Why States Are Offering Workers at Private Companies Access to I.R.A.s

Traditional pensions are increasingly rare. About half of employees at private companies don’t have access to a retirement plan. And retirees themselves say they haven’t saved enough.

That is why states have decided to step in and offer retirement accounts for private-sector employees, helping workers to save more and, new research shows, perhaps even spurring companies to offer their own workplace retirement plans.

Automatic individual retirement account programs, known as “auto-I.R.A.s,” typically require private employers that don’t offer workplace retirement plans like 401(k)s to register for state-run plans.

Workers are automatically enrolled in I.R.A.s, often with 3 to 5 percent of their income deducted from their paychecks, but can change the amount or opt out if they prefer. The employers — typically small businesses and nonprofits — provide access to payroll deductions to ease worker contributions, but don’t oversee the plan or pay fees.

Auto-I.R.A.s are now available in 10 states, including New Jersey and Delaware, which started plans this summer, and soon will be in seven more, according to the Georgetown University Center for Retirement Initiatives. At the end of October, there were more than 930,000 accounts with $1.7 billion in savings for the eight plans for which data was available, according to the Georgetown center.

Workers can, of course, open an I.R.A. on their own at a bank or brokerage. But few workers do so, perhaps because of inertia or because they are intimidated about making investment choices.