State Retirement Plan Mandates Aren't Eroding the Private Plan Market. They're Supercharging It.
For decades, the retirement industry has faced a persistent challenge: millions of workers do not have access to a workplace retirement savings plan.
State-sponsored automated retirement savings (Auto-IRA) programs were designed to help close that gap. But rather than competing with the private market, Auto-IRA programs are expanding participation in workplace retirement savings overall—increasing awareness, driving employee engagement, and accelerating plan adoption.
The Coverage Gap Was Always the Starting Point
The retirement coverage gap remains one of the industry's most largest obstacles. State Auto-IRA programs help address it by making saving the default rather than the exception. Now, state-facilitated IRA programs hold over $2.79 billion in assets and more than 1.2 million funded accounts.
As automatic enrollment and payroll deduction become more common, participation in retirement plans becomes more normalized. After a state adopts an Auto-IRA program, the number of employees who participate in employer-sponsored plans increases. Workers who previously lacked access to retirement savings become accustomed to saving through payroll deduction.
The Surprise Outcome: Private Plans Are Growing Faster in Auto-IRA States
Early conversations around state-facilitated retirement programs often centered on whether they would compete with the private market. Instead, emerging data suggest the opposite: these programs are bringing more employers into the retirement system and increasing overall engagement with workplace savings.
Nearly every state with an Auto-IRA program recorded growth in new private-sector retirement plans between 2022 and 2023. In those states, more than 30,000 businesses chose to establish new private plans after evaluating their retirement options.
Why Employers Upgrade
For many businesses, state-facilitated programs serve as an entry point into retirement benefits. Once employers begin evaluating their options, some determine that a private plan better supports their long-term workforce goals. Private plans, such as 401(k)s or 403(b)s, provide additional flexibility, employer contributions, higher savings limits, and more customized plan designs.
Rather than replacing private plans, state programs are introducing more employers to the broader retirement market. State programs expand access for workers who previously lacked a workplace-based savings option, while private plans continue to grow alongside them.
A Rising Retirement Baseline
One of the most important long-term effects of state-facilitated retirement programs may be cultural rather than regulatory. As retirement access becomes increasingly expected, employers who once viewed retirement benefits as optional are beginning to see them as foundational. Retirement benefits provide a competitive advantage to both attract and retain talent.
Across the industry—from providers and advisors to payroll companies and policymakers—we can see the impact of this cultural shift. The more retirement benefits are seen as necessary, the more quickly private plans evolve and modernize. Increased flexibility, enhanced technology, and unique employee perks may only be the beginning.
What Comes Next
What began as an effort to close the retirement coverage gap is broadening participation in workplace savings. State-facilitated programs and private-sector plans are not competing forces, but complementary parts of a more inclusive retirement system.
As access continues to expand nationwide, the industry's greatest opportunity may not be choosing between public and private solutions but continuing to increase participation and improve outcomes for American workers.