Closing the Coverage Gap

The Problem

The main reason that U.S. workers end up with inadequate retirement savings is that, at any given time, only about half of workers ages 25-64 are participating in an employer-sponsored pension, mostly due to a lack of coverage (see Figure 1).

Figure 1. Percentage of Workers Ages 25-64 Participating in an Employer-Sponsored Pension, 1989-2022

Source: CRR estimates based on U.S. Board of Governors of the Federal Reserve System, Survey of Consumer Finances (1989-2022).

Workers can be uncovered in three ways: 1) their employer does not offer a plan; 2) their employer does offer a plan, but they are not included; or 3) they are self-employed. The first group accounts for three-quarters of all uncovered workers (see Figure 2). Initiatives to close the coverage gap generally focus on expanding coverage to the first group, but some also aim to eventually include the other groups.

Figure 2. Uncovered Workers by Reason Uncovered, 2018

Source: CRR analysis from U.S. Census Bureau, Current Population Survey (2019).

Federal Initiatives

At the federal level, several initiatives to address the coverage gap have been enacted over the years (see Table 1). These programs have relied on the voluntary participation of employers and therefore have had little impact.

Table 1. Federal Provisions Enacted to Address the Coverage Gap Since 1975

Year	Provision
1978-	SEP
1996-	SIMPLE-IRA
1999-	Payroll deduction IRA
2001-	Small business tax credit
2014-2018	myRA
2019	“Open” MEP
2022	Starter 401(k)

Source: CRR analysis of Internal Revenue Service (2022).

→ Learn More about Enacted Federal Provisions

Legislative proposals for mandatory programs are more likely the answer (see Table 2).

Table 2. Recent Federal Proposals to Close the Coverage Gap

Year	Provision
2009-2016	The President’s budget included a national auto-IRA plan, conceptually similar to those that the states have adopted.
2014	USA Retirement Funds Act (S.1979)
2016	SAVE UP Act (H.R.5731)
2017	Automatic Retirement Plan Act of 2017 (H.R.4523)
2019	Automatic IRA Act of 2019 (S.2370)
2021	Automatic IRA provision (H.R. 5376: Build Back Better Act)
2023	Retirement Savings for Americans Act of 2023 (H.R.6065, S.3102)
2024	Automatic IRA Act of 2024 (H.R. 7293)

Source: CRR analysis.

→ Learn More about Federal Proposals

State Initiatives

In the absence of meaningful federal action, states have seized the issue (see Figure 3). The inclusion of a mandate for employers is a significant differentiator for state programs. Mandatory auto-IRAs require employers without a retirement plan to auto-enroll their employees in an Individual Retirement Account (IRA). Voluntary programs, which involve “marketplaces,” multiple employer 401(k)s, and voluntary auto-IRAs, allow the employer to choose whether to participate (see Table 3).

Figure 3. State Initiatives to Address the Coverage Gap, as of December 2024

Source: CRR analysis.

Table 3. Types of State Programs, by Account Type and Employer Role

Employer role	IRA	401(k)
Mandatory	Mandatory auto-IRAs (CA, CO, CT, DE, IL, MD,^a ME, MN, NJ, NV, NY, OR, RI, VA, VT, WA)
Voluntary	Voluntary for employers (NM)^b Voluntary for workers (HI)	Retirement marketplaces (NM, WA) Multiple Employer Plans (MA, MO)

^a Maryland’s legislation requires employers without a plan to auto-enroll their employees, but imposes no penalties for failing to do so. Instead, it allows participating employers to avoid the annual $300 filing fee that ordinarily applies to businesses in Maryland.
^bOnce an employer decides to adopt the program, workers are automatically enrolled.
Source: CRR analysis.

The mandatory programs are showing potential in the early phases (see Table 4). In contrast, voluntary programs have had virtually no impact, with less than a 1-percent take-up rate.

Table 4. Summary of Mandatory Auto-IRAs, as of March 31, 2025

Up-and-running

State	Initial rollout period	Status
Oregon	2017-2021	➤ 8,130 employers facilitating payroll in last 90 days ➤ 134,515 workers with assets ➤ $341.3 million in assets
Illinois	2018-2020	➤ 7,653 employers facilitating payroll in last 90 days ➤ 157,015 workers with assets ➤ $232.2 million in assets
California	2019-2022	➤ 40,001 employers facilitating payroll in last 90 days ➤ 552,300 workers with assets ➤ $1,169.5 million in assets
Connecticut	2022-2023	➤ 2,827 employers facilitating payroll in last 90 days ➤ 31,214 workers with assets ➤ $39.0 million in assets
Maryland	2022-2023	➤ 1,674 employers facilitating payroll in last 90 days ➤ 12,627 workers with assets ➤ $16.2 million in assets

Starting rollout

State	Initial rollout period	Status
Colorado	2023	Recently launched.
Virginia	2023	Recently launched.
New Jersey	2024	Recently launched.
Delaware	2024	Recently launched.
Maine	2024	Recently launched.
Vermont	2024	Recently launched.

In process

State	Initial rollover period	Status
New York	TBD	Legislation passed in October 2021.
Minnesota	TBD	Legislation passed in May 2023.
Nevada	TBD	Legislation passed in June 2023.
Rhode Island	TBD	Legislation passed in June 2024.

Sources: OregonSaves monthly dashboard, Office of the State Treasurer (2025); Illinois Secure Choice performance dashboards, Office of the State Treasurer (2025); CalSavers reports, Office of the State Treasurer (2025); Connecticut Retirement Security Program reports (2025); and Maryland Small Business Retirement Savings Board reports (2025).