Iwry noted that the advent of state partnerships helps achieve the "broad national breakthrough and coverage" that he has long pushed for through proposed legislation for a federal auto-IRA program, which Congress has considered since 2006 but hasn't yet been able to pass.
"If Congress won't do it," he said, "let the states do it."
States are well-positioned to achieve the national coverage that Congress has so far failed to achieve because state auto-IRA programs are fairly uniform, Iwry added. These are typically set up as Roth IRAs and require employers without workplace plans to participate in the programs or face penalties.
States that deviate from the norm, such as Maryland, which does not assess penalties on employers that fail to enroll in the mandated program, "are not going to be as much of a candidate for a partnership," Iwry said, comparing the situation to a high school prom.
"The weirder ones who are less like other kids have a harder time finding a date for the prom," he said.
To join the Colorado consortium, states must have similarly structured statutes, meaning they must be auto-IRA programs that automatically enroll workers at preset default savings and auto-escalation rates, unless the workers opt out. To be part of the consortium, the programs must be mandatory and impose penalties for employers that fail to register and enroll their workers in the program.
"These components do need to be in place," Railey said of the partnership requirements, explaining that participating state programs have "to scale in a way that's going to be financially viable for both the state, the vendor and consequently the partnership."
New Mexico, which signed a memorandum of cooperation with Colorado in 2021, for example, was unable to join the consortium because its program is voluntary.
"New Mexico is a fairly small state in terms of population, so without it being a required program, that's not something our vendor was willing to consider," Railey said, referring to Vestwell, the program's administrator.
New Mexico has attempted to amend its legislation to make the program mandatory for employers but has not been able to do so.
"We are considering available options that would allow the program to move forward," said Cindy Bryan, president of the board of the New Mexico Work and Save program, in a statement. Bryan was unable to give an estimate of the program's launch date.
Industry experts anticipate other partnerships led by large states to emerge.
"I think we'll see a handful but not a lot," AKF Consulting's Feirstein said, adding that there might be room for another two.
Iwry anticipates that new partnerships will be structured differently. They might, for example, offer different investment lineups or offer a uniform "public face."
Under a hypothetical alternate partnership structure, savers in Virginia could conceivably join, say, OregonSaves, if Oregon were to offer a formal partnership arrangement, Iwry said.
Still, Iwry expects the Colorado/Maine model to prevail, with the identity of individual programs within a partnership to remain state specific. Savers in Maine's MERIT program, he said, may not even know that "the Colorado people are involved."