Are workers in the U.K. better prepared for retirement than those in the U.S.?
And could actions taken by the U.K. government offer possible solutions to the impending U.S. retirement crisis?
Those are some of the questions asked in a blog post from Georgetown University’s Center for Retirement Initiatives, which looked at actions taken by the British government over a period of years to set in place a system of mandatory retirement savings similar to that used by the Australian government.
According to the post, the National Employment Savings Trust (NEST) Corporation, which is responsible for operating the NEST pension plan on an ongoing basis, has auto-enrolled some 2.8 million U.K. workers otherwise uncovered by a pension plan, and will auto-enroll millions of additional workers over the course of the next few years.
But the road hasn’t been a smooth one, nor has progress come without cost.
The program was made possible by a multiyear loan from the British government, and in addition to an annual fee for assets under management, NEST charges each participant a 1.8 percent one-time charge on contributions to recover the start-up costs.
With states in the U.S. concocting a patchwork of plans using a variety of provisions, the blog post said that the U.K.’s efforts provide “state governments in the U.S. with critically important insights in how they should proceed down the retirement savings reform path….”
Among those insights are the need to ensure that any new program “supplements and not supplants already existing retirement programs,” as well as making sure that employers who aren’t already offering a qualifying retirement savings program are required to enroll employees in a qualifying arrangement.
There’s also the need to “invest the resources—both money and talent—in a Board or Task Force to design and create effective implementation strategies that would finalize the design of and administer a state retirement savings program,” as well as a means for “commercial vendors to participate in these newly created markets for retirement savings.”
Should all these conditions be met, the post said, there are still three “success drivers” to consider: “a viable, explainable vision to address the retirement coverage gap; … the political will to see it through; and … a properly resourced, effectively led effort to implement it.”
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