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Retirement Planning > Saving for Retirement

Do State Auto-IRA Programs Work? Here Are the Latest Findings

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With about only half of private-sector employees participating in employer-sponsored retirement plans, many states around the country have launched programs that get unprotected employees to invest in auto-IRAs. The first of these auto-IRA plans, OregonSaves, which launched in July 2017, has some impressive as well as inconclusive results to date, according to the latest study from the Center for Retirement Research at Boston College.

Researchers found three key policy implications in its latest paper, Participation and Leakages in Oregon’s Auto-IRA, by Laura D. Quinby, Wenliang Hou, Anek Belbase and Geoffrey T. Sanzenbacher. These include that a) a majority of eligible employees participate in Oregon’s auto-IRA, b) it’s still unclear if these accounts are being used for retirement or savings, and c) it’s too early to tell the effect the program is having on household finances.

This particular paper first formed a framework by measuring participation from previous analyses, then to “advance the conversation” beyond participation and opt-out rates, it reviewed “leakages [or withdraws before retirement], tracking a cohort of employees, who had funded accounts in September 2018, over a 12-month period,” the study stated.

Key results showed that:

  • Participation in the program ranged between, 48% to 67% (the exact rate is uncertain due to data limitations, according to the researchers).
  • That 20% of employees with balances in September 2018 made at least one withdrawal during the subsequent year, removing $1,000 on average.
  • Withdrawals were more likely when employees left their OregonSaves employer (32%), although many full-year contributors (17%) also made withdrawals.

OregonSaves is voluntary for participants, who can stop contributing at any time. The program has been rolled out in waves, with larger firms (those with over 100 employees) in the first wave, moving down to those with five to nine employees.

As of September 2019, 8,000 employers had registered for the program, but only just over 3,000 were processing employee payroll deductions. For employees, as of September 2019, OregonSaves had set up accounts for 190,220 workers representing just over 200,000 distinct employment relationships. Employees cannot participate in the program unless their employer makes payroll deductions on their behalf.


The study noted that in typical retirement funds, only 4%-8% of participants make early withdrawals each year. In this study, it found 20% of those in the auto-enrolled program took withdrawals.

“However, employees may be more likely to make early withdrawals from state auto-IRAs because the programs have been set up as Roth accounts with post-tax contributions, and because participants are likely to have lower incomes and less-stable employment than their counterparts in traditional plans, characteristics that have been shown to increase leakages,” the researchers state. Also, it found, job-changers and lower earners were more likely to withdraw money than others.

In conclusion, the researchers state, “although straightforward conceptually, measuring participation in OregonSaves is difficult in practice because the program is still rolling out to employers, employee mobility is high, and administrative data are missing key information for some potential participants.” Further, it may be too early to tell why leakages are happening, and perhaps the next study should determine the reasons for these withdrawals, they stated.

California, Illinois, Connecticut, Maryland and Massachusetts offer similar retirement programs. Several other states are considering these plans.

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