How do firms respond to state retirement plan mandates?

Abstract

We investigate how state “Auto-IRA” mandates affect firm offerings of employer-sponsored retirement plans (ESRPs). These policies require firms without ESRPs to facilitate automatic employee contributions to state-created individual retirement accounts. We find that these policies increase an individual's probability of working for a firm with an ESRP by 6%–9% and of being included in the ESRP by 8%–13%. At the firm level, these policies increase the probability of offering an ESRP by 7%, the probability of establishing a new ESRP by 41%–44%, and the number of ESRP participants by 6 percent.