topic, we selected and 

discuss in the table below those that would make or would have made

efforts to expand coverage in workplace retirement savings programs 

(see table 7). Because this is a select list, however, and we did not 

include bills that may have had an indirect effect on workplace retirement 

savings program coverage, this list should not be viewed as exhaustive.

Table 7: Description of Key Features of Selected Federal Legislative Proposals to Expand Workplace Retirement Savings 

Program Coverage 

Bill Title Status Description of Key Features

1 Automatic IRA Act of 2015

(S. 245 & H.R. 506)

Referred to 

Committees

The bill would, among other things, require eligible employers that do not maintain a 

qualifying plan or arrangement to make an automatic Individual Retirement Account 

(IRA) arrangement available to qualifying employees. Employers with no more than 

10 employees or not in existence during the current and preceding calendar years 

would be excluded from the requirement. A tax is imposed on covered employers that 

do not meet the requirement. Generally, qualifying employees would be automatically 

enrolled to contribute 2 to 6 percent of their compensation, but may opt out. 

Complying employers with no more than 100 employees are eligible to receive a 

credit for maintaining automatic IRA arrangements.

To eliminate barriers to the use of multiple employer plans, the bill would also require 

the Departments of the Treasury and Labor to prescribe administrative guidance on 

several issues related to sponsorship of a plan by multiple employers. 

In 2013, a similar bill (H.R. 2035) was introduced and referred to committee but not 

enacted. 

2 Retirement Security Act of 

2015

(S. 266 & H.R. 557) 

Referred to 

Committees

To eliminate a disincentive to pooling plan assets for multiple employer plans, among 

other things, this bill would require Treasury to prescribe regulations under which 

plans sponsored by multiple employers could be treated as qualified and modify the 

Employee Retirement Income Security Act of 1974 (ERISA) so that employers without 

a common interest could sponsor multiple employer plans. 

The bill would take other steps to expand coverage, such as allowing individuals to 

claim the Saver’s Credit on the Internal Revenue Service Form 1040EZ.a

In 2014, similar bills (S. 1970 & H.R. 4376) were introduced and referred to 

committees but were not enacted. 

Appendix III: Description of Selected National 

Legislative Efforts to Expand Workplace 

Retirement Savings Program Coverage 

Identified by GAO

Page 70 GAO-15-556 Options to Expand Coverage
Appendix III: Description of Selected National 

Legislative Efforts to Expand Workplace 

Retirement Savings Program Coverage 

Identified by GAO

3 USA Retirement Funds Act 

(2014)

(S. 1979 & H.R. 5818)

Not 

enacted

Among other things, this bill would have required employers that do not maintain a 

qualifying plan or arrangement to make an automatic USA Retirement Fund 

arrangement available to qualifying employees. Employers with no more than 10 

employees or not in existence during the current and preceding calendar year would 

have been excluded from the requirement. Covered employers that did not meet this 

requirement would have been subject to civil monetary penalties. Generally, qualifying 

employees would have been automatically enrolled to contribute 3 percent of 

compensation in 2015 (increasing to 6 percent in 2018) to any qualified USA 

Retirement Fund, but would have been allowed to opt out or receive their 

contributions directly in cash. USA Retirement Funds would have been trust funds 

meeting specified requirements and publicly listed online, and employers would also 

have been permitted to make contributions to their employees’ accounts, subject to 

limits. 

The bill would have also amended ERISA to provide that pooled employer plans, 

defined as a pension plan established or maintained by 2 or more employers, would 

have been treated as a single plan without regard to whether the employers involved 

had a common interest. 

4 Small Businesses Add Value 

for Employees Act of 2014 or 

SAVE Act of 2014

(H.R. 5875)

Not 

enacted

This bill would have, among other things, authorized automatic deferral IRAs, under 

which employees who earned at least $5,000 the preceding year would have been 

automatically enrolled to contribute 3 percent of compensation to an IRA in the 

employee’s first plan year (increasing to 15 percent in the 12th). It would have also 

increased the tax credit for small employer pension plan startup costs, and required 

outreach to and financial education of small businesses about the types and benefits 

of available retirement plans.

The bill would have also provided that multiple employer plans established by 

employers without a common interest would have been treated as single plans.

Page 71 GAO-15-556 Options to Expand Coverage
Appendix III: Description of Selected National 

Legislative Efforts to Expand Workplace 

Retirement Savings Program Coverage 

Identified by GAO

5 Secure Annuities for 

Employee Retirement Act of 

2013 or SAFE Retirement 

Act of 2013

(S. 1270)

Not 

enacted

Among other things, this bill would have authorized a new retirement savings option 

called Starter 401(k) Deferral-Only Plans and allowed eligible employers not 

otherwise offering a qualified plan to sponsor them for eligible employees. Such plans 

would have had to include automatic enrollment and contributions from 3 to 15 

percent of compensation up to $8,000, but employees could opt out. The legislation 

would have simplified reporting requirements for Starter 401(k) Plans and would not 

have treated them as top-heavy plans. 

The bill would have also provided that multiple employer plans established by 

employers without a common interest, but essentially operated by non-employers, 

serving as a designated plan providers, would have been treated as single employer 

plans.

6 Retirement Plan Simplification 

and Enhancement Act of 

2013 (H.R. 2117) 

Not 

enacted

This bill would have, among other things, modified and expanded the Saver’s Credit. 

In addition, to encourage small employers to offer plans, the bill would have increased 

the tax credit for such employers when they start a pension plan or IRAs for 

employees. It would also have eliminated certain barriers to the use of multiple 

employer plans.

7 Savings for American 

Families' Future Act of 2013 

(H.R. 837)

Not 

enacted

The bill would have expanded the availability of the Saver’s Credit by increasing the 

rate of tax credit for retirement contributions, making it refundable, and directing 

Treasury to make, in effect, matching contributions.

Source: GAO review of legislative materials as of July 10, 2015. | GAO-15-556.

a Federal law authorizes a nonrefundable credit (the Saver’s Credit) against federal income tax of up 

to $2,000 based on income for contributions to employee benefits plans or IRAs, with the credit 

phasing out entirely at certain income levels. 26 U.S.C. § 25B.

Page 72 GAO-15-556 Options to Expand Coverage
Appendix IV: Description of State Efforts to 

Expand Workplace Retirement Savings 

Program Coverage Identified by GAO

We developed the following list of 29 states with recent efforts to expand 

retirement savings program coverage for private sector workers1

—

including the introduction, action on or enactment of legislation, an 

executive action, or a study—by (1) reviewing information posted online 

by industry stakeholders, including the National Council of State 

Legislatures, the Pension Rights Center, and other industry publications; 

(2) conducting targeted searches of enacted and proposed state 

legislation using LexisNexis and WestLaw, in consultation with a law 

librarian;2 and (3) interviewing federal officials and knowledgeable 

industry representatives, including stakeholders at the Pension Rights 

Center, the American Society of Pension Professionals and Actuaries, 

and AARP. At multiple points during this process, we confirmed 

completeness of our list of states with knowledgeable industry 

stakeholders, including a more in-depth review by a representative of the 

Center for Retirement Initiatives at Georgetown University, a public policy 

center created to promote retirement savings solutions at the state level 

in the United States. (See fig. 11.)

1 We attempted to identify legislative proposals and executive actions between 2009 and 

July 28, 2015, but multiple states may have proposed legislation prior to 2009. We have 

included select efforts that occurred before 2009 if they were noted by knowledgeable 

industry stakeholders or if we determined through our research that the state had not 

already been captured in the table. 

2 We used the following search terms to identify state efforts on LexisNexis and WestLaw: 

1) state private worker pension plan policies, 2) state private worker pension plans, 3) 

state private sector worker retirement savings plan policies, 4) state private sector worker 

retirement savings policies, 5) state automatic individual retirement accounts, 6) state 

IRAs, 7) state secure choice plans, 8) state-run private retirement plans, 9) state-run 

private retirement savings, and 10) state private pension savings.

Appendix IV: Description of State Efforts to 

Expand Workplace Retirement Savings 

Program Coverage Identified by GAO

Page 73 GAO-15-556 Options to Expand Coverage

 
Appendix IV: Description of State Efforts to 

Expand Workplace Retirement Savings 

Program Coverage Identified by GAO

Figure 11: States GAO Identified as Taking Some Effort to Expand Coverage in Workplace Retirement Savings Programs 

We described the strategies proposed in the state efforts based on 

documentation we obtained from state legislative or executive office 

websites. We use “state efforts” to refer to a range of activities that may 

have occurred in a state, including the introduction of a bill, executive 

action, studies, or the enactment of legislation. While states are exploring 

various approaches, a number of state efforts seem to incorporate 

Page 74 GAO-15-556 Options to Expand Coverage
Appendix IV: Description of State Efforts to 

Expand Workplace Retirement Savings 

Program Coverage Identified by GAO

strategies, such as payroll deduction individual retirement accounts 

(IRAs) and automatic enrollment, that are similar to those incorporated

into “automatic IRA” proposals submitted by the President and some 

members of Congress. We compiled this list, shown in table 8, by 

interviewing state officials and knowledgeable industry representatives 

and conducting targeted searches of legislative databases. We did not 

conduct an independent, legal analysis to determine whether the features 

and strategies used by states will hold up under scrutiny and this list may 

unintentionally exclude relevant state efforts that we did not identify.

Table 8: Description of State Efforts to Increase Coverage of Workplace Retirement Savings Programs Identified by GAO

State Status Description 

1 Arizona Not enacted A bill introduced in 2014 would have required certain employers to automatically enroll 

their employees in a payroll deduction Individual Retirement Account (IRA) as part of the 

Arizona Secure Choice Retirement Savings Program. 

2 California Enacted 2012 law established the California Secure Choice Retirement Savings Program and 

Investment Board. Under the program, eligible employers with 5 or more employees will be 

required to automatically enroll employees in a payroll deduction IRA. Prior to 

implementation of this program, the board is required to conduct a market analysis to 

determine whether the necessary conditions for implementation of the law could be met. 

The board has awarded contracts for (1) legal services, and (2) market analysis, feasibility 

study, and program design consultant services. A final report is expected no later than 

January 2016. The board is prohibited from opening the program for enrollment without a 

subsequent authorizing law. 

Not enacted Bills to expand retirement savings coverage among private sector workers were introduced 

in 2008 and 2009. These proposals would have requested California’s Public Employees 

Retirement System offer one or more IRAs, defined benefit plans, or multiple employer 

plans to eligible employees of participating private sector employers.

3 Colorado Not enacted Bills to create a Colorado retirement security task force were introduced in 2014 and 2015. 

The 2014 bill would have provided that the task force develop recommendations for 

increasing the percentage of Coloradans who are enrolled in a retirement plan which

provides for a secure retirement. The 2015 bill would have provided that the task force 

study, assess, and report on the (1) factors that affect Coloradans’ ability to save for a 

financially secure retirement and (2) feasibility of creating a retirement savings plan for 

private sector workers.

4 Connecticut Enacted In June 2014, legislation established the Connecticut Retirement Security Board to 

conduct a market feasibility study regarding the implementation of the public retirement 

plan for private sector workers and to develop a comprehensive proposal for the 

implementation of such a plan. The board is to report to the governor and a legislative 

committee on the results of the market feasibility study by January 1, 2016, and then 

develop a comprehensive proposal for the implementation of the public retirement plan. 

Not enacted Several other bills to expand retirement plan coverage among private sector workers were 

introduced between 2009 and 2014. One bill would have established a voluntary defined 

contribution plan for small employers and charitable organizations, and another would 

have required qualified employers to automatically enroll their employees in payroll 

deduction IRAs.

Page 75 GAO-15-556 Options to Expand Coverage
Appendix IV: Description of State Efforts to 

Expand Workplace Retirement Savings 

Program Coverage Identified by GAO

State Status Description 

5 Illinois Enacted A 2015 law created the Illinois Secure Choice Savings Program and Board. Under the 

program, eligible employers with 25 or more employees would be required to automatically 

enroll employees in a payroll deduction IRA. The program went into effect on June 1, 2015

and enrollment of employees is to begin before June 1, 2017 unless the board does not 

obtain adequate funding to implement the program. 

Not enacted Several other bills to expand retirement plan coverage among private sector workers were 

introduced between 2011 and 2014.

6 Indiana Not enacted A bill was introduced in 2015 that would have established the Hoosier Employee 

Retirement Option Plan, which would have maintained IRAs for employees of eligible 

employers voluntarily choosing to provide payroll deduction. In addition, bills proposed in 

2013 and 2014 would have established a state-assisted retirement plan to encourage 

Indiana residents to increase their rate of savings and to build assets for use after 

retirement. Employer and employee participation would have been completely voluntary. In 

addition, the 2014 bill would have provided a one-time tax-credit for workers who 

participate in the state-assisted retirement plan.

7 Kentucky Not enacted In 2015, a bill was introduced that would have required certain employers to automatically 

enroll their employees into a payroll deduction IRA, called a Kentucky retirement account. 

8 Louisiana Not enacted In 2014, a bill was introduced that would have required certain employers to automatically 

enroll their employees into the Louisiana Retirement Savings Plan.

9 Maine Not enacted A bill was introduced in 2015 that would have required certain employers to automatically 

enroll their employees in a payroll deduction IRA as part of a Maine Secure Choice 

Retirement Savings Program. A bill that would have established a similar program was 

introduced in 2013. 

10 Maryland Established In 2014, Maryland’s governor established a task force to ensure retirement security for all 

Marylanders. The task force issued a report in February 2015 that catalogued a range of 

possible proposals, and principles that should be considered in judging them, and strongly 

urged the state to develop and enact a program.a

Not enacted A bill was introduced in 2015 that would have established the Maryland Secure Choice 

Retirement Savings Program and Trust. This program would have required eligible 

employers with 5 or more employees to automatically enroll employees in a payroll 

deduction IRA. In addition, employers would have been able to voluntarily contribute to a 

profit sharing defined contribution plan for their employees. Several bills to expand 

retirement savings plan coverage for private sector workers were introduced between 2006 

and 2014. One bill would have established a voluntary plan for private sector employers to 

offer, and another would have required eligible employers to automatically enroll their 

employees in payroll deduction IRAs.

11 Massachusetts Pending Several bills to expand retirement savings plan coverage for private sector workers were

introduced in 2015. One would create the Secure Choice Retirement Savings Plan and 

require eligible employers with 10 or more employees to (1) establish an employee benefit 

plan, (2) participate in a multiple employer plan created by the state, or (3) automatically 

enroll eligible employees into an IRA plan created by the state. The other bills would create 

the Massachusetts voluntary retirement accounts program that could include SIMPLE IRAs 

or workplace-based IRAs or a state-run defined contribution plan. 

Enacted A 2012 law authorized the state to sponsor a defined contribution plan that could be 

adopted by not-for-profit employers with 20 or fewer employees. As of June 2015, a state 

official noted that the plan was awaiting a determination letter from the Internal Revenue 

Service.

Page 76 GAO-15-556 Options to Expand Coverage
Appendix IV: Description of State Efforts to 

Expand Workplace Retirement Savings 

Program Coverage Identified by GAO

State Status Description 

Not enacted A bill was introduced in 2011 that would have established the Massachusetts voluntary 

retirement accounts program under which employers would have been required to deduct 

and remit contributions from payroll upon request by workers. A bill in 2009 would have 

authorized a program that not-for-profit employers could offer their employees. 

12 Michigan Not enacted A bill was introduced in 2007 that would have created an employee benefit plan 

administered by the state. Employer and employee participation would have been 

voluntary, and employers would have been able to contribute to workers’ accounts. 

13 Minnesota Enacted A 2014 law required the Minnesota Commissioner of Management and Budget to report on 

the potential for a state-administered retirement savings plan for workers without access to 

certain programs through their employer. $400,000 was appropriated for the report, and it 

was due Jan. 15, 2015. The state submitted a request for proposals in December 2014, 

but as of June 2015 a final report had not been released. 

14 Nebraska Completed A 2013 legislative resolution asked the Nebraska Retirement Systems Committee to 

conduct an interim study related to the availability and adequacy of retirement savings of 

Nebraska private sector workers. This study resolution was referred to the executive 

committee in a May 2013 floor debate and on Dec. 10, 2013, the Nebraska Retirement 

Systems Committee held a public hearing on this topic. 

15 New Hampshire Not enacted A bill was introduced in 2015 that would have established a statutory Commission on 

Retirement Security to study the creation of a retirement security program, and would have 

appropriated $100,000 to support the commission.

16 New Jersey Pending A bill was introduced in 2015 that would establish the New Jersey Secure Choice Savings 

Program Act, under which certain employers with 25 or more employees would be required 

to automatically enroll their employees into a payroll deduction IRA. 

17 New York Not enacted A bill was introduced in 2011 that would have directed the Department of Audit and Control 

to examine, evaluate, and make recommendations regarding the establishment and 

operation of a public retirement system for employees of private providers of mental 

hygiene services.

18 North Dakota Not enacted A bill was introduced in 2015 that would have required the state Treasurer to establish a 

program that certain nongovernmental employers with 100 or fewer employees may have 

offered to their employees. Generally employee participation, as well as employer 

participation and contributions, would have been voluntary. 

19 Ohio Not enacted A bill was introduced in 2013 that would have created the Ohio Secure Choice Retirement 

Savings Program under which certain employers with 20 or more employees would be 

required to automatically enroll their employees into the program.

20 Oregon Enacted A 2015 law established the Oregon Retirement Savings Board, which will develop a 

defined contribution retirement plan for Oregon workers and conduct a market and legal 

analysis of the plan. Among other things the plan must provide for automatic enrollment 

and requires employers to offer their employees an opportunity to contribute to the plan 

unless the employers offer a qualified retirement plan. Also, a 2013 law established the 

Oregon Retirement Savings Task Force to develop and report recommendations for 

increasing the percentage of Oregonians saving for retirement or enrolled in a retirement 

plan, and for increasing the amount of those individual savings. The task force report, 

issued in 2014, recommended developing and making available a retirement savings plan 

with a minimal employer role, automatic enrollment for the employee, and payroll 

deduction, among other things.b

21 Pennsylvania Not enacted A bill was introduced in 2007 that would have directed the state treasurer to establish a 

bureau within the department to establish and administer the Pennsylvania Voluntary 

Accounts Program, which would have maintained accounts for eligible employees of 

certain private-sector employers voluntarily choosing to provide access to the program. 

Page 77 GAO-15-556 Options to Expand Coverage
Appendix IV: Description of State Efforts to 

Expand Workplace Retirement Savings 

Program Coverage Identified by GAO

State Status Description 

22 Rhode Island Enacted Joint resolutions in 2009 and 2010 established a special legislative commission to study 

the establishment of Universal Voluntary Retirement Accounts. 

23 Tennessee Enacted A 2008 joint resolution instructed the state treasurer to study and, by Feb. 1, 2009, report 

on the feasibility of establishing a voluntary retirement plan for small businesses in 

Tennessee that would offer 401(k) plans and other savings vehicles. The treasurer found 

that encouraging employers to implement a plan is worthwhile, but putting the state in the 

middle of this process could actually increase costs, so it did not make any 

recommendations for state action.c

24 Utah Enrolled A 2015 joint resolution strongly urged Utah’s small business employees and its small 

business community to join with the Legislature and the Utah treasurer to study and 

develop a model for saving for retirement through the workplace that is accessible to the

workers of Utah and consider legislation, if needed, to put the plan into action. A 2014 joint 

resolution determined that certain legislative issues required additional study, including 

how to help people prepare to be financially self-sufficient in retirement.

25 Vermont Enacted A 2014 law created a Public Retirement Plan Study Committee to evaluate the feasibility of 

establishing a public retirement plan and, if it determines that such a plan is necessary, 

feasible, and effective, to also study how to ensure that the plan is available to private 

sector employees who are not covered by an alternative retirement plan. On Jan. 15, 

2015, the Public Retirement Plan Study Committee released a report recommending 

further study.d

26 Virginia Enacted A 2015 law directed the Virginia Retirement System to convene a work group to review 

current state and federal programs that encourage citizens of the Commonwealth to save 

for retirement, including an examination of the retirement savings options for self-employed 

individuals, part-time employees, full-time employees whose employers do not offer a 

retirement savings plan, and groups with a low savings rate. A report of the work group’s 

findings is due by Jan. 1, 2017. 

Not enacted 2009 legislation would have established the Virginia Employee Voluntary Accounts 

Program to enhance the accessibility and affordability of payroll savings deduction plans 

for small employers and their employees to voluntarily participate. 

27 Washington Enacted A 2015 law established the Washington small business retirement marketplace to connect 

eligible employers with fewer than 100 employees and their employees with approved 

plans that, among other things, do not charge employers administrative fees and charge 

workers 1 percent of their account balance or less in total annual fees. Participation is 

voluntary for employers and employees. Also, pursuant to legislation enacted in 2007, 

officials issued a report identifying three options for a state sponsored retirement program 

for private sector workers.e

Not enacted Several other bills to expand retirement plan coverage among private sector workers were 

introduced between 2007 and 2014.

28 West Virginia Enacted A resolution was introduced in 2008 to study the benefits, costs and feasibility of 

establishing a West Virginia Universal Voluntary Accounts Program to assist private 

employers in offering employees an optional retirement plan. The state treasurer’s office 

established a working group and drafted new legislation. 

Not enacted A 2015 Senate concurrent resolution would have requested the Joint Committee on 

Government and Finance to study the need and feasibility of the state creating a costeffective and portable group retirement savings program for small businesses—fewer than 

50 employees—and their employees. Several other bills and one resolution were 

introduced between 2009 and 2014 that would have created the West Virginia Voluntary 

Employee Retirement Account(s) Program or requested a study on such a program. 

Page 78 GAO-15-556 Options to Expand Coverage
Appendix IV: Description of State Efforts to 

Expand Workplace Retirement Savings 

Program Coverage Identified by GAO

State Status Description 

29 Wisconsin Pending A bill introduced in 2015 would create a Wisconsin private retirement security board that 

would study the feasibility of establishing a private security retirement plan for privatesector workers, design a plan, and submit a report to the legislature.

Not enacted A bill was introduced in 2014 that would have had provisions similar to those proposed in 

2015. 

Source: GAO analysis of state legislative records and documentation, and testimonial evidence from knowledgeable industry representatives, as of July 28, 2015. | GAO-15-556

a Governor’s Task Force to Ensure Retirement Security for All Marylanders. 1,000,000 of 

Our Neighbors at Risk: Improving Retirement Security for Marylanders. February 2015. b Oregon Retirement Savings Task Force. Report and Recommendations of the Oregon 

Retirement Savings Task Force Created and Tasked Pursuant to HB 3436 (2013). Sept. 15, 2014.

c Tennessee Treasurer. SJR 1075 Feasibility Study Report: State Sponsored Small 

Business Retirement Savings Plan. d State of Vermont, Office of the State Treasurer. Interim Study of the Feasibility of 

Establishing a Public Retirement Plan Required by Section C. 108 of Act 179 of 2014. e Washington State Department of Retirement Systems. Washington Voluntary Accounts: 

Report to the Legislature January 2009.

Page 79 GAO-15-556 Options to Expand Coverage
Appendix V

Workplace Access and Automatic Enrollment 

Federally regulated and most provincially regulated employers can 

voluntarily offer PRPPs to their workers, while Quebec will require 

employers with five or more eligible workers to offer VRSP. If a federally 

or provincially regulated employer chooses to offer a PRPP, or is required 

to offer VRSP, the employer will contract with a licensed provider who will

manage the set-up process. Eligible workers will be automatically enrolled. 

However, workers have 60 days to opt out or may, 12 months after their 

contributions begin, set their contribution rate to zero for a fixed period of 

up to five years. Full-time workers are immediately eligible to join a PRPP 

and part-time workers are eligible after 24 months of continuous service. 

Eligible workers for Quebec’s VRSP are those who are ages 18 and older, 

have 1 year of continuous service, and who otherwise do not have the 

opportunity to contribute to a workplace retirement plan. 

Financial Incentives and Worker Contributions

PRPPs and VRSPs offer workers tax benefits to encourage participation, 

but contribution requirements vary. Worker contributions to PRPP receive 

a corresponding tax deduction up to a set contribution limit. Default 

contribution rates will be set by the plan administrator for their PRPP, but 

providers may permit workers to adjust the contribution rate. For VRSP, 

the default contribution rate is set by regulation at 2 percent until 2017, 

increasing to 3 percent in 2018 and 4 percent in 2019. However, workers

can alternatively set their contribution rate to zero. Employers are not 

required to make financial contributions to their workers PRPP or VRSP 

accounts. 

Plan Providers

Service providers, like banks or insurance companies, must apply for a 

license to become an administrator of PRPPs or VRSPs, and take on the 

fiduciary responsibility for administering the plans.

Investment Options

Licensed administrators will offer a limited number of investment options 

including a default option that will be either a balanced fund or a target 

date fund, and up to five additional investment options with varying 

degrees of risk. 

Fees 

To ensure fees are reasonable, government regulation requires that PRPP 

providers charge fees equivalent to or below those charged to members of 

defined contribution plans with 500 or more members. As of July 2015,

VRSP fees for the default option range between 1.09 and 1.25 percent. 

At a glance

Access to workplace retirement 

plans has declined in Canada and 

government officials and 

stakeholders reported that middle 

income workers, in particular, were 

not adequately prepared for 

retirement. According to a recent 

industry report, about 17 percent of 

Canadian households are not 

adequately prepared for retirement.

To address this gap, the federal 

government passed the Pooled 

Registered Pension Plans (PRPP) 

Act in 2012, which created defined 

contribution plans that federally 

regulated employers can choose to 

offer their workers. The federal 

PRPP Act covers PRPPs offered to 

workers in specific industries, such 

as banking or inter-provincial 

transportation, and those workers 

who are employed or selfemployed in the Canadian 

territories. Some provinces are in 

various stages of planning and 

implementation of their own PRPP 

legislation for provincially regulated 

employers. For example, Quebec’s 

version of PRPPs, the Voluntary 

Retirement Savings Plan (VRSP), 

took effect in July 2014, and is 

being phased in over 4 years

starting with large employers, with 

the rollout scheduled to be 

complete by 2018. 

According to research by a 

Canadian financial institution, 

VRSP is estimated to enroll 1

million workers in the province by 

2018. Because the PRPP is 

voluntary for employers and 

implementation is in the early 

stages, estimates on participation 

rates remain unclear.

Source: GAO analysis of foreign agency 

documentation and interviews with 

Canadian officials and industry experts.

Canada

Page 80 GAO-15-556 Options to Expand Coverage
Workplace Access and Automatic Enrollment 

Employers are required to automatically enroll new workers ages 18 to 65 

into a KiwiSaver plan. In addition, existing workers, as well as the selfemployed and unemployed, can choose to opt into a KiwiSaver plan by 

notifying their employer or by contacting a provider directly. Employers 

can select a preferred provider for workers who do not choose their own, 

but workers have the right to change providers anytime. Following 

automatic enrollment, workers have between 2 and 8 weeks to opt out.

Financial Incentives and Worker Contributions

Participation in KiwiSaver offers eligible workers employer contributions, 

tax benefits, and a one-time government contribution, to complement 

workers’ own contributions. For workers who do not opt out, employers 

are generally required to contribute 3 percent of earnings. In addition, 

workers who contribute a minimum of $1,043 New Zealand dollars (NZD) 

(about $663 USD) or more annually get a $521 NZD ($331 USD) tax 

credit. Until May 21, 2015, the government also made a one-time kick start 

contribution of $1,000 for new accounts. After this date, new members are 

no longer eligible for this payment. Workers generally contribute 3, 4, or 8 

percent of earnings. After an initial 12 month period, workers have the 

option of a contributions holiday from 3 months to 5 years.

Plan Providers

KiwiSaver service providers, such as banks, insurance companies and 

investment firms, are registered to offer qualifying plans, and deal directly 

with workers after the initial set-up process. If an employer does not have 

a preferred KiwiSaver provider and a worker does not select one, Inland 

Revenue, the government tax collection and social programs agency, 

allocates workers to one of the nine government-appointed default service 

providers. All service providers are registered with and monitored by the 

Financial Markets Authority, the government regulator.

Investment Options

KiwiSaver service providers offer a range of products with different 

investment options and risk levels with the default being a conservatively 

invested fund. Approximately 25 percent of KiwiSaver participants are in a 

default investment fund. 

Fees 

Default service providers are licensed by Inland Revenue and establish 

reasonable fees for participants by submitting a fee schedule as part of 

the application process. Inland Revenue must also approve any changes 

to the fee structure. In addition, the Commission for Financial Capability

established Fund Finder, an online tool that allows participants to compare 

plan features and fee structures. Over half of KiwiSaver plans charge 

between 1 and 1.5 percent in fees—New Zealand uses a Total Expense 

Ratio tool to measure fees, which is a ratio of total fees to funds under 

management in percentage terms.

At a glance

To increase national savings and 

address the declining trend in 

private sector retirement plan 

coverage of the under 65 

population—from about 20 percent 

in 2001 to about 15 percent in 

2007—the New Zealand 

government passed the KiwiSaver 

Act. The act established KiwiSaver 

in 2007 as a governmentsponsored defined contribution 

workplace program. KiwiSaver 

requires employers to automatically 

enroll all new workers into a 

qualified plan, with a worker optout. Workers are encouraged to 

participate in KiwiSaver through a 

series of incentives that include 

employer contributions, tax 

benefits, and a one-time 

government contribution. 

As of June 2014, KiwiSaver had 

grown to include 2.35 million 

members. Of this total, 

approximately 61 percent chose to 

opt into KiwiSaver either through 

their employer or through a plan 

provider. The remaining 39 percent 

were automatically enrolled by their 

employer. Approximately 20 

percent of enrolled workers have 

chosen to opt out of KiwiSaver. 

Source: GAO analysis of foreign agency 

documentation and interviews with New 

Zealand officials and industry experts.

New Zealand

Page 81 GAO-15-556 Options to Expand Coverage
Workplace Access and Automatic Enrollment 

Employers are required to automatically enroll workers to a qualified 

workplace retirement plan if they are between age 22 and State Pension 

Age—which is variable based on age, gender, years of employment, and 

national insurance status—and have earnings over 10,000 British pounds 

(GBP) (about $15,353 USD) for the 2015/2016 tax year. The U.K. 

government reviews the threshold annually and may adjust it. Once they 

have been automatically enrolled, workers have 1 month to opt out. Some 

workers earning less than 10,000 GBP, ages 16 to 21, and over the State 

Pension Age have the option to opt in. Every 3 years, employers are 

required to automatically re-enroll workers who have previously opted out.

Financial Incentives and Worker Contributions

For workers who do not opt out, the total minimum contribution from the 

employer, government, and worker will combine to reach 8 percent by 

2018. Employers are required to contribute 1 percent of qualified 

earnings—a band of earnings between 5,824 GBP and 42,385 GBP

(about $8,941 USD and $65,073 USD) as of 2015—gradually increasing 

to 3 percent by 2018. In addition, the U.K. government will contribute the 

equivalent of 1 percent of qualified earnings in the form of tax relief by that 

date. Workers currently pay 0.8 percent of qualified earnings, gradually 

increasing to 4 percent by 2018, through payroll deduction.

Plan Providers

Employers may offer a plan through a commercial provider, such as an 

insurance company, if it meets or exceeds certain legal criteria. If an 

employer does not offer a qualifying plan, they must enroll workers into 

NEST, which was established to act as a low-cost default provider. It has 

a public service obligation to accept any employer that wants to use it, 

including smaller employers that may not be able to find suitable 

commercial providers.

Investment Options

NEST offers a limited number of investment options to reduce complexity 

and fees. The default fund is a diversified target date fund, which is 

conservatively invested to avoid capital loss during initial years of saving 

to discourage workers from opting out. In addition to the default, NEST 

offers five other options with varying levels of risk. 

Fees 

NEST does not charge employers to use the program. Workers enrolled in 

NEST pay an annual management fee of 0.3 percent. A temporary 

additional fee of 1.8 percent on contributions is also deducted until NEST 

start-up costs are recovered. According to NEST officials, this is 

equivalent to a total fee of about 0.5 percent annually, which is

comparable to fees charged by larger workplace retirement programs. 

From April 2015 onward, workers who enroll with non-NEST commercial 

providers pay an annual charge fee capped at 0.75 percent.

At a glance

To address the declining proportion 

of private sector workers 

participating in a workplace 

retirement plan—down from 47 

percent in 2002 to about 32 

percent in 2012—the United 

Kingdom government passed 

legislation in 2008 requiring 

employers to automatically enroll 

all eligible workers into a retirement 

plan. Employers can meet their 

obligation by enrolling workers in a 

plan that meets minimum 

standards or the new National 

Employment Savings Trust (NEST) 

set up by the government. 

Automatic enrollment is being 

phased in over the course of 

several years beginning with the 

largest employers. Since its 

implementation began, the rollout 

had reached over 50,000 

employers and 5.3 million workers 

by end of June 2015. An additional 

1.2 million employers are 

scheduled to implement automatic 

enrollment for approximately 4 

million employees by April 2017. 

The rollout is scheduled to be 

completed by 2018, when it will 

cover employers of all sizes. 

Worker opt-out rates were 

approximately 9 to 10 percent in 

2013 and 12 percent in 2014, 

below the initial government 

estimates of 33 percent. 

Source: GAO analysis of foreign agency 

documentation and interviews with 

United Kingdom officials and industry 

experts.

United Kingdom

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Appendix VI: Technical Appendix for Data 

Analysis

In this appendix we summarize the results of our analyses of factors 

affecting retirement program participation. We first looked at the likelihood 

of participating in retirement programs overall, or among all workers. We 

then examined, among all workers, the likelihood of their employers 

offering them retirement programs. Then, among workers whose 

employers offered programs, we looked at the likelihoods of workers 

being eligible for them. And finally, we looked at the likelihood of 

participating in retirement programs among workers who were offered 

programs and eligible for them. In all of these analyses, we estimated 

how these different likelihoods were associated with different 

characteristics of the workers, including their income, occupation, 

education, age, gender, marital status, race/ethnicity, the size of the firm 

they worked for, whether they worked full-time or part-time, whether they 

worked for the full year or only part of the year, and whether they were or 

were not union members. 

For our analyses, we used publicly available data from the Survey of 

Income and Program Participation (SIPP) from 2012, as shown in tables

9 – 12 of this appendix. To correct for under-reporting of participation we 

also used W-2 data as described in appendix I. Results from the public 

use data and W-2 data were very similar in the size and significance of 

variables included in our analysis, as shown in table 13 at the end of this 

appendix. In all of the tables, the numbers and estimates derived from 

them use weighted data to reflect population estimates, using weights 

provided by SIPP.

Table 9 shows how various categories of workers differ in their likelihood 

(expressed both as percentages and odds) of participating in retirement 

programs. In the first column of numbers in the table we show the number 

of workers in each group (or category) defined by the different factors. 

The next two columns of numbers reflect the percentages in each group 

that were and were not participating in retirement programs. The 

traditional way of comparing groups involves considering the difference in 

those percentages, and those differences are in many cases quite 

sizable. For example, only 14 percent of the workers in the lowest income 

quartile were participating in retirement programs, while 76 percent of the 

workers in the highest income quartile were participating in retirement 

programs. Only 18 percent of workers with less than a high school 

diploma, but 62 percent of workers with at least a bachelor’s degree, were 

participating in retirement programs. And while only 23 percent of the 

workers in firms with fewer than 50 workers were participating in 

retirement programs, 60 percent of workers in firms with more than 1,000 

workers were retirement program participants. Sizable differences also 

Appendix VI: Technical Appendix for Data 

Analysis

Factors Affecting 

Workplace Retirement 

Program Participation

Likelihood of Participating

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Appendix VI: Technical Appendix for Data 

Analysis

exist between most of the categories of workers defined by the other 

characteristics shown in the table. 

Odds and Odds Ratios

An alternative method of estimating the likelihood of participating in 

retirement programs and the differences in those likelihoods between 

groups involves calculating odds and odds ratios. The odds on 

participating (vs. not participating) in retirement programs are calculated 

by taking, overall or for any one group, the number (or percent) of 

workers participating in retirement programs and dividing it by the number 

(or percent) of workers not participating in retirement programs. Overall, 

using the percentages in the final row of table 9, the odds on participating 

in retirement programs in our (weighted) sample of workers is 45.4 ÷ 54.6 

= .832, apart from rounding.1 While somewhat different and less 

traditional than percentages, the odds have a fairly direct and simple 

interpretation: In this case it implies that overall there are .83 retirement 

program participants for every 1 non-participant, or 83 participants for 

every 100 non-participants. In the fourth column of numbers in table 9, we 

show the odds on participating for each subgroup defined by the different 

worker characteristics shown in the table. There we see, for example, that 

the odds on participating in retirement programs increases from 0.167 for 

workers in the lowest income quartile to 0.514 for workers in the second 

income quartile to 1.338 for workers in the third income quartile and, 

finally, to 3.176 for workers in the highest income quartile.

The unadjusted odds ratios in the penultimate column of table 9 show 

how the odds on participating in retirement programs vary across the 

different subgroups. Where the factors or worker characteristics 

distinguish only two groups, like union membership, we simply take the 

ratio of the odds for one group to the other – e.g., 2.103 ÷ 0.774 = 2.72, 

which implies that the odds on union members participating in retirement 

programs are 2.7 times higher than the odds for workers who are not 

union members. Where the factors involve more than two subgroups, we 

choose one subgroup as the referent category and calculated the ratios of 

the odds for the other subgroups relative to that one. To make 

1 This value, and the other values of the odds shown in the tables, may not equal 

precisely what one obtains by dividing the percentages shown in the table, since the 

tabled values were estimated directly from the numbers on which the percentages were 

based to avoid rounding error.

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Appendix VI: Technical Appendix for Data 

Analysis

comparisons across income categories, for example, the lowest income 

quartile was chosen as the referent category, and the ratios shown for the 

other subgroups (i.e., 0.514 ÷ 0.167 = 3.08; 1.338 ÷ 0.167 = 8.01; and 

3.176 ÷ 0.167 = 19.01) indicate that workers in the second, third, and 

highest income quartiles have higher odds on participating than workers 

in the lowest quartile, by factors of 3, 8, and 19, respectively. The full set 

of unadjusted odds ratios shown in the table indicate that virtually all of 

the subgroups differ from one another, in most cases significantly, and in 

many cases by a substantively large amount.

2 Workers in the broad 

category of occupations involving Management, Business, Science, and 

Arts, for example, were 6.5 times as likely to be participating in retirement 

plans (or have odds that are 6.5 times higher) as workers working in 

Service occupations. Workers with bachelor’s degrees were 2.7 times as 

likely as workers with less than a high school education to be participating 

in retirement programs. And, to offer a final example, Hispanics were less

likely than white non-Hispanics to be participating in a retirement program

by a factor of 0.37.

These unadjusted odds ratios may seem to inflate the differences 

between groups, especially to those who are accustomed to comparing 

percentages. That is, while the odds ratio comparing workers in the 

highest and lowest income quartiles suggests a 19-fold difference 

between the two groups, there is only slightly more than a 5-fold 

difference between the two groups in the percentage participating (i.e., 

76.1 ÷ 14.3 = 5.3). Focusing on the difference between groups in the 

percent participating, however, ignores the implicit difference in the 

percent not participating between groups, which differed by a factor of 

23.9 ÷ 85.7 = 0.28. One advantage of the odds ratio (also referred to as 

the cross-product ratio) is that in estimating the ratios of participants to 

non-participants it makes fuller use of the data involved in the 

comparisons, and considers both differences at once. In fact, the odds 

ratio we obtain in this case, equal to 19.01, could just as easily have been 

obtained by taking the ratio of these two percentage differences (i.e., 5.3 

÷ 0.28 = 19.01, apart from rounding). 

2 The only difference (or ratio) shown in the table which is not statistically significant 

involves the difference between Asians and Whites, where the odds ratio is 0.9, or very 

nearly 1.0, which indicates no difference in the odds on participating.

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Appendix VI: Technical Appendix for Data 

Analysis

Overall Participation

Another advantage of odds ratios is that, unlike percentage differences, 

they can be adjusted using multivariate models (logistic regression 

models) so that they reflect the net effect of each variable, rather than the 

gross (or unadjusted) effect. The odds ratios in the final column of table 9

show how different the odds on participating are when we consider all of 

the variables in the table simultaneously. Because of the correlations 

among some of the variables in the table (like income and education), the 

effects of the different variables, or the differences between the 

categories of workers they define, are in many cases substantially 

attenuated (or smaller) when we look at them simultaneously than when 

we look at each individually. The odds ratio estimating the income 

difference just discussed, for example, is reduced when we estimate its 

effect net of the other variables, from 19.0 to 6.8. Even after adjusting the 

ratios to take account of the interrelatedness of many of the factors in the 

table, most of the subgroups compared remain significantly different from 

one another, and in many cases the differences are sizable. In addition to 

the income difference mentioned above we find, even after adjustment, 

that the likelihood of participating varies significantly for many of the 

variables we examined (see table 9). For example:

1. Workers in all other occupational categories have significantly higher 

odds on participating in retirement programs than workers in Service 

occupations, and the odds are nearly twice as high (OR = 1.95) for 

workers in Management, Business, Science, and Arts occupations as 

for those in Service occupations.

2. Workers with less than a high school diploma were less likely (by a 

factor of 0.6) than those with less than a high school education to be 

participating, though after adjustment those with some college or with 

a Bachelor’s degree are not statistically distinguishable from those 

with a high school diploma.

3. Workers in larger firms had higher odds on participating in retirement 

programs than workers in smaller firms. Workers in firms with 51 to 

100 workers were about twice as likely (OR = 2.1) as workers in firms 

with 50 or fewer workers to participate, and workers in firms with more 

than 1,000 workers were about five times (OR = 4.9) as likely.

4. The youngest category of workers (ages 18-24) were only roughly 

one-third as likely (OR =0.37) as workers 25-34 to be participating in 

Regression Results 

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Analysis

retirement programs; workers 35-44 were not significantly different 

from workers 25-34; and workers 45-54 and 55-64 were both more 

likely than those 25-34 to be participating in retirement programs, in 

both cases by a factor of 1.4. Workers 65 and over had lower odds on 

participating than all groups except the very youngest, and odds that 

were lower than workers 25-34 by a factor of 0.68.

5. Additionally, full-time workers were 1.6 times more likely than parttime workers to be participating in retirement programs; full-year 

workers were 2.5 times more likely than part-year workers to be 

participating in retirement programs; and union workers were twice as 

likely (OR = 2.0) as non-union workers to be participating in retirement 

plans.

6. Finally, male workers were less likely than female workers to be 

participating in retirement programs, by a factor of 0.91; currently 

married workers were 1.2 times more likely than never married 

workers to be participating in retirement programs, while widowed, 

divorced, and separated workers were not significantly different from 

those who were never married; and Black, Hispanic, and Asian 

workers had lower odds on participating than White, non-Hispanic 

workers, by factors of 0.8, 0.6, and 0.7, respectively.

Employer Offers Program

Some of these differences in the likelihood of participating in retirement 

programs are likely due to the fact that some categories of workers are 

more likely than others to work for employers that offer retirement 

programs. Table 10 shows that a great many categories of workers differ 

in terms of whether their employer offers a program. As in the table 

above, the unadjusted odds ratios indicating the differences between 

groups in the odds on their employers offering a program (in the 

penultimate column of the table) tend to be somewhat larger than the 

adjusted odds ratios, or the odds ratios obtained from multivariate models 

in which all of the different factors are considered simultaneously using a 

multivariate model (in the final column). But even the adjusted odds ratios 

reveal some sizable and significant differences, including the following:

1. Workers with higher incomes are more likely to work for employers 

that offer retirement programs. Workers in the 2nd, 3rd, and highest 

income quartiles have higher odds on working for employers that offer 

retirement programs than workers in the lowest income quartile, by 

factors of 1.7, 2.7, and 3.9, respectively.

2. Workers in all occupational categories except for Natural Resources, 

Construction, and Maintenance Occupations have significantly higher 

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Analysis

odds on working for employers that offer retirement programs than 

workers in Service occupations, and the odds are nearly twice as high 

(OR = 2.0) for workers in Management, Business, Science, and Arts 

occupations as for those in Service occupations.

3. Workers with less than a high school education were less likely to 

work for employers that offer retirement programs than those with a 

high school diploma, by a factor of 0.73, while workers with some 

college or a Bachelor’s degree were more likely (in both cases) by a 

factor of roughly 1.2.

4. Workers in larger firms had substantially higher odds on working for 

employers that offer retirement programs than workers in smaller 

firms. Workers in firms with 51 to 100 workers were about three times 

as likely (OR = 2.95) as workers in firms with 50 or fewer workers to 

work for employers that offer retirement programs, workers in firms 

with 101 to 500 workers and with 501 to 1,000 workers were 5 and 6 

times as likely, respectively, and workers in firms with more than 

1,000 workers were about 9 times (OR = 9.1) as likely to work for 

employers that offer retirement programs.

5. The youngest category of workers (ages18-24) were only roughly 

three-fourths as likely (OR =0.76) as workers 25-34 to be working for 

employers that offer retirement programs; workers 35-44 were also 

somewhat less likely than workers 25-34 to work for employers that 

offer retirement programs (OR = 0.88); and workers 45-54 and 55-64 

did not significantly differ from those 25-34 in working for employers 

that offer retirement programs. Workers 65 and over had lower odds 

on working for employers that offer retirement programs than all 

groups, and odds that were lower than workers 18-24 by a factor of 

0.62.

6. Additionally, full-time workers were 1.2 times more likely than parttime workers to be working for employers that offer retirement 

programs; full-year workers were 1.5 times more likely than part-year 

workers to be working for employers that offer retirement programs, 

and union workers were twice as likely (OR = 2.0) as non-union 

workers to be working for employers that offer retirement programs.

7. Finally, male workers and female workers did not significantly differ in 

their chance of working for employers that offer retirement programs 

(OR = 0.96); currently married workers were slightly but significantly 

(OR = 1.1) more likely than never married workers to be working for 

employers that offer retirement programs, while widowed, divorced,

and separated workers were not significantly different from those who 

were never married; and Black, Hispanic, and Asian workers had 

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Analysis

lower odds on working for employers that offer retirement programs 

than White, non-Hispanic workers, by factors of 0.8, 0.6, and 0.6, 

respectively.

Eligibility

Some of these differences in the likelihood of participating in retirement 

programs are also likely due to the fact that some categories of workers 

are more likely than others to be eligible for the retirement programs that 

their employers offer. Table 11 shows that a number of categories of 

workers differ in terms of whether they are eligible for the retirement 

programs their employers offer, though fewer factors are significantly 

associated with eligibility than participation. The differences that do exist, 

like those described above, are in virtually all cases somewhat smaller 

when we estimate them simultaneously than when we estimate them 

separately; nonetheless, the odds ratios from the multivariate models 

indicate that:

1. Workers with higher incomes are more likely to be eligible for the 

retirement programs their employers offer than workers with lower 

incomes. Workers in the 2nd, 3rd, and highest income quartiles have 

higher odds on being eligible than workers in the lowest quartile, by 

factors of 2.0, 4.4, and 7.5, respectively.

2. Occupation was not significantly associated with whether workers 

were eligible for the retirement programs their employers offer.

Education was significantly related to eligibility, however; workers with 

some college and with a college degree were less likely than those 

with a high school degree to be eligible, by factors of 0.8 and 0.7, 

respectively.

3. Workers in mid-size firms were not significantly different from workers 

in the smallest firms in their chance of being eligible for the retirement 

programs their employers offer, though workers in firms with more 

than 1,000 workers were 1.3 times as likely to be eligible as workers 

in firms with 50 or fewer workers.

4. The youngest category of workers (ages 18-24) were less than onehalf as likely (OR = 0.44) as workers 25-34 to be eligible for retirement 

programs their employers offer, while workers 35-44, 45-54, and 55-

64 were more likely to be eligible than those 25-34, by factors of 1.4, 

1.6, and 1.6, respectively. Workers 65 and over were less likely to be 

eligible than workers 18-24, by a factor of 0.73.

5. Full-time workers were 2.6 times more likely than part-time workers to 

be eligible for the retirement programs their employers offer; full-year 

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Analysis

workers were 3.1 times more likely than part-year workers to be 

eligible for the retirement programs their employers offer; and union 

workers were 1.4 as likely as non-union workers to be eligible for the 

retirement programs their employers offer.

6. Finally, male workers and female workers did not significantly differ in 

their chance of being eligible for the retirement programs their 

employers offer (OR = 1.1); currently married workers were 

significantly more likely (OR = 1.4) than never married workers to be 

eligible for the retirement programs their employers offer, while 

widowed, divorced, and separated workers were not significantly 

different from those who were never married; and race and ethnicity 

was not significantly associated with eligibility.

Participation among Those Eligible

Given these results indicating that participation in retirement programs is 

partly the result of whether programs are offered, and whether workers 

are eligible for them, in table 12 we show how various categories of 

workers differ in their likelihood of participating in retirement programs 

when we restrict our attention to workers whose employers offer 

programs for which they are eligible. While differences are in most cases 

smaller than they appeared when we looked at all workers, regardless of 

whether they worked for companies that offered retirement programs and 

whether they were eligible for them, many still remain sizable and 

statistically significant. Focusing again on the multivariate odds ratios in 

the final column of the table, the results are as follows among those who 

were eligible for the programs their employers offered:

1. Workers with higher incomes are more likely to participate than 

workers with lower incomes. Workers in the 2nd, 3rd, and highest 

income quartiles have higher odds on participating in retirement 

programs than workers in the lowest income quartile, by factors of 1.2, 

2.2, and 4.4, respectively.

2. Workers in all occupational categories except for Production, 

Transportation, and Material Moving Occupations have significantly 

higher odds on participating in retirement programs than workers in 

Service occupations, by factors ranging from 1.3 to 1.5.

3. Workers with less than a high school diploma were less likely (by a 

factor of 0.7) than those with a high school education to be 

participating, though after adjustment those with some college or with 

a Bachelor’s degree are not significantly different from those with a 

high school diploma.

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4. Workers in firms with 51 to 100 workers were somewhat less likely 

(OR = 0.75) as workers in firms with 50 or fewer workers to 

participate, while workers in each of the larger firm categories (with 

more than 100 workers) were not significantly different from the 

smallest firms.

5. The youngest category of workers (ages 18-24) were only roughly 

one-half as likely (OR =0.46) as workers 25-34 to be participating in 

retirement programs; workers 35-44, 45-54, and 55-64 were more 

likely than those 25-34 to be participating in retirement programs, by 

factors of 1.3, 1.7, and 1.9, respectively. Workers 65 and over had 

odds of participating that were not statistically distinguishable from the 

odds for workers 25-34 (OR = 0.9).

6. Full-time workers were slightly more likely (OR =1.1) than part-time 

workers to be participating in retirement programs; full-year workers 

were 1.3 times more likely than part-year workers to be participating in 

retirement programs, though the result was not statistically significant; 

and union workers were 1.7 times as likely as non-union workers to 

be participating in retirement programs.

7. Finally, male workers were less likely than female workers to be 

participating in retirement programs, by a factor of 0.8; marital status 

was not statistically associated with participation; and Black and 

Hispanic workers had lower odds on participating than White, nonHispanic workers, by factors of roughly 0.7 in both cases. Asians and 

other non-Hispanics were not significantly different from Whites. 

Ignoring for the moment the numbers in parentheses, table 13

summarizes how the differences in participating across groups change 

when we look at the different group characteristics (1) one at a time 

among all workers, (2) all at once among all workers, and (3) all at once 

among workers who are eligible for the retirement programs offered by 

their employers. Some of the differences that appear sizable and 

significant when we look at them in isolation (column 1) diminish in size 

and become insignificant when all of the different factors are considered 

simultaneously (column 2). This is true of the differences between 1) 

workers with more than a high school education vs. workers with only a 

high school diploma, 2) workers ages 35-44 vs. workers ages 25-34, 3) 

workers who are widowed, divorced, or separated vs. workers who were 

never married, and 4) other non-Hispanic workers and white non-Hispanic 

workers. Further, some of the differences that remain sizable and 

significant even when they are considered simultaneously (column 2) 

diminish and become insignificant when we restrict the sample to workers 

who were offered programs and were eligible for them (column 3). Such 

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Analysis

is the case with the differences between 1) workers in Production, 

Transportation, and Material Moving Occupations vs. workers in Service 

Occupations, 2) workers in each of the larger firm categories with more 

than 100 workers vs. those in firms with 50 or fewer workers, 3) workers 

65 and older vs. workers 25-34, 4) full-year vs. part-year workers, 5) 

married vs. never married workers, and 6) Asian non-Hispanic vs. white 

non-Hispanic workers. Most of the differences that remain significant after 

taking account of eligibility, which are noted in the bullets above 

associated with table 12, are smaller than they appeared before taking 

account of eligibility, though some of the age differences are exceptions 

to this. The factors that have the most pronounced effects when they are 

considered jointly and restricted to eligible workers are income, 

occupation, age, and union membership.

The numbers in parentheses in the table show these same coefficients 

from the same bivariate and multivariate models for the same subgroups 

that we obtain when we use the “corrected” data which combines W-2 

information from the Census with the self-reported data from SIPP. In 

virtually all cases the coefficients are very similar, and only in a few 

instances, involving the adjusted education effect for all workers, and the 

adjusted differences between part-time and full-time workers and workers 

in firms with 1,000+ workers and in firms with fewer than 50 workers 

among those who are eligible, are the estimated odds ratios significant in 

one set of results but not in the other. In virtually all other instances, the 

effects are similar in both size and significance. 

Page 92 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Table 9. Percentages of Workers of Different Types Participating and Not Participating in Retirement Programs, and Odds and 

Odds Ratios Derived from Them

Variable Category Total Participating

Not 

Participating

Odds On 

Participating

Odds 

Ratio

Odds Ratio 

(Multivariate)

Income Lowest Quartile 25,569,365 14.3 85.7 0.167

2nd Quartile 25,493,645 33.9 66.1 0.514 3.08 * 2.00 *

3rd Quartile 25,643,901 57.2 42.8 1.338 8.01 * 4.04 *

Highest Quartile 25,575,562 76.1 23.9 3.176 19.01 * 6.84 *

Occupation 1. Management, Business, Science, 

and Arts Occupations

32,917,449 64.0 36.0 1.774 6.48 * 1.95 *

2. Service Occupations 18,465,079 21.5 78.5 0.274

3. Sales and Office Occupations 27,175,235 43.2 56.8 0.760 2.78 * 1.54 *

4. Natural Resources, Construction, 

and Maintenance Occupations

9,619,204 37.9 62.1 0.610 2.23 * 1.25 *

5. Production, Transportation, and 

Material Moving Occupations

14,105,504 42.8 57.2 0.749 2.74 * 1.44 *

Education 1. LT HS Diploma 8,095,918 18.1 81.9 0.221 0.37 * 0.61 *

2. HS Diploma 26,703,135 37.2 62.8 0.593

3. Some College 37,213,439 43.8 56.2 0.779 1.31 * 1.03

4. Bachelor's or More 30,269,980 61.9 38.1 1.625 2.74 * 1.06

Firm Size 1. More Than 1,000 Workers 44,333,968 59.6 40.4 1.473 4.85 * 4.93 *

2. 501 to 1,000 Workers 4,822,085 54.0 46.0 1.175 3.87 * 3.57 *

3. 101 to 500 Workers 13,086,877 52.0 48.0 1.083 3.57 * 3.01 *

4. 51 to 100 Workers 7,025,518 41.8 58.2 0.719 2.37 * 2.07 *

5. 50 or Fewer Workers 33,014,024 23.3 76.7 0.304

Age Age2: 18 - 24 13,224,335 11.9 88.1 0.135 0.18 * 0.37 *

Age2: 25 - 34 24,119,413 43.1 56.9 0.757

Age2: 35 - 44 22,862,202 49.9 50.1 0.997 1.32 * 1.08

Age2: 45 - 54 23,309,611 56.1 43.9 1.278 1.69 * 1.43 *

Age2: 55 - 64 14,913,382 57.4 42.6 1.347 1.78 * 1.44 *

Age2: 65+ 3,853,529 36.9 63.1 0.585 0.77 * 0.68 *

Part/Full Time 

Status

Full-time 70,763,725 53.9 46.1 1.168 3.26 * 1.62 *

Part-time 31,518,747 26.4 73.6 0.358

Part/Full Year 

Status

Full-Year 97,047,824 47.0 53.0 0.885 4.46 * 2.47 *

Part-Year 5,234,648 16.6 83.4 0.198

Union 

Membership

1. Union 7,463,103 67.8 32.2 2.103 2.72 * 2.00 *

2. Non-Union 94,819,369 43.6 56.4 0.774

Gender 1. Male 54,394,487 47.2 52.8 0.895 1.17 * 0.91 *

2. Female 47,887,985 43.3 56.7 0.764

Page 93 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Variable Category Total Participating

Not 

Participating

Odds On 

Participating

Odds 

Ratio

Odds Ratio 

(Multivariate)

Marital Status 1. Married 54,849,942 53.5 46.5 1.149 2.62 * 1.19 *

2. Widowed 1,938,759 42.5 57.5 0.740 1.69 * 0.97

3. Divorced 11,429,738 50.4 49.6 1.017 2.32 * 0.99

4. Separated 2,174,048 36.8 63.2 0.582 1.33 * 0.92

5. Never Married 31,889,985 30.5 69.5 0.439

Race/Ethnicity 1. White, Non-Hispanic 67,465,862 50.6 49.4 1.023

2. Black, Non-Hispanic 11,039,136 40.3 59.7 0.676 0.66 * 0.75 *

3. Hispanic 16,358,256 27.2 72.8 0.374 0.37 * 0.58 *

4. Asian, Non-Hispanic 4,752,505 48.1 51.9 0.926 0.90 0.66 *

5. Other, Non-Hispanic 2,666,713 42.6 57.4 0.743 0.73 * 0.86

 Total 102,282,472 45.4 54.6 0.832

Source: GAO analysis of weighted Survey of Income and Program Participation (SIPP) Data (2012). | GAO-15-556. 

Note: Asterisks denote odds ratios which reflect differences that are statistically significant at the .05 level.

Table 10. Percentages of Workers of Different Types Whose Employers Do and Do Not Offer Retirement Programs, and Odds 

and Odds Ratios Derived from Them

Variable Category Total

Retirement 

Program 

Offered

No 

Retirement 

Program 

Offered

Odds On 

Program 

Offered

Odds 

Ratio

Odds Ratio 

(Multivariate)

Income Quartile Lowest Quartile 25,569,365 40.3 59.7 0.675

2nd Quartile 25,493,645 55.7 44.3 1.259 1.87 * 1.66 *

3rd Quartile 25,643,901 71.3 28.7 2.483 3.68 * 2.71 *

Highest Quartile 25,575,562 83.9 16.1 5.219 7.73 * 3.92 *

Occupation 1. Management, Business, Science, and Arts 

Occupations

32,917,449 77.1 22.9 3.360 4.54 * 1.97 *

2. Service Occupations 18,465,079 42.5 57.5 0.739

3. Sales and Office Occupations 27,175,235 64.7 35.3 1.829 2.47 * 1.61 *

4. Natural Resources, Construction, and 

Maintenance Occupations

9,619,204 48.6 51.4 0.945 1.28 * 1.03

5. Production, Transportation, and Material 

Moving Occupations

14,105,504 62.4 37.6 1.658 2.24 * 1.50 *

Education 1. LT HS Diploma 8,095,918 35.4 64.6 0.548 0.43 * 0.73 *

2. HS Diploma 26,703,135 55.8 44.2 1.262

3. Some College 37,213,439 63.5 36.5 1.738 1.38 * 1.16 *

4. Bachelor's or More 30,269,980 75.6 24.4 3.090 2.45 * 1.18 *

Firm Size 1. More Than 1,000 Workers 44,333,968 81.6 18.4 4.431 9.22 * 9.14 *

Page 94 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Variable Category Total

Retirement 

Program 

Offered

No 

Retirement 

Program 

Offered

Odds On 

Program 

Offered

Odds 

Ratio

Odds Ratio 

(Multivariate)

2. 501 to 1,000 Workers 4,822,085 75.6 24.4 3.094 6.44 * 6.11 *

3. 101 to 500 Workers 13,086,877 72.6 27.4 2.648 5.51 * 4.98 *

4. 51 to 100 Workers 7,025,518 60.1 39.9 1.508 3.14 * 2.95 *

5. 50 or Fewer Workers 33,014,024 32.5 67.5 0.481

Age Age2: 18 - 24 13,224,335 45.4 54.6 0.831 0.49 * 0.76 *

Age2: 25 - 34 24,119,413 63.0 37.0 1.702

Age2: 35 - 44 22,862,202 63.9 36.1 1.767 1.04 0.88 *

Age2: 45 - 54 23,309,611 68.7 31.3 2.194 1.29 * 1.11

Age2: 55 - 64 14,913,382 69.3 30.7 2.254 1.32 * 1.05

Age2: 65+ 3,853,529 55.1 44.9 1.228 0.72 * 0.62 *

Part/Full Time 

Status

Full-time 70,763,725 68.2 31.8 2.146 2.09 * 1.22 *

Part-time 31,518,747 50.7 49.3 1.029

Part/Full Year 

Status

Full-Year 97,047,824 63.9 36.1 1.770 2.37 * 1.54 *

Part-Year 5,234,648 42.8 57.2 0.747

Union 

Membership

1. Union 7,463,103 82.6 17.4 4.742 3.00 * 2.01 *

2. Non-Union 94,819,369 61.3 38.7 1.582

Gender 1. Male 54,394,487 63.4 36.6 1.733 1.06 * 0.96

2. Female 47,887,985 62.2 37.8 1.642

Marital Status 1. Married 54,849,942 66.9 33.1 2.021 1.67 * 1.11 *

2. Widowed 1,938,759 61.4 38.6 1.591 1.31 * 1.09

3. Divorced 11,429,738 66.6 33.4 1.991 1.64 * 1.03

4. Separated 2,174,048 59.1 40.9 1.445 1.19 1.18

5. Never Married 31,889,985 54.8 45.2 1.213

Race/Ethnicity 1. White, Non-Hispanic 67,465,862 67.4 32.6 2.068

2. 2. Black, Non-Hispanic 11,039,136 62.9 37.1 1.695 0.82 * 0.80 *

3. 3. Hispanic 16,358,256 44.5 55.5 0.802 0.39 * 0.57 *

4. 4. Asian, Non-Hispanic 4,752,505 60.4 39.6 1.523 0.74 * 0.55 *

5. 5. Other, Non-Hispanic 2,666,713 63.4 36.6 1.732 0.84 0.84

 Total 102,282,472 62.8 37.2 1.690

Source: GAO analysis of weighted Survey of Income and Program Participation (SIPP) Data (2012). | GAO-15-556. 

Note: Asterisks denote odds ratios which reflect differences that are statistically significant at the .05 level.

Page 95 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Table 11. Percentages of Workers of Different Types Who Are Eligible and Ineligible for the Retirement Programs Their 

Employers Offer, and Odds and Odds Ratios Derived from Them

Variable Category Total Eligible

Not 

Eligible

Odds On 

Eligible

Odds 

Ratio

Odds Ratio 

(Multivariate)

Income 

Quartile

Lowest Quartile 10,304,214 56.0 44.0 1.272

2nd Quartile 14,208,542 82.8 17.2 4.810 3.78 * 2.01 *

3rd Quartile 18,281,313 93.1 6.9 13.577 10.6

7

* 4.35 *

Highest Quartile 21,462,898 96.5 3.5 27.551 21.6

6

* 7.52 *

Occupation 1. Management, Business, Science, and 

Arts Occupations

25,366,781 92.0 8.0 11.445 4.30 * 1.21

2. Service Occupations 7,848,882 72.7 27.3 2.660

3. Sales and Office Occupations 17,569,072 81.6 18.4 4.432 1.67 * 0.94

4. Natural Resources, Construction, and 

Maintenance Occupations

4,673,784 92.1 7.9 11.649 4.38 * 1.28

5. Production, Transportation, and 

Material Moving Occupations

8,798,449 86.4 13.6 6.334 2.38 * 0.97

Education 1. LT HS Diploma 2,864,394 76.2 23.8 3.210 0.60 * 0.80

2. HS Diploma 14,900,315 84.2 15.8 5.316

3. Some College 23,622,812 83.9 16.1 5.197 0.98 0.80 *

4. Bachelor's or More 22,869,446 90.7 9.3 9.711 1.83 * 0.70 *

Firm Size 1. More Than 1,000 Workers 36,171,148 85.8 14.2 6.027 1.00 1.27 *

2. 501 to 1,000 Workers 3,644,348 86.1 13.9 6.194 1.03 1.18

3. 101 to 500 Workers 9,499,033 86.9 13.1 6.661 1.11 1.14

4. 51 to 100 Workers 4,224,392 86.7 13.3 6.511 1.08 1.09

5. 50 or Fewer Workers 10,718,048 85.7 14.3 6.002

Age Age2: 18 - 24 6,000,057 48.9 51.1 0.956 0.17 * 0.44 *

Age2: 25 - 34 15,191,868 85.1 14.9 5.729

Age2: 35 - 44 14,598,763 91.4 8.6 10.573 1.85 * 1.38 *

Age2: 45 - 54 16,011,483 92.4 7.6 12.078 2.11 * 1.56 *

Age2: 55 - 64 10,330,876 92.3 7.7 12.016 2.10 * 1.59 *

Age2: 65+ 2,123,920 82.0 18.0 4.562 0.80 0.73 *

Part/Full Time 

Status

Full-time 48,270,903 92.2 7.8 11.865 5.78 * 2.56 *

Part-time 15,986,065 67.3 32.7 2.054

Part/Full Year 

Status

Full-Year 62,018,353 87.2 12.8 6.842 6.36 * 3.12 *

Part-Year 2,238,615 51.8 48.2 1.076

Union 

Membership

1. Union 6,163,455 91.5 8.5 10.752 1.83 * 1.38 *

2. Non-Union 58,093,513 85.4 14.6 5.865

Page 96 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Gender 1. Male 34,491,780 88.4 11.6 7.624 1.53 * 1.10

2. Female 29,765,188 83.2 16.8 4.968

Marital Status 1. Married 36,695,804 91.6 8.4 10.948 4.01 * 1.43 *

2. Widowed 1,190,516 83.5 16.5 5.070 1.86 * 0.88

3. Divorced 7,608,362 89.3 10.7 8.368 3.06 * 1.03

4. Separated 1,284,829 82.5 17.5 4.700 1.72 * 0.84

5. Never Married 17,477,456 73.2 26.8 2.733

Race/Ethnicity 1. White, Non-Hispanic 45,473,443 86.9 13.1 6.633

2. Black, Non-Hispanic 6,942,898 82.3 17.7 4.647 0.70 * 0.91

3. Hispanic 7,281,447 83.0 17.0 4.877 0.74 * 1.00

4. Asian, Non-Hispanic 2,868,585 90.0 10.0 8.992 1.36 * 0.96

5. Other, Non-Hispanic 1,690,595 83.8 16.2 5.164 0.78 1.21

 Total 64,256,968 86.0 14.0 6.150

Source: GAO analysis of weighted Survey of Income and Program Participation (SIPP) Data (2012). | GAO-15-556. 

Note: Asterisks denote odds ratios which reflect differences that are statistically significant at the .05 level.

Table 12. Percentages of Workers of Different Types Participating and Not Participating in Retirement Programs, and Odds 

and Odds Ratios Derived from Them, for Workers Whose Employers Offer Retirement Programs for Which They Are Eligible

Category Total Participating

Not 

Participating

Odds On 

Participating

Odds 

Ratio

Odds Ratio 

(Multivariate)

Income 

Quartile

Lowest Quartile 5,768,713 63.4 36.6 1.735

2nd Quartile 11,763,009 73.6 26.4 2.782 1.60 * 1.22 *

3rd Quartile 17,027,209 86.2 13.8 6.242 3.60 * 2.23 *

Highest Quartile 20,711,171 93.9 6.1 15.440 8.90 * 4.43 *

Occupation 1. Management, Business, 

Science, and Arts 

Occupations

23,328,455 90.2 9.8 9.252 4.05 * 1.53 *

2. Service Occupations 5,704,097 69.6 30.4 2.285

3. Sales and Office 

Occupations

14,334,536 81.9 18.1 4.512 1.97 * 1.34 *

4. Natural Resources, 

Construction, and 

Maintenance Occupations

4,304,300 84.6 15.4 5.506 2.41 * 1.37 *

5. Production, 

Transportation, and 

Material Moving 

Occupations

7,598,715 79.5 20.5 3.884 1.70 * 1.17

Education 1. LT HS Diploma 2,184,037 67.2 32.8 2.048 0.54 * 0.74 *

2. HS Diploma 12,541,175 79.3 20.7 3.825

3. Some College 19,810,619 82.2 17.8 4.631 1.21 * 0.97

4. Bachelor's or More 20,734,271 90.4 9.6 9.390 2.46 * 1.18

Page 97 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Firm Size 1. More Than 1,000 Workers 31,023,957 85.1 14.9 5.720 1.12 1.17

2. 501 to 1,000 Workers 3,137,735 83.0 17.0 4.888 0.95 0.92

3. 101 to 500 Workers 8,259,137 82.4 17.6 4.672 0.91 0.86

4. 51 to 100 Workers 3,661,940 80.2 19.8 4.055 0.79 0.75 *

5. 50 or Fewer Workers 9,187,334 83.7 16.3 5.127

Age Age2: 18 - 24 2,932,209 53.5 46.5 1.151 0.28 * 0.46 *

Age2: 25 - 34 12,934,186 80.4 19.6 4.094

Age2: 35 - 44 13,337,350 85.6 14.4 5.944 1.45 * 1.26 *

Age2: 45 - 54 14,787,150 88.4 11.6 7.647 1.87 * 1.67 *

Age2: 55 - 64 9,537,167 89.8 10.2 8.760 2.14 * 1.87 *

Age2: 65+ 1,742,041 81.7 18.3 4.459 1.09 0.90

Part/Full Time 

Status

Full-time 44,518,662 85.6 14.4 5.965 1.75 * 1.14 *

Part-time 10,751,441 77.3 22.7 3.411

Part/Full Year 

Status

Full-Year 54,109,568 84.2 15.8 5.339 1.81 * 1.27

Part-Year 1,160,534 74.7 25.3 2.951

Union 

Membership

1. Union 5,638,995 89.7 10.3 8.702 1.73 * 1.73 *

2. Non-Union 49,631,108 83.4 16.6 5.017

Gender 1. Male 30,492,061 84.3 15.7 5.360 1.04 0.84 *

2. Female 24,778,042 83.7 16.3 5.140

Marital Status 1. Married 33,624,417 87.2 12.8 6.830 2.16 * 1.08

2. Widowed 994,393 82.9 17.1 4.848 1.53 * 0.86

3. Divorced 6,796,173 84.8 15.2 5.584 1.76 * 0.86

4. Separated 1,059,401 75.5 24.5 3.081 0.97 0.73

5. Never Married 12,795,718 76.0 24.0 3.164

Race/Ethnicity 1. White, Non-Hispanic 39,516,204 86.3 13.7 6.315

2. Black, Non-Hispanic 5,713,495 77.9 22.1 3.530 0.56 * 0.74 *

3. Hispanic 6,042,577 73.7 26.3 2.801 0.44 * 0.67 *

4. Asian, Non-Hispanic 2,581,511 88.5 11.5 7.690 1.22 0.97

5. Other, Non-Hispanic 1,416,317 80.2 19.8 4.063 0.64 * 0.91

 Total 55,270,103 84.0 16.0 5.260

Source: GAO analysis of weighted Survey of Income and Program Participation (SIPP) Data (2012). | GAO-15-556. 

Note: Asterisks denote odds ratios which reflect differences that are statistically significant at the .05 level.

Page 98 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Table 13. Summary Table of Unadjusted and Adjusted Odds Ratios Reflecting Differences in Participating, Comparing SelfReported Data and “Corrected” Census Data (in Parentheses)

Variable Category

(1)

Unadjusted 

Odds Ratios

(All Workers)

(2)

Adjusted

Odds 

Ratios 

(All 

Workers)

(3)

Adjusted

Odds 

Ratios

( Eligible 

Workers)

Income Lowest Quartile

2nd Quartile 3.08

(2.82)

*

*

2.00

(1.94)

*

*

1.22

(1.30)

*

*

3rd Quartile 8.01

(7.07)

*

*

4.04

(3.79)

*

*

2.23

(2.44)

*

*

Highest Quartile 19.01

(18.05)

*

*

6.84

(6.84)

*

*

4.43

(5.42)

*

*

Occupation 1. Management, Business, Science, and Arts Occupations 6.48

(6.46)

*

*

1.95

(1.95)

*

*

1.53

(1.56)

*

*

2. Service Occupations

3. Sales and Office Occupations 2.78

(2.92)

*

*

1.54

(1.71)

*

*

1.34

(1.45)

*

*

4. Natural Resources, Construction, and Maintenance Occupations 2.23

(1.98)

*

*

1.25

(1.18)

*

*

1.37

(1.47)

*

*

5. Production, Transportation, and Material Moving Occupations 2.74

(2.68)

*

*

1.44

(1.50)

*

*

1.17

(1.22)

Education 1. LT HS Diploma 0.37

(0.40)

*

*

0.61

(0.66)

*

*

0.74

(0.68)

*

*

2. HS Diploma

3. Some College 1.31

(1.39)

*

*

1.03

(1.14)

* 0.97

(0.97)

4. Bachelor's or More 2.74

(2.95)

*

*

1.06

(1.18)

* 1.18

(1.18)

Firm Size 1. More Than 1,000 Workers 4.85

(4.77)

*

*

4.93

(4.89)

*

*

1.17

(1.29)

*

2. 501 to 1,000 Workers 3.87

(4.03)

*

*

3.57

(3.82)

*

*

0.92

(1.05)

3. 101 to 500 Workers 3.57

(3.57)

*

*

3.01

(3.10)

*

*

0.86

(0.90)

4. 51 to 100 Workers 2.37

(2.32)

*

*

2.07

(2.07)

*

*

0.75

(0.71)

*

*

Page 99 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Variable Category

(1)

Unadjusted 

Odds Ratios

(All Workers)

(2)

Adjusted

Odds 

Ratios 

(All 

Workers)

(3)

Adjusted

Odds 

Ratios

( Eligible 

Workers)

5. 50 or Fewer Workers

Age Age2: 18 - 24 0.18

(0.24)

*

*

0.37

(0.50)

*

*

0.46

(0.43)

*

*

Age2: 25 - 34

Age2: 35 - 44 1.32

(1.28)

*

*

1.08

(1.06)

1.26

(1.20)

*

*

Age2: 45 - 54 1.69

(1.65)

*

*

1.43

(1.41)

*

*

1.67

(1.63)

*

*

Age2: 55 - 64 1.78

(1.68)

*

*

1.44

(1.34)

*

*

1.87

(1.75)

*

*

Age2: 65+ 0.77

(0.73)

*

*

0.68

(0.63)

*

*

0.90

(0.76)

Part/Full Time 

Status

Full-time 3.26

(3.34)

*

*

1.62

(1.76)

*

*

1.14

(1.14)

*

Part-time

Part/Full Year 

Status

Full-Year 4.46

(3.69)

*

*

2.47

(1.93)

*

*

1.27

(1.28)

Part-Year

Union 

Membership

1. Union 2.72

(2.55)

*

*

2.00

(1.75)

*

*

1.73

(1.60)

*

*

2. Non-Union

Gender 1. Male 1.17

(1.15)

*

*

0.91

(0.92)

*

*

0.84

(0.79)

*

*

2. Female

Marital Status 1. Married 2.62

(2.48)

*

*

1.19

(1.21)

*

*

1.08

(1.11)

2. Widowed 1.69

(1.59)

*

*

0.97

(0.97)

0.86

(1.06)

3. Divorced 2.32

(2.17)

*

*

0.99

(0.96)

0.86

(0.85)

4. Separated 1.33

(1.35)

*

*

0.92

(1.01)

0.73

(0.78)

5. Never Married

Race/Ethnicity 1. White, Non-Hispanic

Page 100 GAO-15-556 Options to Expand Coverage
Appendix VI: Technical Appendix for Data Analysis

Variable Category

(1)

Unadjusted 

Odds Ratios

(All Workers)

(2)

Adjusted

Odds 

Ratios 

(All 

Workers)

(3)

Adjusted

Odds 

Ratios

( Eligible 

Workers)

2. Black, Non-Hispanic 0.66

(0.72)

*

*

0.75

(0.83)

*

*

0.74

(0.75)

*

*

3. Hispanic 0.37

(0.37)

*

*

0.58

(0.58)

*

*

0.67

(0.71)

*

*

4. Asian, Non-Hispanic 0.90

(0.89)

0.66

(0.64)

*

*

0.97

(0.91)

5. Other, Non-Hispanic 0.73

(0.77)

*

*

0.86

(0.91)

0.91

(0.85)

Source: GAO analysis of weighted Survey of Income and Program Participation (SIPP) Data (2012). | GAO-15-556. 

Note: Asterisks denote odds ratios which reflect differences that are statistically significant at the .05 level.

Page 101 GAO-15-556 Options to Expand Coverage
Appendix VII: Comments from the U.S. Appendix VII: Comments from the U.S. Department of Labor

Department of Labor

Page 102 GAO-15-556 Options to Expand Coverage
Appendix VII: Comments from the U.S. 

Department of Labor

Page 103 GAO-15-556 Options to Expand Coverage
Appendix VIII: GAO Contact and Staff Acknowledgments

Charles A. Jeszeck, (202) 512-7215 or jeszeckc@gao.gov

In addition to the contact named above, Kimberly Granger (Assistant 

Director), Sharon Hermes and Jessica Gray (Analysts-in-Charge), 

Melinda Bowman, Gustavo Fernandez, Grant Mallie, Douglas Sloane, 

Walter Vance, and Seyda Wentworth made key contributions to this 

report. Also contributing to this report were David Chrisinger, Peter Del 

Toro, Cynae Derose, Helen Desaulniers, Jennifer Gregory, Stephen 

Komadina, Kathy Leslie, Andrea Levine, Ashley McCall, Sheila McCoy, 

Ty Mitchell, Matthew Nattinger, Drew Nelson, Mimi Nguyen, Susan Offutt, 

Mark Ramage, Margie Shields, Joseph Silvestri, Jeff Tessin, Kimberly 

Walton, Margaret Weber, Craig Winslow, and Paul Wright.

Appendix VIII: GAO Contact and Staff

Acknowledgments

GAO Contact

Staff 

Acknowledgments

Page 104 GAO-15-556 Options to Expand Coverage
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(131311) Page 105 GAO-15-556 Options to Expand Coverage
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