Obama unveils savings plan for workers lacking 401(k)

Wolohan declined to comment further before hearing the details of Obama's proposal. Vanguard was the second-largest manager of 401(k)-type assets in 2012 behind Fidelity Investments, according to researcher Cerulli Associates.

Fidelity, which is also the largest provider of IRAs, declined to comment before hearing the speech, according to an e-mail from spokeswoman Eileen O'Connor.

JPMorgan Chase & Co., which manages retirement assets and administers plans, declined to comment before seeing more details, Gregory Roth, a bank spokesman, said in an e-mail.

One of the biggest challenges for the retirement system is that many workers don't have access to a pension or 401(k) plan through their employer, said Lisa Mensah, executive director of the initiative on financial security at the Aspen Institute.

"We have to get people in," Mensah said. "You do need an automated way for people to get into the savings system."

Small businesses

Small-business groups in the past have opposed such proposals because they say that setting up the required payroll deduction would be a cost for them.

Molly Brogan Day, a spokeswoman for the National Small Business Association in Washington, said that while her group "supports making retirement savings easier, the auto-IRA idea is one we've raised skepticism over in the past because it put the administrative and financial onus squarely on small firms."

U.S. savings bonds designed for retirement accounts have been proposed in the past and termed R-bonds, said Don Fuerst, an actuary and senior pension fellow at the American Academy of Actuaries.

The securities are seen as a way to allow low-income workers to save for retirement, Fuerst said. They usually can't contribute much at the start, making their balances expensive to administer and vulnerable to investment-management costs.

'Small amount'

"If you're only putting a small amount into the plan the fees could eat up your investment income," said Fuerst, who's based in Washington. "This gets around that."

With savings bonds, he said, the U.S. government can issue the investments and cover the costs of keeping track of them.

The accounts aren't as attractive as a typical employer- sponsored 401(k) because there is no employer match and only one investment option, Graff said.

Even so, he said, it may significantly boost retirement savings for middle- and low-income workers who don't have access to a 401(k) account, Graff said.

Middle- and moderate-income workers in particular are much more likely to set aside money forretirement when they can have it directly deducted from their pay, Graff said.

Among workers earning between $30,000 and $50,000 a year, 72 percent of those covered by an employer-sponsored payroll deduction retirement plan such as a 401(k) participate, while only 5 percent of those without such a plan set aside money through an IRA, according to a 2010 analysis of 2008 data by the Employee Benefit Research Institute.