While employers generally terminate 4% of retirements plans, both nationwide and in the states implementing auto-IRA programs, the share of plans that were ended began to trend down slightly to just 3% in 2019 in California, Illinois and Oregon once they had established auto IRA plans, Pew found.
The percentage of new plans as a share of all employer-sponsored plans increased nationwide from roughly 6% to nearly 8% by 2019.
The three states implementing state auto-IRA programs show a similar trend—with the proportion of new plans holding steady or increasing in each. In 2019, for example, Oregon and California had some of the highest proportions of new plan adoption, with Illinois’ proportion just slightly lower than the national average of 8% new plan adoption.
Among employers with retirement plans and five to 250 workers, only 13% said they would drop theirs and enroll in such a program if launched in their state, Pew found in an earlier study.
“When these auto IRA plans first started being implemented in California, Illinois and Oregon, there were a lot of concerns that they were going to edge out advisors. The Pew study looked at the 5,500 company filings and found those states have had increased private plan creation,” Kahn said.
“I think we’ll see more states doing this and this may at some point be the tipping point to get Congress to act to create a federal mandate,” Kahn added, noting that a national IRA mandate for employers would likely be an uphill battle for Chairman Neal.