To address the need for retirement savings, several states have launched or are proposing mandatory IRA programs or state-run retirement marketplaces.

In this environment, we believe it’s important to consider that employer-sponsored 401(k) plans are one of the easiest and most convenient ways to save for retirement.

As OppenheimerFunds’ Head of Retirement & Third Party Distribution, Kathleen Beichert, recently discussed with PlanAdviser, the common features that employer-sponsored plans have support the goal of increasing participation in retirement savings plans. These features include:

  • Payroll deduction, which can help participants set aside money for retirement, and which may explain why moderate income employees are 15 times more likely to save for retirement through a workplace plan than they are with  any option available outside of their work.1
  • Automatic enrollment, which is now something 50% of plans do1, helps ensure that people are setting aside a portion of their income for retirement.
  • Automatic increases in salary deferrals, can help ensure that savings keep pace with increasing costs in retirement.
  • Access to education and advice, which can guide participants in their decision-making.

These are not features that will likely be offered in many state-run plans. Advisors are in a unique position to make sure their local government representatives fully understand the potential benefits of delivering retirement programs at the workplace.

Watch the video to hear Kathleen Beichert’s full discussion with PlanAdviser on this important topic.

 
  1. a, bSource: Callan Institute. 2017 Defined Contribution Trends.