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.