Retirement Security: Federal Action Could Help State Efforts to Expand Private Sector Coverage
Published: 2015-09-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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.
section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: 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.  However, as we recently reported, 29 percent of households age 55 and  older do not have any retirement savings or a defined benefit pension.  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  research shows that the overall coverage rate has not increased  substantially.
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.  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  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.  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 efforts 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  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.
subsections: section_title: Background
paragraphs: 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, or make arrangements for  employees to contribute to Individual Retirement Accounts (IRAs), such  as payroll deduction IRAs, to help employees save for retirement. (See  table 1.)
Workers may also choose to save on their own in an IRA to increase their  retirement savings. However, our recent work shows that approximately  95 percent of money contributed to traditional IRAs in 2008 was from  rollovers, primarily from employee benefit plans.
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.  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. 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. 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.
subsections: section_title: Efforts to Expand Workplace Retirement Savings Program Coverage in the United States
paragraphs: 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. 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.   Some workers, on the other hand, may lack the financial literacy or  resources to participate.
subsections: section_title: Automatic Enrollment
paragraphs: 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.  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. 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  Labor (DOL) and the Department of the Treasury (Treasury) promulgated  implementing regulations.
section_title: Saver’s Credit
paragraphs: 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. 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.
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. 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. 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.  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 tax- free at any time. Moreover, not all Americans will be eligible to participate  due to IRA contribution limits based on modified adjusted gross income.  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.
section_title: Legislative Proposals
paragraphs: 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.   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. 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. Appendix  III provides a description of the bills we identified.
section_title: Federal Regulation of Employee Benefit Plans and Individual Retirement Accounts
paragraphs: 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. 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). 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. The IRC and ERISA define prohibited  transactions and list exemptions to them. In addition DOL may grant  exemptions. 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.
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. 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. An employer may also  establish a plan that excludes certain groups of employees as long as the  ERISA and IRC requirements are met. For example, an employer may  establish and maintain a plan that excludes workers in certain job  categories or geographic locations.
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.
section_title: ERISA Preemption
paragraphs: ERISA includes a provision stating that ERISA supersedes any and all  state laws as they “relate to” any employee benefit plan covered under  ERISA. This ERISA preemption provision has a relatively small number  of exceptions 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.
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.”  The Court has emphasized that state law  may be preempted even if not specifically designed to affect such plans.  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. 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  other things, that covered employers make a certain level of health care  expenditures on behalf of their employees.
section_title: Gaps in Access Leave Many Low- Income and Other Workers without Workplace Retirement Savings Program Coverage
paragraphs: 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. 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.
subsections: section_title: Lack of Coverage Is Driven by Gaps in Access
paragraphs: Roughly half of private sector workers participate in a workplace  retirement savings program, according to 2012 data. Specifically, self- reported SIPP data indicate that 45 percent of all private sector workers  were participating in a program. However, prior research using SIPP  data linked with W-2 tax records has shown that some individuals under- report their participation.  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). 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.  Our  findings are similar to estimates from our prior work and other studies.   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.   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.  Other more recent data from the 2014 National Compensation Survey, a  firm level survey conducted by the Bureau of Labor Statistics, show that  48 percent of private sector workers participated in a retirement plan.
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  must offer a program, and (2) the worker must be eligible to participate  (see fig. 2).
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). Only 16  percent of those who did not participate reported being eligible and not  participating.
section_title: Lower Income Workers and Those Employed by Smaller Firms Are Much Less Likely to Have Coverage
paragraphs: 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. 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  income quartile. In addition, lower-income workers had a lower likelihood  of participating even when they were eligible (see fig. 4).
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  quartile participated in a program compared to 67 percent and 84 percent  of those in the third and fourth income quartiles.
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.  Moreover, smaller and newly  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.
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  using the W-2 adjusted data.  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.
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.  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.
For example, among those eligible, workers ages 18 to 24 were  roughly one-half as likely to participate as workers ages 25 to 34.  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.
section_title: Given Access, Most Workers Participate
paragraphs: 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).
section_title: States and Other Countries Use Similar Key Strategies to Expand Retirement Coverage
subsections: section_title: States and Countries We Reviewed Often Combine Workplace Access, Automatic Enrollment, and Financial Incentives
paragraphs: 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 incentives —an approach that has helped increase worker  participation in countries we studied. For example, the United Kingdom  (U.K.) implemented reforms that require private sector employers to  automatically enroll eligible workers in a workplace retirement savings  program, allowing workers to contribute to individual accounts and  receive financial incentives in the form of employer contributions and tax  preferences. 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. 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. Similar to the U.K. and other countries, state efforts we  reviewed in the United States would use a range of approaches to  combine workplace access, automatic enrollment, and financial incentives  to expand coverage.
subsections: section_title: Workplace Access
paragraphs: 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) plan  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  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. 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.)
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  for retirement if their employer offers a retirement savings program.  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. 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. In addition, New Zealand and Canada would  encourage or require certain employers to offer workplace access.
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.
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  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.
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.  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. 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  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.   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.
section_title: Financial Incentives
paragraphs: 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—employer- sponsored 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.  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  liability but may pay higher taxes in the future. 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.  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.
section_title: States Can Learn from Other Countries’ Experiences Implementing another Key Strategy— Simplifying Administration and Investment Management
paragraphs: 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).
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  the burden on employers of choosing an appropriate provider. NEST  stakeholders said 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. 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. Lastly, NEST is  responsible for sending out welcome packages to new participants with  information on how to access the website and create accounts.
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).
section_title: While Implementation of State Efforts Would Likely Increase Coverage, Some Private Sector Workers May Remain Uncovered
paragraphs: 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 self- employed 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  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.   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. 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.
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. 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.
section_title: States Face Potential Challenges with Legal Uncertainties That Could Delay or Deter Their Efforts to Expand Coverage without Federal Action
paragraphs: 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.  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. 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).
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. 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,  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  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.  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.
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  plans and are not subject to ERISA. 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. 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. 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  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. 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  expand coverage in workplace retirement savings programs and  determine if new, or changes to, DOL regulations or guidance are  needed. 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.
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  qualified default investment alternative (QDIA).  DOL promulgated a  regulation describing the type of investments that qualify as QDIAs.
subsections: section_title: Other Issues Causing Legal Uncertainty
paragraphs: 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).
section_title: Conclusions
paragraphs: 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  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.
section_title: Matter for Congressional Consideration
paragraphs: 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.
section_title: Recommendation for Executive Action
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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  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 Non- Governmental Employees,” which will appear in the Fall 2015 Semi- Annual 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.
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.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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, 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.
subsections: section_title: Section 1: Examining Estimates of Retirement Program Access and Participation and Characteristics of Workers Who Lack Coverage
paragraphs: 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  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.
Previous research has also found evidence of under-reporting of  retirement program participation by comparing self-reported survey  responses to W-2 tax records. Specifically, W-2 records include  information on contributions to tax-advantaged retirement programs. By  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.
subsections: section_title: Data Reliability
paragraphs: 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.
section_title: Methods for Examining Retirement Program Coverage
paragraphs: 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.
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  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.
section_title: Literature Review and Interviews
paragraphs: 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.
section_title: Section 2: Examining Strategies Used in State Efforts to Expand Coverage and the Potential Challenges States Could Face Given Existing Federal Law and Regulations
paragraphs: To review the strategies used in state efforts 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.
subsections: section_title: List of State Efforts
paragraphs: 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  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.
section_title: State Case Studies
paragraphs: 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, 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.
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.
section_title: Section 3: Examining Strategies Used in Other Countries’ Efforts to Expand Coverage
paragraphs: 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.). Our review provides non- generalizable 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.
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.
section_title: Appendix II: Description of Efforts to Simplify Administration and Investment Management of Workplace Retirement Savings Programs
subsections: section_title: Reducing Administrative Burden and Cost for Employers
subsections: section_title: Use Employers’ Existing Payroll Processes
paragraphs: 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. While some  stakeholders were concerned with employers’ payroll deduction  capabilities, research shows that the majority of employers already use  electronic payroll services. 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. However, some states hoped to utilize the experience of state  agencies that accept payroll deduction for other employer deductions and  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.
section_title: Allow Small Employers to Choose Whether to Participate and Other Efforts to Recognize Resource Limitations of Small Employers
paragraphs: 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. 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  a purely voluntary program, it may not be able to achieve the scale  necessary to ensure that costs are reasonable.
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. 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  employees, at a reasonable cost to workers. 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 low- cost 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.
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.
section_title: Other Actions to Reduce Administrative Burden for Employers
paragraphs: 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).
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. 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. 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  their programs. 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. 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.
section_title: Appendix III: Description of Selected National Legislative Efforts to Expand Workplace Retirement Savings Program Coverage Identified by GAO
paragraphs: 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.
section_title: Appendix IV: Description of State Efforts to Expand Workplace Retirement Savings Program Coverage Identified by GAO
paragraphs: We developed the following list of 29 states with recent efforts to expand  retirement savings program coverage for private sector workers— 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; 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.)
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  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.
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.
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.
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  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 government- sponsored defined contribution  workplace program. KiwiSaver  requires employers to automatically  enroll all new workers into a  qualified plan, with a worker opt- out. Workers are encouraged to  participate in KiwiSaver through a  series of incentives that include  employer contributions, tax  benefits, and a one-time  government contribution.
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 self- employed 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.
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.
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 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.
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.
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.
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.
section_title: Appendix VI: Technical Appendix for Data Analysis
subsections: section_title: Factors Affecting Workplace Retirement Program Participation
paragraphs: 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.
subsections: section_title: Likelihood of Participating
paragraphs: 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  exist between most of the categories of workers defined by the other  characteristics shown in the table.
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. 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  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. 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).
section_title: Regression Results
paragraphs: 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  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 part- time 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.
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  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 part- time 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  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.
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 one- half 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  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.
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.  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, non- Hispanic 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  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.
subsections: section_title: Table 9. Percentages of Workers of Different Types Participating and Not Participating in Retirement Programs, and Odds and Odds Ratios Derived from Them
paragraphs: Odds Ratio  (Multivariate)
section_title: Appendix VI: Technical Appendix for Data Analysis
paragraphs: Odds Ratio  (Multivariate)
section_title: 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
paragraphs: Odds Ratio  (Multivariate)
section_title: Appendix VI: Technical Appendix for Data Analysis
paragraphs: Odds Ratio  (Multivariate)
section_title: 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
paragraphs: Odds Ratio  (Multivariate)
Odds Ratio  (Multivariate)
section_title: Variable Income
paragraphs: (1)  Unadjusted   Odds Ratios  (All Workers) (2)  Adjusted  Odds  Ratios   (All  Workers) (3)  Adjusted  Odds  Ratios  ( Eligible  Workers)
3.08  (2.82)
2.00  (1.94)
1.22  (1.30)
8.01  (7.07)
4.04  (3.79)
2.23  (2.44)
19.01  (18.05)
6.84  (6.84)
4.43  (5.42)
1. Management, Business, Science, and Arts Occupations  6.48  (6.46)
1.95  (1.95)
1.53  (1.56)
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)
0.37  (0.40)
0.61  (0.66)
0.74  (0.68)
1.31  (1.39)
1.03  (1.14)
0.97  (0.97)
2.74  (2.95)
1.06  (1.18)
1.18  (1.18)
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)
3.57  (3.57)
3.01  (3.10)
0.86  (0.90)
2.37  (2.32)
2.07  (2.07)
0.75  (0.71)
section_title: Variable
paragraphs: (1)  Unadjusted   Odds Ratios  (All Workers) (2)  Adjusted  Odds  Ratios   (All  Workers) (3)  Adjusted  Odds  Ratios  ( Eligible  Workers)
0.18  (0.24)
0.37  (0.50)
0.46  (0.43)
1.32  (1.28)
1.08  (1.06)
1.26  (1.20)
1.69  (1.65)
1.43  (1.41)
1.67  (1.63)
1.78  (1.68)
1.44  (1.34)
1.87  (1.75)
0.77  (0.73)
0.68  (0.63)
0.90  (0.76)
3.26  (3.34)
1.62  (1.76)
1.14  (1.14)
4.46  (3.69)
2.47  (1.93)
1.27  (1.28)
2.72  (2.55)
2.00  (1.75)
1.73  (1.60)
1.17  (1.15)
0.91  (0.92)
0.84  (0.79)
2.62  (2.48)
1.19  (1.21)
1.08  (1.11)
1.69  (1.59)
0.97  (0.97)
0.86  (1.06)
2.32  (2.17)
0.99  (0.96)
0.86  (0.85)
1.33  (1.35)
0.92  (1.01)
0.73  (0.78)
section_title: Variable
paragraphs: (1)  Unadjusted   Odds Ratios  (All Workers) (2)  Adjusted  Odds  Ratios   (All  Workers) (3)  Adjusted  Odds  Ratios  ( Eligible  Workers)
0.66  (0.72)
0.75  (0.83)
0.74  (0.75)
0.37  (0.37)
0.58  (0.58)
0.67  (0.71)
0.90  (0.89)
0.66  (0.64)
0.97  (0.91)
0.73  (0.77)
0.86  (0.91)
0.91  (0.85)
section_title: Appendix VII: Comments from the U.S. Department of Labor
section_title: Appendix VIII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: 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.
section_title: Related GAO Products
paragraphs: Retirement Security: Most Households Approaching Retirement Have Low  Savings. GAO-15-419. Washington, D.C.: May 12, 2015.
Automatic IRAs: Lower-Earning Households Could Realize Increases in  Retirement Income. GAO-13-699. Washington, D.C.: Aug. 23, 2013.
Retirement Security: Women Still Face Challenges. GAO-12-699. Washington,  D.C.: July 19, 2012.
Private Sector Pensions: Federal Agencies Should Collect Data and Coordinate  Oversight of Multiple Employer Plans. GAO-12-665. Washington, D.C.: Sept. 13,  2012.
Private Pensions: Better Agency Coordination Could Help Small Employers  Address Challenges to Plan Sponsorship. GAO-12-326. Washington, D.C.: March  5, 2012.
Private Pensions: Some Key Features Lead to An Uneven Distribution of Benefits.  GAO-11-333. Washington, D.C.: March 30, 2011.
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.
Private Pensions: Alternative Approaches Could Address Retirement Risks Faced  by Workers but Pose Trade-offs. GAO-09-642. Washington, D.C.: July 24, 2009.
Individual Retirement Accounts: Government Actions Could Encourage More  Employers to Offer IRAs to Employees. GAO-08-590. Washington, D.C.: June 4,  2008.
Private Pensions: Low Defined Contribution Plan Savings May Pose Challenges to  Retirement Security, Especially for Many Low-Income Workers. GAO-08-8.  Washington, D.C.: Nov. 29, 2007.