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As its name suggests, the Setting Every Community Up forRetirement Enhancement Act is designed to improve the country'sretirement prospects. Time will tell if or howmuch the SECURE Act succeeds, but in the interim, newanalysis from the Employee Benefit Research Institute models arange of potential outcomes that deliver modest to significantreductions in savings deficits.

EBRI's analysis isolates three provisions of the bill—thecreation of Open Multiple Employer Plans, the increase ofthe cap on auto-escalation from 10 percent to 15 percent, and a newmandate to include part-time employees in workplace retirementplans.

Open MEPS, the cornerstone of the bill that wassigned into law last December, have the greatest impact on outcomesof the three provisions, said Jack VanDerhei, director of researchat EBRI and the author of How Much More Secure Does the SECURE ActMake American Workers.

"The youngest age cohort—35 to 39—working for employers withless than 100 employees stand to benefit the most," said VanDerhei."Their retirement deficit will decrease by 10.7 percent, primarilybecause of Open MEPs. If you are on the verge of retirement, youwon't have enough time to benefit as much."

VanDerhei applied EBRI's Retirement Security Projection Model(RSPM), which calculates the necessary savings rates for differentages of men and women needed to cover retirement expenses, to aseries of assumed take up rates in Open MEPs and different plandesigns.

Four Open MEP adoption rates by employers that do not sponsor a plan were assumed, from the low endof 7.3 percent, to the high end of 100 percent. VanDerhei used atake-up rate of 30 to 31 percent as the baseline assumption, basedon a 2016 Prudential survey of employers with fewer than 500workers that would be likely to join an Open MEP.

He then used different participation rates based on automaticenrollment and voluntary enrollment, and a baseline blended ratethat assumes a 75 percent participation rate.

From there, he accounted for the impact of increased automaticescalation, and the enrollment of part-time workers into retirementplans.

$3.83 trillion retirement deficit

For all households age 35 to 64, the RSPM puts the country'stotal retirement savings deficit at $3.83 trillion.

Under EBRI's baseline assumptions—a 30 percent Open MEP take-uprate among employers that don't already sponsor a retirement plan,and a 25 percent opt-out rate among employees—the country's overallretirement deficit would be reduced by 3 percent, or $115 billionfor households age 35 to 64.

Workers at smaller firms would experience slightly betterimprovement: a 5.6 percent reduction in the deficit for workers infirms with fewer than 100 employees; a 5.2 percent reduction forworkers in firms with 100 to 500 employees.

But for those that have more time to benefit from the SECUREAct's policies, the potential improvement in retirement readinessis "considerable," said VanDerhei.

For savers employed by firms with fewer than 100 workers, thoseages 35 to 39 would see their aggregate savings deficit reduced by10.7 percent. Those ages 40 to 44 would see an 8.3 percentreduction; those between 45 and 49 would see a 5.4 percentreduction.

Older workers ages 60 to 64 would see a negligible deficitreduction of 0.8 percent.

Firms with 100 to 500 workers would see an 8.6 deficit reductionamong ages 35 to 39, and an 8.3 percent and 5.4 percent reductionfor those ages 40 to 44 and ages 45 to 49, respectively.

Important steps, but still room to improve

VanDerhei said he wasn't surprised by the numbers his modelingproduced.

"There is still room for improvement, and certainly if Congresspassed Chair Neal's bill on top of the SECURE Act, there would bean even bigger reduction of the overall deficit," he said,referencing the Automatic Retirement Plan Act (ARPA), sponsored byWays and Means Chairman Rep. Richard Neal, D-MA.

ARPA, first introduced in 2017, would require all private sectoremployers with more than 10 employees to establish a definedcontribution savings plan. Employers would not be required tocontribute to the plans. Employees would be automatically enrolledat a 6 percent deferral rate.

Think Advisor, BenefitsPRO's sister publication, reported thatChair Neal intends to reintroduce ARPA as part of SECURE Act 2.0legislative package.

"The bill would go a long way to cover the remaining savingsgap," said VanDerhei. "So far, no one is clamoring for me to run asimulation of the bill at this point."

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