With no federal requirement for U.S. employers to offer retirement savings options, individual states are stepping up and delivering meaningful programs.

Speaking at Benefits Canada’s 2025 Defined Contribution Plan Summit, Michael Frerichs, state treasurer at the Illinois Treasurer’s Office, said the U.S. is facing a retirement crisis and he hopes these government tools can be efficient and effective. However, he noted increasing government distrust is making it difficult to engage with people on their retirement options.

Read: 45% of U.S. DC plan sponsors considering adding emergency savings options in 2024: survey

Illinois was the first state to enact legislation creating individual retirement accounts where employees are automatically enrolled to make contributions through their workplaces. The program, he said, aims to help prevent workers from delaying the start of their retirement savings process. “People put it off and put it off and they find themselves in their 50s or 60s unprepared for retirement.”

The retirement savings accounts are transferable across employers and prioritize simplicity in investment options with the ability to create a default for a set-it-and-forget-it approach. Employees are also able to opt out, can change their contribution rates and can withdraw funds without penalties. “It’s really important to know that employees control their participation.”

In terms of investments, the account offers a default target-date fund, said Frerich, though employees can also choose a conservative fund, a growth fund and a capital preservation option.

Read: 74% of U.S. DC pension plan sponsors to conduct plan fee review in 2024: survey

He acknowledged skepticism from people who are concerned about the government getting involved in workers’ retirement savings path, but he also sees a lack of sufficient retirement savings as a public problem in the long run. “We all benefit from more people saving and we all pay when they don’t.”

More workers with little to no retirement savings, he added, means increased pressures on publicly funded programs, citing a current estimate with a total cumulative cost over a 20-year period of $1.3 trillion in safety net spendings that Americans will end up paying.

Illinois’ policy initially faced a lot of push back because many people were against the idea of government overreach, said Frerichs. However, since it was enacted in 2018, the policy has inspired other legislators and now there are 20 states with similar retirement legislation.

“If anyone thinks this is easy, it was not. It’s never easy to be first. It’s like blazing a trail.”

Read more coverage of the 2025 DC Plan Summit.