Administration Looks to U.K. for Retirement Savings Model

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By Michael J. Bologna

Nov. 4 — The Obama administration is monitoring the automatic enrollment retirement savings strategies being pioneered in other countries as it launches its own myRA program, a senior Treasury Department official said.

J. Mark Iwry, Treasury's deputy assistant secretary for retirement and health policy, told a conference audience Nov. 3 that the administration is monitoring retirement innovations around the globe and is particularly interested in the approach being developed in the U.K.

In October 2012, the U.K. launched a broad retirement savings initiative, which included the creation of a low-cost savings platform known as the National Employment Savings Trust (NEST). By statute, all employers in the U.K. must automatically enroll eligible employees in an approved retirement savings system, a NEST product, or a traditional pension—and make annual contributions.

Iwry conceded that the administration's myRA program—launched nationwide Nov. 4 (see related article in this issue)—is modest compared with the U.K. model. Unlike the U.K. model, the myRA program doesn't require employers to make contributions to the accounts.

“We’ve been able to do less, in terms of achieving enactment—partly because of the differences in the way our governments work and our systems are structured—than the U.K.,” Iwry said. “We very much admire” that the U.K. has “been able to get this kind of automatic enrollment,” he said.

Obama unveiled the myRA program, which is tailored to workers without access to employer-sponsored retirement coverage, in his 2014 State of the Union address. 

Europe and Asia

David C. John, senior strategic policy adviser at the AARP Public Policy Institute, lauded retirement saving innovations being pursued throughout Europe and on other continents as well.

The U.K. program “is very close to some of the solutions we’ve discussed,” John said. “But we see the same discussions in France and Germany, in Sweden and Japan. Malaysia is working on a system. So this is not just an American situation. This is a worldwide situation,” John said.

The comments by Iwry and John came during a retirement policy conference in Chicago sponsored by AARP and several retirement research organizations, including the Retirement Security Project of the Brookings Institution. Several speakers from the U.K. gave presentations highlighting the innovations in that nation.

According to a summary document provided at the conference, eligible workers in the U.K. are automatically enrolled in the program, but they're free to opt out. Workers who opt out, however, will be re-enrolled every three years or within 30 days of changing jobs. Workers are free to opt out following re-enrollment.

When the program is fully implemented in 2018, all enrolled workers will see 8 percent of their annual income channeled into their personal plan. Of that total, 3 percent is paid by the worker, 4 percent by the employer and 1 percent by the government.

NEST Option

In tandem with these requirements, the U.K. developed NEST, a nonprofit pension provider whose key features include:

• low costs, including an annual management fee of 0.3 percent of a worker's savings, through economies of scale and a narrow menu of investment choices;

• a “target retirement date fund” as a default investment, which draws 99 percent of participants;

• higher- and lower-risk investment options, a human rights fund, a Sharia fund based on Islamic law and a fund for individuals close to retirement who are planning to purchase an annuity.


Charlotte Clark, director of private pensions in the U.K. Department for Work and Pensions, was asked her predictions for the program as employers and employees become more comfortable with it. Clark said she expects the national requirements for enrollment to expand, capturing more of the U.K. workforce; consolidation of private plans offering retirement options to workers; greater interest in retirement planning service and a more active savings culture; and higher contribution requirements totaling 10 percent of annual salary.

To contact the reporter on this story: Michael J. Bologna in Chicago at

To contact the editor responsible for this story: Phil Kushin at


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