Public Policy Proposal: A Simple Federal Solution to Closing the Retirement Coverage Gap
Nearly 83 million Americans lack workplace retirement savings coverage—including independent workers and employees who remain uncovered by an employer-sponsored retirement plan—leaving half the U.S. workforce without a clear path to financial security1.
Expanding the IRA rules is the most efficient and cost effective way to close the significant retirement coverage gap.
Click here to view the full Independent Worker Coverage Proposal.
PROPOSAL
Create requirements for business-facilitated automatic IRAs for both independent workers and employees.
Current law would be revised to require businesses to automatically enroll certain individuals into IRAs.
Businesses engaging 1 or more independent workers (including “app” or “platform” based workers will facilitate automatic enrollment.
Employers with 1 or more employees who are not covered by an employer retirement plan will facilitate automatic enrollment.
These revisions would apply to individuals who have attained age 18 and are expected to earn at least $10,000 for services provided to a business for the year either as an employee or as an independent worker.
Employers with 1 or more employees who are not eligible for the employer’s retirement plan will facilitate automatic enrollment for employees that do not participate in the plan.
Automatic enrollment will be based on a 6% default contribution rate with annual increases of 1% up to a maximum contribution rate of 10%.
Businesses will annually re-enroll independent workers and employees who have previously opted out.
Contributions would generally be directed to a Roth IRA (traditional IRA when required).
IRA owners would choose from a wide range of investments or be automatically invested in a qualified investment alternative (QDIA) if no selection is made.
RATIONALE
Address a Growing Coverage Gap
Almost half of U.S. private-sector workers—about 59 million people—lack access to a retirement plan at work.1
Approximately 23.4 million U.S. workers rely on alternative work arrangements as their primary source of employment.2
Approximately 72% of employees save for retirement, compared with only 56% of independent workers.3
Increases Participation Rates
Automatic enrollment provides a 71% improvement in participation rates over standard opt-in programs.4
Builds on Existing Frameworks
Leverages existing public/private-sector infrastructure rather than building a costly new government program.
Protects Taxpayers
Helps address a projected $334 billion retirement-related state budget gap over the next 20 years.4
Empowers Workers
Participation is voluntary as workers can opt out or adjust contribution amounts at any time.
Supports Companies and Employers
Companies and employers can easily participate, incurring no or minimal cost and can do so without assuming the fiduciary liability associated with sponsored plans.
1 Angela M. Antonelli. "Who Lacks Access to Retirement Savings? A State-Level Analysis and an Examination of the Potential Benefits of State-Facilitated Retirement Savings Programs", Policy Report no. 25 01 (Washington, DC: Center for Retirement Initiatives, Georgetown University, March 2025), https://cri.georgetown.edu/wp-content/uploads/2025/03/Who-Lacks-Access-to-Retirement-Savings.pdf
2 U.S. Bureau of Labor Statistics. “Contingent and Alternative Employment Arrangements—July 2023.” Economic News Release, November 8, 2024. https://www.bls.gov/news.release/pdf/conemp.pdf
3 Ted Godbout. “Nearly Half of Gig Workers Feel Financially Ready for Retirement.” National Association of Plan Advisors. March 27, 2019. Accessed December 9 ,2025. https://www.napa-net.org/news/2019/3/nearly-half-gig-workers-feel-financially-ready-retirement/
4John Scott and Andrew Blevins, “States Face $334.3 Billion Shortfall Over 20 Years Due to Insufficient Retirement Savings,” The Pew Charitable Trusts, June 1, 2023, https://www.pew.org/en/research-and-analysis/articles/2023/06/01/states-face-334-billion-shortfall-over-20-years-due-to-insufficient-retirement-savings
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