The Bureau of Labor Statistics’ (BLS) Annual National Compensation Survey found that 78% of all full-time civilian workers had access to retirement plans at work, with 83 % of them participating in these plans. For private sector workers, BLS found the access and participation rates are 74% and 80% respectively. Alternate research suggests these estimates are less than what is actually happening in the workplace, but regardless of what the exact percentages may be there are tens of millions of workers across the country that do not have access to an employer-sponsored retirement plan.
These stark facts are the reason why the American Retirement Association has long supported the concept of Automatic Payroll Deduction IRAs at both the federal and state levels. Employers implementing this arrangement would simply allow employees to use the employers’ payroll system to channel the employees’ own money into an IRA. For most employees, payroll deductions would be made by direct deposit, similar to the common practice of depositing paychecks directly into employees’ bank accounts. Automatic Payroll Deduction IRAs would play an important role in expanding coverage because it would make it easier for employers, particularly small businesses, to offer a retirement plan to their employees at minimal, or even no, cost.