Solutions That Skyrocket Participation in Workplace Retirement Plans

During this time in which the reliability of Social Security is being questioned, participation in a retirement plan is a way to establish future financial stability and security. Some members of the private workforce have multiple options when it comes to setting aside a portion of their income for retirement, such as a standard savings account, deferred or Roth IRAs, and a Simplified Employee Pension Plan for the self-employed. However, the access to workplace retirement plans is the most significant determining factor in whether people will actually save for retirement.

Retirement plans provided by employers offer workers tax advantages and convenience, such as automatic withdrawal from each paycheck. This is beneficial for workers, but there has been a decline in conventional pension plans and 401(k)-type contribution plans offered by employers.

According to an in-depth study conducted by The Pew Charitable Trusts, 42 percent of full-time workers in the United States who are between the ages of 18 to 64 and who work at a private-sector company do not have access to an employer-based retirement plan. The study, which evaluates the rates of access and participation in work-related pensions for all 50 states, reports that the average participation rate among workers is only 49 percent. This data has increased concerns about the retirement security of future aging generations and has led to more efforts by state and federal governments to find ways to encourage participation in workplace pensions.

Factors That Contribute to the Trends in Workplace Retirement Enrollment

According to the same study by The Pew Charitable Trusts, the trends in access and participation rates for employee-sponsored retirement plans are defined by a number of economic and social determinants, including:


  • Age


  • Region


  • Industry


  • Race


  • Education


  • Ethnicity


  • Wages and income


  • Size of employer

The rates of participation and access for full-time workers tend to be higher in the northern portions of the country, like New England and the Pacific Northwest. Also included is the Upper Midwest, where the state of Wisconsin has the highest rates in the country; 70 percent of workers have access to a pension, and 61 percent take part in the plans that are offered. In contrast, much lower rates can be found along the Western part of the country and in the southern states. Florida, which is a top retirement haven with its lack of state income, estate and inheritance taxes, has the lowest workplace retirement plan access and participation rates in the country. Only 46 percent of its full-time workers have an employer-sponsored retirement plan option, and the state has just a 38 percent participation rate.

Although the report shows that the rates tends to be lower with part-time workers for whom the access rate is 33 percent and the participation rate is only 18 percent, it does indicate that when employer pensions are offered, most workers opt to participate. The lowest take-up rate in the country is 76 percent in Nevada, while Indiana boasts the highest rate with 90 percent.

Efforts Being Made to Increase Access and Participation in Employer Retirement Plans

Both federal and state lawmakers are analyzing ways to resolve the work-based retirement plan dilemma and avoid a crisis in which the majority of retirees lack sufficient retirement income. While there have been efforts made by the current administration, such as the myIRA program that operates like a Roth IRA, the most effective efforts may lie with the individual state where circumstances surrounding the attributing factors unique to their state can be taken into consideration.

For example, lawmakers in Colorado have introduced legislation to fund studies on ways to promote access to workplace retirement plans and creative solutions to make them more available. States like California and Illinois have established the Secure Choice Retirement Savings Program, which gives workers the opportunity to enroll in payroll deduction for retirement accounts.

More information regarding retirement plans and economic trends can be found on a number of financial blogs, including

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