In recent months, our attention has been drawn to some deserving public policy initiatives that would dramatically expand access to workplace retirement savings accounts and address the “access gap” encountered by millions of American workers who are presently offered no such option.
The access gap is very real. According to an analysis of the U.S. Census Survey of Income and Program Participation, The Pew Charitable Trusts estimates that 36.2% of American workers do not have access to either a defined benefit or defined contribution plan sponsored by their employers.
One proposal relies upon legislative action to eliminate barriers to open multiple-employer plans (MEPs) and requires private employers to auto-enroll their employees in a defined contribution (DC) plan. Thus, universal access to DC plans could become a reality, and the access gap would be quickly bridged.
A surge in new participants contributing to employer-sponsored defined contribution accounts has substantial benefits. The Employee Benefits Research Institute (EBRI) has estimated that universal DC access could contribute $740 billion towards reducing our nation’s $4.1 trillion retirement savings shortfall.