Jan. 28 (Bloomberg) — President Barack Obama offered moreAmericans the chance to save for retirement through payrolldeductions with a plan for new government-sponsored savingsaccounts.

The accounts, which Obama announced tonight in a State of theUnion Address that concentrated on expanding economic opportunity,will be available to workers who don't have access to a 401(k)plan, administration officials said.

The “MyRA” accounts, similar to an individual retirementaccount, will provide “a new way for working Americans to starttheir own retirement savings,” Obama said in the text of the speechreleased by the White House.

Under the initiative, workers would be allowed to have a portionof their pay deducted for deposit into an account invested in U.S.government bonds that would be treated for tax purposes as anindividual retirement account, administration officials said.

The accounts, set up through the Treasury Department, would havea maximum balance after which money would have to be rolled overinto an IRA, the officials said.

The officials project that millions of Americans will takeadvantage of the savings accounts.

“This isn't earth-shattering stuff,” said Brian Graff, the chiefexecutive officer of the American Society of Pension Professionals& Actuaries. “But it is a step in the right direction to getmore people saving for retirement, which I would think is abipartisan issue.”

Existing Authority

Obama can establish the savings program under existing executiveauthority without new legislation, the officials said. He willannounce details of the plan tomorrow.

“I don't expect this to get a lot of pushback,” said Graff, whodiscussed the proposal in advance with Treasury officials. He saidit draws on an existing program that permits workers to purchaseU.S. savings bonds through payroll deductions and adds “aretirement twist.”

The proposal resembles an earlier Obama administration plan thatwould have required employers to offer an automatic IRA option toemployees. That plan, which was included in Obama's 2014 budget,would have cost the government an estimated $17.6 billion inforegone revenue over 10 years.

About 68 percent of U.S. workers had access to retirementbenefits as of March 2013, with 54 percent participating, accordingto the Bureau of Labor Statistics.

Company Reaction

“Although we don't have the details yet, Vanguard is generallysupportive of expanding savings opportunities for those not coveredby a workplace retirement plan,” Linda Wolohan, a spokeswoman forVanguard Group Inc., said in an e- mail.

Wolohan declined to comment further before hearing the specificsof Obama's proposal. Vanguard was the second-largest manager of401(k)-type assets in 2012 behind Fidelity Investments, accordingto researcher Cerulli Associates.

Fidelity, which is also the largest provider of IRAs, declinedto comment before hearing the speech, according to an e-mail fromspokeswoman Eileen O'Connor.

JPMorgan Chase & Co., which manages retirement assets andadministers plans, declined to comment before seeing more details,Gregory Roth, a spokesman for the bank, said in an e- mail.

Under the proposal, proceeds couldn't be cashed out without atax penalty until the depositor reaches retirement age, unlikeordinary savings-bond purchases, Graff said. The funds could betransferred to an ordinary IRA without penalty, he said.

Access Lacking

One of the biggest challenges for the U.S. retirement system isthat many workers don't have access to a pension or 401(k) planthrough their employer, said Lisa Mensah, executive director of theinitiative on financial security at the Aspen Institute.

“We have to get people in,” Mensah said. “You do need anautomated way for people to get into the savings system.”

Small-business groups in the past have opposed such proposalsbecause they say that setting up the required payroll deductionwould be a cost for them.

U.S. savings bonds designed for retirement accounts have beenproposed in the past and termed R-bonds, said Don Fuerst, anactuary and senior pension fellow at the American Academy ofActuaries.

The securities are seen as a way to allow low-income workers tosave for retirement, Fuerst said. They usually can't contributemuch at the start, making their balances expensive to administerand vulnerable to investment-management costs.

'Small Amount'

“If you're only putting a small amount into the plan the feescould eat up your investment income,” said Fuerst, who is based inWashington. “This gets around that.”

With savings bonds the U.S. government could issue theinvestments and cover the costs of keeping track of them, hesaid.

The accounts aren't as attractive as a typical employer-sponsored 401(k) because there is no employer match and only oneinvestment option, Graff said.

Even so, he said, it may significantly boost retirement savingsfor middle- and low-income workers who don't have access to a401(k) account, Graff said.

Research has shown that middle- and moderate-income workers arelikely to save for retirement when they can do so with a payrolldeduction and are unlikely to do so when they don't have thatoption, Graff said.

Among workers earning between $30,000 and $50,000 a year, 72percent of those covered by an employer-sponsored payroll deductionretirement plan such as a 401(k) participate, while only 5 percentof those without such a plan set aside money through an individualretirement account, according to a 2010 analysis by the EmployeeBenefit Research Institute.

Participation in the Obama retirement savings program would bevoluntary, Graff said.

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