The U.K.’s Ambitious New Retirement Savings Initiative
The brief’s key findings are:
- The United Kingdom is rolling out a low-cost retirement system for workers who lack pension coverage.
- The new system has three core elements:
- Employers auto-enroll their workers at a 4-percent contribution rate, matched by the employer and government combined.
- A new non-profit provides the infrastructure to keep costs low.
- The plans’ target date funds start young workers with low-risk investments to avoid losses that could discourage saving.
- The U.S.’s new “myRA” program includes two similar design features – low-risk investments and government infrastructure – but it lacks auto-enrollment and matching contributions.