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.