State-facilitated retirement savings programs have accumulated more than $1 billion in assets, as of July 31, according to data collected by the Center for Retirement Initiatives at Georgetown University.
The assets are held by eight of the 19 state programs, with the largest share in the programs run by California, Oregon and Illinois, each of which launched in 2018 or earlier, the center reports. There are also two city-sponsored programs in the U.S.
As of June 20, nine of the 19 state programs—including auto-IRA programs in California, Colorado, Connecticut, Illinois, Maryland, Oregon and Virginia and programs with different structures in Massachusetts and Washington state—are open to all eligible employers and workers in those states. The remaining 10 are in various stages of their development.
As the number of programs has grown across the country and programs have become more well established in early-adopter states, the programs’ asset growth is accelerating.
“It took more than three years to hit $500 million in program assets, but only 13 months for programs to cross the $1 billion mark,” said Angela Antonelli, executive director of the CRI, in an emailed response to questions.
Antonelli said the programs, which give private sector employees access to tax-deferred retirement savings in their workplace, even if their employer does not sponsor a plan, “can be life changing.”
“Program participants report a greater sense of financial security, so even modest levels of savings in state programs likely contribute to improved financial wellness,” Antonelli wrote.
Research published this year has shown that in states that have made it mandatory for businesses to either utilize the state-run plan or offer an employer-sponsored plan, more employers are offering their own retirement plans, giving a wider swath of employees a chance to save for the future.
Additional research by the Pew Charitable Trusts found that state-facilitated retirement savings plans for private sector workers that do not have workplace plans may have a positive effect on the creation and retention of private plans.
As the largest state-sponsored plans continue to drive the lion’s share of asset growth in these programs, smaller state programs are coming online and also seeking ways to control costs, including partnerships such as the one announced this week by Maine and Colorado.
Antonelli says a partnership can also “significantly reduce the amount of time from adoption to launch. Maine will now be able to move to a pilot by this October and a program launch in January 2024, and it will move even more quickly for other states entering such partnerships in the future, reducing time from 18 to 24 months to a matter of just a few months.”Tags: Angela Antonelli, CalSavers, Center for Retirement Initiatives, Delaware, Illinois Secure Choice, OregonSaves, private sector retirement savings, retirement savings plan