Skip to main content Accessibility help
×
Home

Retirement plans for contingent workers: issues and options

  • William G. Gale (a1), Sarah E. Holmes (a2) and David C. John (a3)

Abstract

This paper examines retirement saving policy for independent – or contingent – workers, a growing segment of the workforce. Because few of these workers are covered by employer-sponsored retirement plans, they often do not benefit from payroll deduction, employer matching contributions, automatic enrollment, and other provisions that encourage retirement saving. Better use of fintech, judicious changes to tax policy, and expanded Automatic IRAs would help independent workers save for retirement. In addition, we propose the creation of retirement saving accounts that attach to the worker as a supplement to, and possible replacement for, the current system of employer-sponsored accounts.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Retirement plans for contingent workers: issues and options
      Available formats
      ×

      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Retirement plans for contingent workers: issues and options
      Available formats
      ×

      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Retirement plans for contingent workers: issues and options
      Available formats
      ×

Copyright

This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.

Corresponding author

*Corresponding author. Email: wgale@brookings.edu

References

Hide All
Argento, R, Bryant, VL and Sabelhaus, J (2015) Early withdrawals from retirement accounts during the great recession. Contemporary Economic Policy 33, 116.
Benartzi, S and Thaler, RH (2007) Heuristics and biases in retirement savings behavior. Journal of Economic Perspectives 21, 81104.
Benjamin, DJ (2003) Does 401(k) eligibility increase saving? Evidence from propensity score subclassification. Journal of Public Economics 87, 12591290.
Bradford, H (2018) Efforts to help gig economy workers save for retirement gaining ground. Pensions & Investments (July 9).
Brown, JE and John, DC (2017) Improving the Saver's Credit for Low- and Moderate-Income Workers, AARP (September).
Chetty, R, Friedman, JN, Leth-Petersen, S, Nielsen, TH and Olson, T (2013) Active v. Passive Decisions and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark, (December). Available at http://www.rajchetty.com/chettyfiles/crowdout.pdf (Accessed 14 August 2016).
Choitz, V and Conway, M (2015) The Future of Work for Low-Income Workers and Families. The Working Poor Families Project (Fall/Winter). Available at http://www.workingpoorfamilies.org/wp-content/uploads/2015/12/WPFP-Fall_Winter-2015-Brief.pdf (Accessed 29 June 2016).
Copeland, C (2018) Individual Retirement Account Balances, Contributions, Withdrawals, and Asset Allocation Longitudinal Results 2010–2015: The EBRI IRA Database, Employee Benefit Research Institute (January 10).
Engen EM and Gale WG (2000) The Effects of 401(k) Plans on Household Wealth: Differences Across Earnings Groups. National Bureau of Economic Research Working Paper 8032.
Fitchard, K (2013) Braintree launches Marketplace, a payments system for collaborative consumption apps, GigaOM (August 14).
Foster, N, Nelson, G and Reder, L (2016) Portable Benefits Resource Guide, The Aspen Institute (July 13).
Friedman, JN (2015) Building on What Works: A Proposal to Modernize Retirement Savings, The Hamilton Project (June 23).
Future of Work Initiative (2016) Toward a New Capitalism: A Policy Agenda to Restore the Promise of Work, Aspen Institute.
Gale, WG and John, DC (2017) State Sponsored Retirement Savings Plans: New Approaches to Boost Retirement Plan Coverage, PRC WP2017, Pension Research Council Working Paper. Available at https://pensionresearchcouncil.wharton.upenn.edu/wp-content/uploads/2017/09/WP-2017-12-John-Gale.pdf (Accessed 13 July 2018).
Gruber, J, Orszag, PR and Gale, WG (2006) Improving Opportunities and Incentives for Saving by Middle- and Low-Income Households, Brookings (April 1).
Harkin, T (2014) HELP Chairman Tom Harkin Introduces the USA Retirement Funds Act – Bill Summary. United States Senate: Health, Education, Labor and Pensions Committee.
Harris, SD and Krueger, AB (2015) A Proposal for Modernizing Labor Laws for Twenty-First Century Work: The ‘Independent Worker’, the Hamilton Project, the Brookings Institution (Dec 7).
Honest Dollar (2018) How Do I Get Started with Honest Dollar? Available at https://help.honestdollar.com/hc/en-us/articles/360000091188-How-do-I-get-started-with-Honest-Dollar- on July 13, 2018.
Internal Revenue Service (2014) Plan Now to Get Full Benefit of Saver's Credit; Tax Credit Helps Low- and Moderate-Income Workers Save for Retirement (Nov 3).
Internal Revenue Service (2015 a) Retirement Topics – IRA Contribution Limits. Available at https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits (Accessed 1 April 2016).
Internal Revenue Service (2015 b) IRA Deduction Limits. Available at https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits (Accessed 1 April 2016).
Internal Revenue Service (2015c) SEP Plan FAQs – Contributions. Available at https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions (Accessed 1 April 2016).
Internal Revenue Service (2018) Table 2. Individual Income and Tax Data, by State and Size of Adjusted Gross Income, Tax Year 2015. Available at https://www.irs.gov/pub/irs-soi/15in54cm.xlsx (Accessed 11 July 2018).
JPMorgan Chase & Co. Institute (2016 a) Paychecks, Paydays, and the Online Platform Economy (November).
JPMorgan Chase & Co. Institute (2016 b) Paychecks, Paydays, and the Online Platform Economy (February).
Katz, LF and Krueger, AB (2016) The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015. Available at http://krueger.princeton.edu/sites/default/files/akrueger/files/katz_krueger_cws_-_april_26_2016.pdf (Accessed 28 June 2016).
Lacy, L (2016) Micro Businesses Need a Voice of their Own this National Small Business Week, Invoice2go blog, 2 May 2016. Available at https://blog.2go.com/micro-businesses-need-voice-national-small-business-week/ (Accessed 6 July 2016).
Lyft (2018) Express Pay – Lyft Help. Available at https://help.lyft.com/hc/en-us/articles/115012923167-Express-Pay (Accessed 13 July 2018).
Madrian, BC and Shea, DF (2001) The power of suggestion: inertia in 401(k) participation and savings behavior. The Quarterly Journal of Economics (November).
Manyika, J, Lund, S, Robinson, K, Valentino, J and Dobbs, R (2015) A Labor Market That Works: Connecting Talent with Opportunity in the Digital Age, McKinsey Global Institute (June).
Marcus, S (2016) Christie signs law creating small biz retirement marketplace, NJ.com (January 19).
Marte, J (2016) Uber is Tackling One of the Biggest Challenges for Workers in the Gig Economy. The Washington Post. (August 24).
Munnell, AH and Webb, A (2015) The Impact of Leakages of 401(k)/IRA Assets, Center for Retirement Research at Boston College, Number 15–2. Available at http://crr.bc.edu/wp-content/uploads/2015/01/IB_15-2.pdf (Accessed 29 June 2016).
Perez, ST (2016) Innovation and the Contingent Workforce, U.S. Department of Labor Blog. Accessed via blog.dol.gov/2016/01/25/innovation-and-the-contingent-workforce/ on June 11, 2016.
QuickBooks (2016) Dispatches from the New Economy: The On-Demand Workforce. Available at http://www.slideshare.net/IntuitInc/dispatches-from-the-new-economy-the-ondemand-workforce-57613212/4-the_majority_of_ondemand_economyproviders (Accessed 24 March 2016).
Schreur, E and Veghte, BW (2018) Improving Social Security Coverage and Retirement Benefits for Independent Contractors, National Academy of Social Insurance (June).
Storey, D, Steadman, T and Davis, C (2016) Is the gig economy a fleeting fad, or an enduring legacy? Ernst and Young (June).
Supreme Court of California (2018) Dynamex Operations West, Inc., Petitioner, v. The Superior Court of Los Angeles County, Respondent; Charles Lee et al. , Real Parties in Interest. Available at http://www.courts.ca.gov/opinions/documents/S222732.PDF (Accessed 11 July 2018).
Transamerica Center for Retirement Studies (2015) 16th Annual Transamerica Retirement Survey: A Compendium of Findings About American Workers. Available at http://www.transamericacenter.org/docs/default-source/resources/center-research/16th-annual/tcrs2015_sr_16th_compendium_of_workers.pdf (Accessed 29 March 2016).
U.S. Bureau of Labor Statistics (2005) Contingent and Alternative Employment Arrangements, February 2005. Available at https://www.bls.gov/news.release/archives/conemp_07272005.pdf (Accessed 11 July 2018).
U.S. Bureau of Labor Statistics (2018) Contingent and Alternative Employment Arrangements – May 2017. Available at https://www.bls.gov/news.release/pdf/conemp.pdf (Accessed 11 July 2018).
U.S. Department of Labor (2015) Administrator's Interpretation No. 2015-1, (July 15). Available at http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.htm (Accessed 1 March 2016).
U.S. Department of Labor (2017) US Secretary of Labor Withdraws Joint Employment, Independent Contractor Informal Guidance, (June 7). Available at https://www.dol.gov/newsroom/releases/opa/opa20170607 (Accessed 11 July 2018).
U.S. Government Accountability Office (2015) Contingent Workforce: Size, Characteristics, Earnings, and Benefits, (April 20). Available at http://www.gao.gov/assets/670/669766.pdf (Accessed 1 March 2016).
Warner, MR (2015) Asking the tough questions about the gig economy, Washington Post (June 18).
Washington State, Department of Financial Institutions (2015) Small Business Retirement Marketplace. Available at http://www.dfi.wa.gov/rulemaking/small-business-retirement-marketplace (Accessed 29 March 2016).
Wiessner, D (2018) GrubHub case could be barometer for new rules on independent contractors, Reuters (May 6).
Zumbrun, J and Sussman, AL (2015) Proof of a ‘Gig Economy’ Revolution is Hard to Find, Wall Street Journal (July 26).

Keywords

Retirement plans for contingent workers: issues and options

  • William G. Gale (a1), Sarah E. Holmes (a2) and David C. John (a3)

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed