Moving Forward from SECURE 2.0

The SECURE 2.0 Act of 2022, passed with broad bipartisan support, made an array of changes to the U.S. retirement system to bolster workers’ financial security later in life.^[A] From small technical corrections to significant policy improvements, SECURE 2.0’s provisions will expand participation and boost savings in workplace retirement plans such as 401(k)s; increase support for small businesses trying to help their workers prepare for retirement; and ease access to products that provide protected streams of income later in life. Although the bill contained dozens of provisions, three in particular stand out: the requirement beginning in 2025 that new plans implement key automatic features; the creation of emergency savings accounts that are connected to workplace retirement accounts; and the transformation of a little-used tax credit for low-income savers into the Saver’s Match, a program that starting in 2027 will provide matching government contributions into retirement accounts.

These three provisions represent great strides forward, but each could be improved. Moreover, these features primarily benefit those who already have access to the most effective retirement-savings tools. Tens of millions of U.S. workers still lack access to a workplace retirement plan, leaving them unable to benefit from automatic enrollment, regular automatic contribution increases, and SECURE 2.0’s emergency savings accounts. These workers will also be much less likely to benefit from the Saver’s Match.

The access gap underscores not only the need for continued policy reform but also the vital role of Social Security in ensuring that all American workers can retire with dignity. Personal savings are a vital source of insurance against the loss of earned income in retirement, and Social Security is a form of social insurance that shields virtually all Americans from the risk of outliving those savings. Self-insurance and social insurance must both be strong to ensure widespread retirement security.

For nearly a decade—beginning with the 2016 release of a report from the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings—BPC has been at the forefront of efforts to improve the retirement savings system in the United States. BPC’s commission covered topics as diverse as increasing access to workplace retirement plans and improving their effectiveness; expanding guaranteed income streams in retirement; boosting household emergency savings; better using home equity; and reforming Social Security to ensure it continues to serve as the foundation of retirement security.

That report, and our work in the years that followed, set the stage for BPC to play an integral role in developing SECURE 2.0 and its predecessor, the SECURE Act of 2019. We continue to provide significant research and technical assistance on legislation meant to enhance retirement and emergency savings, including for a potential “SECURE 3.0” package later in the 119th Congress.

This report explores six key opportunities for federal policymakers to build on SECURE 2.0 to further strengthen workers’ ability to financially prepare for retirement:

• require automatic enrollment for all workplace retirement plans;
• allow employers to set individual employees’ default contribution amounts based on their contributions in their previous jobs or to set different default contribution levels for different age groups;
• simplify pension-linked emergency savings accounts (PLESAs), which were created by SECURE 2.0;
• allow automatic enrollment for non-pension-linked emergency savings accounts;
• integrate public awareness efforts, tax documents, and claiming processes for the Saver’s Match into state-level automatic individual retirement account (IRA) programs;
• allow Saver’s Match funds to be deposited in after-tax Roth accounts or streamline the process of opening a pretax IRA for this purpose.

It then describes the access gap, delineating the limitations on SECURE 2.0’s reach, before presenting two major priorities for federal action: closing the access gap to help all U.S. workers prepare for retirement, and strengthening Social Security to ensure the program can continue to provide vital insurance against lost income in old age.

A. The three bipartisan bills that ultimately became SECURE 2.0 were introduced by Reps. Richard Neal (D-MA) and Kevin Brady (R-TX) and Sens. Ron Wyden (D-OR), Patty Murray (D-WA), and Richard Burr (R-NC).