I have been an advocate for mandatory IRA programs for employers that don’t offer them because I believe when push comes to shove, employers would rather have their own plan than be forced into a state-mandated program. A recent Pew study backs me up.
Pew examined the effects the state programs have had on private market plans and whether eligible businesses would ditch their own defined contribution plans or terminate existing plans as a result.
The shifts in the share of plans created, pre-and post-implementation of the state programs, align with national trends and in some cases prove larger than the national change, the Pew research found.
The share of plans created in the U.S.—excluding California—increased from an average of 6.4% before 2019 to 7.3% from 2019 to 2021.
In the three states examined, the rate of introduction of plans, as a share of existing plans, remained higher than prior to the year when each launched its savings program.
In California, the share of new plans increased from an average of 8.1% between 2013 and 2018 to an average of 9.4% from 2019 to 2021, when the CalSavers program fits made effective.
In Illinois, the average share of new plans increased from 5.3% between 2013 and 2017 to 6.2% with Illinois Secure Choice enrolling savers from 2018 to 2021.
In Oregon, the average share of new plans increased from 6.7% between 2013 and 2016 to 8.5% on average in the years after OregonSaves started in 2017.
Businesses in California, Illinois, and Oregon continued to create new plans in 2021 at rates similar to or surpassing those in states without state-mandated IRA programs
