New Research Brief Examines United Kingdom’s Bold New Retirement Initiatives to Address Retirement Crisis
Offers Innovative Approaches That Could be Applied in the U.S. to
Strength Economic Security for Americans
Webinar on Monday, December 5th
at 2 PM ET to Review Findings
WASHINGTON–(BUSINESS WIRE)–A new issue
brief offers the first detailed analysis for U.S. audiences on the
U.K.’s new retirement policy initiatives. Faced with a daunting
retirement savings shortfall, U.K. policymakers instituted a series of
reforms that has expanded retirement plan coverage for workers.
The
United Kingdom’s New Retirement Savings Program is the
latest issue brief from the National Institute on Retirement Security (NIRS).
It is co-authored by John A. Turner, director of the Pension Policy
Center, and Jennifer Erin Brown, NIRS manager of research.
A webinar is scheduled for Monday, December 5, 2016, at 2 PM ET to
review the findings. Register at no charge here.
Download the research brief here.
As outlined in the research brief, the U.K. reforms require all
employers to automatically enroll their employees in retirement savings
account. Also, employers are required to contribute to the retirement
plan if an employee participates, although individuals can opt-out. The
U.K. also sponsors its own retirement plan – the National Employment
Savings Trust (NEST)
– so that all employers are able to offer their employees a plan.
The new reforms are being phased in over time and will be fully
implemented by 2018. During the remainder of 2016 and in 2017, U.K.
employers with 30 or fewer employees will enroll their employees in a
plan. Already, the U.K. has expanded coverage by six million workers.
The total increase in coverage of nine million workers is expected when
the program is fully implemented in 2017.
“U.S. policymakers would be wise to examine the reforms the U.K. has
implemented. We have a deep and serious retirement savings shortfall in
the U.S., and legislative efforts that attempted to move the needle on
retirement savings and coverage have failed,” said Jennifer
Brown, report co-author.
In the United States, nearly 40 million – or 45 percent – of working-age
households do not have a retirement account, such as a 401(k) plan or an
Individual Retirement Account (IRA). This shortfall
in retirement savings means that the typical working household has
virtually no retirement savings, and more than more than three out of
five near-retirement households have less than one times their income
saved for retirement.
“Ten years ago, Congress clarified that employers could use automatic
enrollment features to nudge employees to save for retirement. But
sadly, the rate of retirement plan coverage is lower today than it was
in 2006,” said Diane
Oakley, NIRS executive director. “The experience across the pond is
proof for policymakers of the power of auto-enrollment when it’s working
at full capacity. In fact, many U.S states that are taking steps to help
working Americans have a financial stability in retirement are
considering similar automatic enrollment practices,” she explained.
Brown added, “As evidenced by the recent elections, middle class Americans
are angry about their economic security, and retirement is a big
part of that equation. If newly-elected policymakers are going to
deliver the economic security that they promised on the campaign trail,
they will take action to address America’s retirement crisis. We hope
this research contributes to a serious examination of policies in other
nations that are working and making real progress towards closing the
savings and coverage gaps.”
The
National Institute on Retirement Security is a non-profit,
non-partisan organization established to contribute to informed
policymaking by fostering a deep understanding of the value of
retirement security to employees, employers and the economy. Located in
Washington, D.C., NIRS’ diverse membership includes financial services
firms, employee benefit plans, trade associations and other retirement
service providers. More information is available at www.nirsonline.org.
Follow NIRS on Twitter @nirsonline.
Contacts
National Institute on Retirement Security
Kelly Kenneally,
202-457-8190
kkenneally@nirsonline.org
