At a Glance | August 8, 2019 Projecting the Impact of Policy and Design Proposals on Retirement Income Adequacy We used the EBRI Retirement Security Projection Model® to simulate a few proposed changes. M A K ING PROJEC TIONS Average Retirement Deficit and Projected Deficit Reduction Under Two Scenarios By Age Our projections reveal reduced deficits for all age cohorts. Deficits would be significantly lowered by the addition of auto $49.2k portability. Average Retirement $44.1k $44.2k $44.1k $43k $42.7k Deficit Baseline SCENARIO 1 COV ER AGE ENH A NCEMENT S All employers (except those with fewer than 10 employees) are required to offer defined contribution (DC) plans. New plans are auto-IRAs with a 6 percent default contribution rate that auto-escalates by 1 percent annually until it reaches 15 percent of pay. It assumes 30 percent opt-out for new eligi- Age Cohort 35–39 40–44 45–49 50–54 55–59 60–64 bles and includes all non-ex- cludable employees. Projected Deficit Reduction 3% 5% 7% 9% 10% Scenario 1 — Coverage Enhancements 12% SCENARIO 2 15% 15% 17% 20% COV ER AGE ENH A NCEMENT S Scenario 2 — Coverage Enhancements 24% + AUTO POR TA BILIT Y 27% + Auto Portability Upon termination, participants in Scenario 1 would have the account from their former employer automatically combined with their account in the new employer’s plan. INCRE A SED ACCE SS Projected Deficit Reduction as a Result of the Availability of Open MEPs Ages 35–39 Distributed by Future Years in the Work Force Without Eligibility Expanding access to open multiple employer plans (MEPs) Employees With Employees results in a significant reduction All or Most Years With Little or in retirement deficits for of Eligibility No Eligibility employees ages 35–39 who Most 3rd 2nd Least otherwise would spend a large Eligibility Level Quartile Quartile Quartile Quartile portion of their work career without eligibility. Workers are Projected Deficit Reduction 4% divided into quartiles according 12% to their eligibility level. 23% 27% SOURCE: Jack VanDerhei. “Under the Dome – A Closer Look at Legislative Proposals Impacting Retirement,” EBRI Issue Brief, no. 486 (Employee Benefit Research Institute, July 11, 2019). © 2019 EBRI This report is copyrighted by the Employee Benefit Research Institute (EBRI). You may copy, print, or download this report solely for personal and noncommercial use, provided that all hard copies retain any and all copyright and other applicable notices contained therein, and you may cite or quote small portions of the report provided that you do so verbatim and with proper citation. Any use beyond the scope of the foregoing requires EBRI’s prior express permission. For permissions, please contact EBRI at permissions@ebri.org.