ONE STARK trend of the last two decades has been the dwindling number of companies that provide traditional pensions. Defined-benefit plans, which commit employers to paying a specific monthly stipend to their retirees, have increasingly been replaced by 401(k) plans at larger companies, while many other businesses offer nothing at all to help employees prepare for retirement. And even when workers do participate in such a plan, the burden is on them to put away enough for their future needs. In practice, there’s often a large gap between what most people have saved and what a comfortable retirement will require.
One promising solution lies in the mandatory enrollment of every worker in special savings plans. Other countries confronting similar problems have tried out plans along the same lines. Some countries require employers to set aside a certain portion of an employee’s pay. Other times, the responsibility falls on the employees or requires contributions from both.