Illinois earlier this month did something no other state has done: it signed into law an automatic retirement savings program to help residents who have no such plan at work. Other states are considering similar programs. Jon Vogler, who works as a senior analyst on retirement research at Invesco Consulting, sees plenty of challenges ahead for these programs. Before starting work at Invesco in 2008, he spent more than 25 years in compliance, research and underwriting of retirement services. Here, Vogler addresses some of the key issues facing state retirement programs for's Advisor Corner. 

1. What are some of the biggest problems that we might see as states move forward in setting up their own retirement systems?

State-run retirement programs for private-sector employees would have limited investor choice for plan participants. There could be substantial expenses for states and taxpayers in start-up and ongoing administrative and compliance costs. State-run retirement programs could undermine incentives for small businesses that do not currently offer employer-sponsored plans to establish their own plans in the future. In addition, some small businesses that do have their own plans might be incented to drop them and let the state cover their employees.

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