Trump targets ‘retirement gap’ with new executive order

President Donald Trump on Thursday signed an executive order aimed at expanding access to retirement savings accounts for millions of workers who lack employer-sponsored plans.

The proposal seeks to address the nation’s “retirement coverage gap,” which affects more than 50 million private-sector workers, most of them low- and moderate-income earners. These workers typically do not have access to a traditional pension or an employer-sponsored retirement savings option.

Trade groups representing the financial services industry welcomed the opportunity to serve more Americans with life insurance and annuity products.

"Expanding access to retirement savings opportunities through both employer-sponsored plans and individual savings solutions is critical to addressing Americans’ growing concerns about their long-term financial futures," said Chris Gandy, president of the National Association of Insurance and Financial Advisors. "NAIFA looks forward to learning more about the administration’s proposed retirement savings initiative and working with policymakers to strengthen awareness, understanding, and use of the retirement plans and financial tools already available to workers and families."

Those most affected include employees of small businesses, part-time workers, independent contractors and the self-employed. According to AARP, about 78% of businesses with fewer than 10 employees do not offer a retirement plan. Nonwhite workers are also disproportionately represented among those without access.

Under the plan, the administration said workers will be able to open accounts through a new federal website, TrumpIRA.gov, beginning next year. The site will allow individuals to enroll in low-cost individual retirement accounts designed to mirror features of the federal government’s Thrift Savings Plan.

'A positive step'

The executive order requires participating IRA providers to maintain low administrative costs, capping total annual expense ratios at 0.15% of an account’s balance. Providers are also barred from imposing minimum contribution or balance requirements.

Some account holders will be eligible for the federal Saver’s Match, a program approved by Congress during the administration of former President Joe Biden and scheduled to take effect next year. The match provides a federal contribution to qualifying savers.

"This action is a positive step toward helping those least likely to save gain access to the tools they need to start building retirement financial security," said Wayne Chopus, president and CEO of the Insured Retirement Institute. "We are particularly encouraged by the Administration’s effort to connect this expanded access to the Saver’s Match established under SECURE 2.0 -- a provision strongly supported by IRI -- to help eligible workers take advantage of a matching contribution from the government."

Under current guidelines, individuals earning less than $35,500 — or $71,000 for married couples — can receive matching contributions if they save up to $2,000 annually, or $4,000 for couples, in qualified retirement plans such as 401(k)s or IRAs. The maximum federal match is $1,000 for individuals and $2,000 for couples.

The executive order directs federal agencies to increase awareness of the Saver’s Match, which officials say could encourage more workers to save. According to The Pew Charitable Trusts, 87% of workers without access to a workplace retirement plan said they would be more likely to save if eligible for such a match.

Coordinated efforts needed

At a White House signing event, Trump and National Economic Council Director Kevin Hassett said the administration will also work with Congress to expand eligibility for the Saver’s Match to higher-income workers.

The order further calls on lawmakers to codify the policy, ensuring long-term access to low-fee retirement options with features such as diversified index-based investments, automatic portfolio selections and portability between jobs.

It remains unclear how many of the tens of millions of eligible workers will ultimately enroll in the new program.