In The Worksite

State Street's O'Hanley Calls on Congress to Mandate Workplace Retirement Coverage for All Private-Sector US Workers

Outlines Framework Guaranteeing Access to Workplace Retirement Savings Plans That Could Reduce Savings Shortfall by up to $740 Billion

June 07, 2016 — BOSTON–(BUSINESS WIRE)–Ron O’Hanley, president and chief executive officer of State Street Global Advisors (SSGA), the asset management business of State Street Corporation (NYSE:STT), today called on Congress to enact a national framework that ensures workplace coverage for all private-sector working Americans.

In an open letter to congress, O’Hanley proposed a framework that expands access to workplace retirement savings plans and ensures coverage through auto-enrollment, auto-escalation, tax incentives for small employers, eliminates barriers to open Multiple Employer Plans (MEPs). The framework could reduce the expected retirement savings shortfall by up to $740 billion1.

“Today we face an access imperative,” said O’Hanley. “The Government Accountability Office report on retirement security finds that nearly 40 percent of working households lack access to, or are not eligible to participate in, an employer-sponsored defined contribution (DC) plan2.

We applaud efforts by the White House, Congress, and many states to expand workplace retirement savings opportunities through auto-IRAs and open MEPs. However, discrete initiatives will lead to a complex and inefficient set of retirement savings programs that perversely could lead to lower savings levels. It’s time for a national, bipartisan solution that guarantees workplace coverage in a retirement savings plan.”

A National Framework

In his letter, O’Hanley urges Congress to enact a national framework for helping Americans save for retirement. More specifically, O’Hanley calls for federal legislation that includes the following key elements for increased access and savings to retirement savings in the workplace:

Today we face an access imperative

  • Require private employers to auto-enroll all workers into a defined contribution plan
  • Require use of auto-escalation and default investments such as target date funds to help employees maximize retirement savings
  • Enact tax credits for small employers to cover the administrative costs of implementing these plans
  • Eliminate barriers to open MEPs to allow businesses to band together and offer affordable retirement savings plans

“By using existing programs that have already received bipartisan support, we can act now. Every day we fail to act is another day that Americans fail to save for the future,” continued O’Hanley. “These solutions allow us to put aside our differences, avoid making perfection the enemy of the good, and work toward a common goal of greater retirement security for millions of working Americans.”

The full text of O’Hanley’s letter and policy proposal is available here.


1: According to an analysis by the Employee Benefit Research Institute (EBRI) of our proposal
2: Retirement Security: Low Defined Contribution Savings May Pose Challenges: United States Government Accountability Office report from May of 2016.
About State Street Global Advisors
For nearly four decades, State Street Global Advisors has been committed to helping our clients, and those who rely on them, achieve financial security. We partner with many of the world’s largest, most sophisticated investors and financial intermediaries to help them reach their goals through a rigorous, research-driven investment process spanning both indexing and active disciplines. With trillions* in assets, our scale and global reach offer clients access to markets, geographies and asset classes, and allow us to deliver thoughtful insights and innovative solutions.
State Street Global Advisors is the investment management arm of State Street Corporation.
*Assets under management were $2 trillion as of March 31, 2016. AUM reflects approx. $32.6B (as of 3/31/2016) with respect to which State Street Global Markets, LLC (SSGM) serves as marketing agent; SSGM and State Street Global Advisors are affiliated.
1: According to an analysis by the Employee Benefit Research Institute (EBRI) of our proposal
2: Retirement Security: Low Defined Contribution Savings May Pose Challenges: United States Government Accountability Office report from May of 2016.
Multiemployer Plan- A multiemployer plan is an employee benefit plan maintained under one or more collective bargaining agreements to which more than one employer contributes. These collective bargaining agreements typically involve one or more local unions that are part of the same national or international labor union and more than one employer.
Defined contribution (DC) plan- A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. It has become the dominant form of retirement plan for U.S. workers.
Auto- IRAs- The auto IRA would enable employees to use an employer’s payroll system to channel savings to an IRA, similar to the way in which employees save through a 401(k). Employees would initiate saving, using their own money and choosing how much and where to save.