Iowa, Idaho, and Montana Rank Best For Access to Retirement Plans in the Workplace

Florida, Georgia, and Rhode Island have the lowest rates of access to employer-provided retirement plans nationally, lagging behind national leaders by as much as 25%, according to recent research from the DC-based Economic Innovation Group.

The findings are based on an analysis of state-level data from the Bureau of Labor Statistics’ population survey, as of 2021 year end. States with the lowest share of workers who have access to a plan were Florida (33%), Georgia (37%), and Rhode Island (38%). Those figures lag well behind the national state leaders in terms of access, which are: Iowa (58%), Idaho (57%), and Montana (55%), according to EIG associate economist Ben Glasner.

These numbers compare to a national state average of 46% of employees with access to a workplace plan, according to EIG’s findings. This policy and lobby group cites this data as an argument for a federally-sponsored national retirement program.

“Far too many U.S. workers—particularly low-income individuals—slip through the gaps in the current retirement system, leaving millions across the country with inadequate savings,” Glasner wrote in the report. “Retirement accounts are the largest source of aggregate fungible wealth for American households and are an important tool to build a nest egg for the future. Unfortunately, access to employer-provided retirement plans remains deeply divided across earning levels and regions of the country.”

In its regional analysis of workplace retirement plans, EIG found that the Midwest had the highest rates of access at 49%. The southern states came in last at 42%, according to the report.

As of the most recent count this year, 18 states have enacted mandatory or state-facilitated retirement plans for businesses. None of either the top or bottom states listed in EIG’s report have state-facilitated plans; Virginia is the only southern state with a mandatory plan.

Even when workers are offered a workplace retirement plan, there is still a significant gap between access as well as participation when compared to the rest of the workforce, according to EIG.

Of those workers making $37,000 or less per year, 30% have access to an employer-provided plan. And among that group, just 19% participate in the plan, as compared to 37% of the total workforce, EIG wrote.

“The large and persistent gap in participation points to the difficulties many low-income workers have setting aside savings for retirement even when plans are available to them,” EIG wrote. “Policymakers aiming to close the retirement savings gap must therefore confront a two-pronged challenge: opening up access and increasing participation. Simply encouraging greater access to retirement plans may not be enough to increase take-up among low-income workers, particularly when every dollar is tight.”

EIG positions its findings to back bipartisan retirement legislation proposed last year called the Retirement Savings for America Act. The act proposes a national government-sponsored retirement program that would include automatic enrollment and federal matching for employee contributions.

The EIG and its push for a federal retirement plan was called out for conflicting with the private retirement industry by leaders of the National Association of Plan Advisors at their annual conference in San Diego.

Brian Graff, executive director and CEO of NAPA, noted that the program would undercut legislation already underway to help reduce the coverage gap, including the sweeping retirement legislation in SECURE 2.0 that will bring further incentives as well as mandates to retirement plan sponsors in coming years.