Philadelphia Launches First City-Sponsored Auto-IRA Program as States Expand Retirement Coverage
Why It Matters
More than 50 million American workers currently lack access to a retirement plan through their employer, a gap that federal and state policymakers say leaves low- and moderate-income families financially vulnerable in old age. Philadelphia’s newly approved automatic retirement savings program marks the first attempt by a U.S. city to address that gap directly, joining a broader national movement that now spans 15 states and is drawing bipartisan attention.
What Happened
Philadelphia voters approved a change to the city charter on Tuesday, clearing the way for the city council’s PhillySaves program. The measure requires employers who do not already offer retirement benefits to automatically enroll their workers in an individual retirement account, or IRA. Workers who prefer not to participate may opt out.
Mayor Cherelle Parker, a Democrat, signed the enabling legislation earlier this year. The program drew support from a broad coalition that included AARP, the Chamber of Commerce for Greater Philadelphia, and The Pew Charitable Trusts. Proponents argue the initiative will help families build long-term financial stability and may eventually reduce municipal costs tied to social services spending.
The city will serve as a national test case. While a growing number of states have enacted similar programs, no other American city has attempted to run one independently. Experts note that implementation costs present a significant barrier for most municipalities, and smaller states such as Delaware, Rhode Island, and Vermont have chosen to pursue shared partnership models rather than standalone programs.
By the Numbers
- $3 billion — total retirement savings accumulated by workers enrolled in the 15 active state auto-IRA programs nationwide
- 1.2 million+ — workers participating in state-sponsored plans across those 15 states
- 18 months — the time it took to go from $1 billion to $2 billion in total savings, compared to six years to reach the first billion milestone
- 35–37% — approximate opt-out rates in California and Illinois, the two states cited by business groups as evidence of limited worker demand
- $1,000–$2,000 — the federal tax credit match for eligible lower-income individuals and married couples, respectively, set to begin next year under a provision Congress enacted in 2022
Zoom Out
Oregon launched the first state-run auto-IRA in 2017, and participation has grown steadily since. Minnesota launched its own program this year targeting employers with five or more workers, Hawaii’s program is scheduled to go live in 2026, and Washington state is expected to follow in 2027.
The programs require employers to set up payroll deductions but do not mandate any employer match. Research on retirement savings behavior consistently finds that automatic enrollment — where workers must actively choose to leave rather than actively choose to join — produces substantially higher participation rates than traditional opt-in models.
President Donald Trump last month signed an executive order directing the creation of a federal website, TrumpIRA.gov, where workers without employer-sponsored plans could research and enroll in IRA accounts. Lower-earning workers would be eligible for a government match under the initiative. Angela Antonelli, executive director of the Georgetown University Center for Retirement Initiatives, said the presidential attention has encouraged additional states to consider adopting similar programs.
To date, states that have enacted mandatory auto-IRA programs have been predominantly left-leaning. Several conservative states, including Missouri and Utah, have instead established voluntary frameworks to help small businesses identify retirement plan options. In Pennsylvania, legislation to create a state auto-IRA passed the Democratic-controlled House but has not received a Senate vote in the Republican-controlled chamber.
Opposition
Small business advocates have pushed back against mandatory enrollment requirements. Greg Moreland, Pennsylvania director of the National Federation of Independent Business — which represents roughly 13,200 small businesses in the state — called auto-IRA mandates “a Band-Aid on a hemorrhage,” arguing the compliance burden outweighs the benefits and that high opt-out rates suggest workers themselves have reservations about the programs.
What’s Next
Philadelphia will now move toward implementing PhillySaves, a process that involves contracting with private administrators to manage investment funds. How smoothly the city executes the rollout will likely influence whether other major American cities pursue similar programs. At least two additional states are expected to launch auto-IRA programs in the coming years, with several others still in deliberation. The federal tax credit match for lower-income participants, established by Congress in 2022, is scheduled to take effect next year, potentially increasing the financial incentive for enrollment in both state and city programs.