The group shared its thoughts on Friday, a day after the Senate followed the House and passed a resolution to undo rules helping municipalities and states set up payroll deduction retirement plans that automatically enroll private-sector workers lacking access to such savings programs.
“There is a retirement crisis brewing in America, because workers do not have enough access to retirement savings programs and because there is no retirement system for low income earners. The rule being repealed was helping the states address that problem,” said Bob Stammers, head of investor education for the CFA Institute, in a statement.
The CFA Institute says that the rollback of the rule that lets states create retirement savings accounts for low-income workers “increases the potential for creating generation of retirees living under the poverty line.” It estimates these plans stood to benefit some 63 million American workers who lack access to retirement plans.
“California and Illinois had already made progress in developing state-sponsored retirement accounts,” Stammers said, “… [and] may continue to offer them regardless of the changes in the Department of Labor rule.
The importance of auto-enrollment in retirement savings has been highlighted in the academic work of Harvard economist Brigitte Madrian, who also serves on Finra’s Board, and Dennis Shea of Penn State. Madrian, Shea and other researchers have found that individuals will accept the employer’s default savings rate and the default investment; plus, the data they collected from recordkeepers shows these changes have transformed how workers invest and how much they save.