RETIREMENT: New GAO Report Highlights Need to Expand Access to Workplace Retirement Plans
(Washington, D.C.) – Today, Senate Health, Education, Labor, and Pensions (HELP) Committee Ranking Member Patty Murray (D-WA) released a report from the Government Accountability Office (GAO) highlighting that nearly half of private sector workers do not have a retirement plan through their employer, primarily because they lack access. The report found that a majority of those who lack access to plans are workers who are lower income, work part- time, and work for firms with 50 or fewer employers. The report also shows that when offered the chance, a majority of these workers do participate in a retirement plan through their employers.
“Workers, regardless of their income, want to save for retirement, but as this report makes clear, too often, they do not have access to a workplace savings plan to help them put away money for their golden years,” said Senator Murray. “In our country, a secure retirement is one of the hallmarks of a thriving middle class. Expanding access to workplace retirement plans is a key step in helping more workers grow their savings and building our economy from the middle out, not the top down.”
Read the report here.
Workplace retirement plans are an important tool for workers to build their retirement savings, because those in employer-sponsored retirement plans save more than those who save on their own. Nearly two-thirds of workers who participate in employer-sponsored savings plans have at least $10,000 or more in overall savings, according to the Employee Benefit Research Institute. By contrast, 81 percent of workers who do not have workplace retirement plans have saved less than $10,000, and of that total, 64 percent have less than $1,000 in any savings.
To determine its findings, GAO matched the Survey of Income and Program Participation (SIPP) from the U.S. Census with IRS data, making it the new benchmark for data on access to workplace retirement savings plans. Senator Murray commissioned the report as part of her ongoing work to boost economic security in retirement.
Major Takeaways from the report’s findings:
- About half (46 percent) of private-sector workers do not participate in a workplace retirement savings program. Most of these workers (84 percent) lacked access to a program, meaning that either their employer didn’t offer a plan (68 percent), or the individual wasn’t eligible for a plan that was offered (16 percent). Only 16 percent of workers opted to not participate in a workplace retirement savings plan when eligible.
- The majority of those workers who are least likely to participate, such as lower income, service sector, and younger workers, participate when they had access to workplace retirement savings plans. When eligible, 68 percent of workers in the lowest quartile of income participated, and 81 percent of part-time workers participated when they had access to savings plans through their employer.
- States can play a key role in expanding access to retirement savings programs, making it important to remove any uncertainty with respect to the application of federal law to the state-based reform initiatives, as the Obama Administration has announced plans to do.
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