The Securities Industry Financial Market Association, the trade association that represents the interests of the brokerage industry, is a free-market proponent when it comes to expanding access to workplace retirement plans.

And it isn’t.

When the Treasury Department recently launched its myRA retirement savings program, which hopes to expand access to the more than 50 million Americans without access to a workplace retirement savings plan, SIFMA was quick to lend its support.

Read: 5 things to know about Americans and retirement planning

"MyRa offers a simple, no fee, government-backed savings option - particularly for those who are just starting to save and those who do not have access to employer-sponsored plans,” said Kenneth Bentsen, SIFMA’s president and CEO.

“Through greater education on the value of saving early with even the smallest contributions to a retirement account, myRA will help many more Americans take the first steps towards a more financially secure future," added Bentsen.

Participants in the myRA program can elect to have contributions automatically deferred from paychecks or their bank account.

Money is invested in a newly issued government-backed security that returns a rate comparable to the G Fund available to federal workers through the Thrift Savings Plan.

Annual contributions are capped at $5,500 for individuals—the same as apply to Traditional and Roth IRAs.

Upon its rollout, Jack Lew, Secretary of the Treasury, stressed that the program is not intended to replace private sector savings plans, but rather serves as “a bridge to other savings products.”

In fact, when participants in myRA accounts accrue $15,000 in savings, they no longer collect interest on the accounts. If they don’t roll the assets over into a private sector account on their own, Treasury will automatically roll them into a private sector Roth IRA.

Savers who defer as much as $100 a week—an aggressive rate for the low and middle-income workers the program hopes to target—would meet the $15,000 threshold in about three years. Saving $20 a week could put an enrollee flirting with the threshold after 13 years.

When it comes to the wave of state-sponsored retirement initiatives, SIFMA support for government-led retirement solutions stops cold.

In a new position paper, the trade group says such initiatives are not the most effective way to address access shortfalls to savings plans.

SIFMA cited three primary reasons—the first being the collective shortfall of state and local pensions across the country, which the Center for Retirement Research put at more than $1 trillion in 2013.

It also said state sponsored retirement plans for private sector workers would create conflicts between federal and state law, and pointed out that there is currently “no guidance” from the DOL or courts as to how state-run plans would operate under ERISA.

That of course is expected to change, as Phyllis Borzi, assistant secretary of Labor and head of the Employee Benefits Security Administration, has promised guidance will be issued by year’s end.

In a report issued by the Government Accountability Office, none of the six states it examined would cap asset levels and then automatically roll them over to the private sector, as myRA does (one plan in Washington state would create a state-run marketplace for providers to compete for business).

The GAO came out in support of regulatory and Congressional action to support state-sponsored retirement initiatives.

Some plans at the state level would mandate enrollment for businesses with as few as five employees. Such requirements from states may be as close as the country can come to legislating compulsory enrollment at the federal level, as has been done in Australia.

To SIFMA, government intervention at the state level makes little sense, in spite of the support it gives to the myRA program.

“The private sector already offers a variety of retirement savings options, including fairly priced 401(k) plans, 403(b) plans, 401(a) plans, 457(b) plans, SIMPLE IRAs, SEP IRAs, and traditional IRAs,” said SIFMA in its position paper.

Instant Insights /

SIFMA backs myRA while cautioning against state-run retirement programs

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