The United Kingdom is rolling out a broad retirement savingsinitiative that is far more ambitious than President Barack Obama'srecently announced MyRA program, according to the Center for Retirement Researchat Boston College.

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Both aim to encourage retirement saving among workers who do notcurrently participate in employer plans, typically those withaverage to low incomes; both also steer new participants initiallyinto low-risk investments, the center said in a report thisweek.

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But the U.K. requires all employers to “auto-enroll” theiruncovered workers, with the right to opt out. And the governmentcreated a new non-profit entity, the National Employment SavingsTrust (NEST), to provide employers with high-quality, low-costplans. In addition, the plans' target date funds start young workers with low-risk investmentsto avoid losses that could discourage saving.

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While the U.S.'s new MyRA program includes low-risk investmentsand government infrastructure, it lacks auto-enrollment.

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The U.K. initiative is a bold experiment. It aims to raise theretirement savings of those with the greatest saving deficits –average- and low-wage workers and those not covered by employerplans. And it aims to do that using the best contemporary thinkingon retirement plan design," said Steven Sass, the report'sauthor.

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"President Obama’s recently announced myRA program has a similarambition and also offers workers not covered by employer plans alow-risk, no-cost retirement saving option. The U.K. experience,however, suggests that take-up in MyRA could be low withoutauto-enrollment and matching employer and government contributions.U.S. 401(k) providers might also find other features in the U.K.initiative of interest, such as NEST’s TDF design in plans foraverage- and lower-wage workers."

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"It remains to be seen if the new initiative suc­ceeds and theUnited Kingdom avoids a future with “increasingly inadequate andunequal” retirement incomes. But it would surely arrive had thenation continued on its previous course," the report concluded.

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