Illinois Secure Choice Retirement Program Participants See Improved Credit Scores

Participants in the Illinois Secure Choice retirement savings program appear to be showing modest improvements in their financial health, as measured by credit scores, perhaps alleviating concerns that setting aside a portion of each paycheck could lead workers to take on debt or use other savings for day-to-day expenses.

To achieve scale and help employees save, state-sponsored retirement savings programs, such as the one Illinois launched in 2018, automatically enroll eligible private sector workers whose employers do not offer an opportunity to save. Workers can opt out or change their contribution amounts at any time. One concern about automatic enrollment has been whether those who participate but have little discretionary income might offset their contributions by accessing other savings or by increasing their debt.

Data from The Pew Charitable Trusts’ survey of savers in Illinois Secure Choice generally shows modest increases in financial health. These findings are consistent with recent research in the United Kingdom that shows increased savings from automated retirement savings programs can come with modest increases in debt—although the amount of savings outpaces the debt. The evidence of improvements in credit scores in Illinois aligns with survey results showing that nearly 4 in 10 savers felt more financially secure because they participated in the program.

Those who cannot afford to save appear to be opting out of the program. According to data from Illinois Secure Choice, as of October 2024, about 38% of those eligible for the program have opted out. In the first round of the Pew survey, done in spring 2020, when workers were asked about their top reasons for choosing not to participate, 55% attributed the decision to financial reasons. The reasons included having other immediate financial needs, wanting to pay off debt, or wanting to save for upcoming expenses.

Because eligible workers must take action to opt out, some workers who are not paying close attention might be participating in the savings program when they might otherwise have chosen not to. To explore potential unintended consequences of automatic enrollment, Pew researchers compared the credit profiles of a subset of survey respondents to the overall credit data of the Illinois adult population. These data sets allowed for an examination of changes in a worker’s financial profile over the course of a year—between April 2020 and April 2021.

Of those who completed the final round of the multi-round survey in spring 2021, about 36% gave Pew permission to access their credit profiles with credit reporting company Experian. White workers were slightly more likely than Black and Hispanic workers to grant permission to access the credit data. Those who were participants in the program were more likely to give permission than workers who had opted out. Of those who gave permission, Pew was able to match nearly 8 in 10 with their Experian credit profile. These profiles include measures of financial well-being such as credit scores (both Experian’s VantageScore and the FICO score) and total credit balances.

Table 1

Participants in Illinois Secure Choice (ILSC) Saw Largest Increase in Credit Scores

Participants in Illinois Secure Choice (ILSC) Saw Largest Increase in Credit Scores

Average Experian VantageScores

Average FICO scores

As shown in Table 1, participants in Illinois Secure Choice had lower credit scores when compared with those who opted out and with all Illinois adults, but participants had greater increases from one year to the next, both in the actual numerical change and in the percent change. The survey found that workers who opted out were more likely to say that they broadly felt financially secure in the first survey wave. But participants and opt-outs were reporting similar feelings of financial security by the final round of the survey, reflecting the larger increases for participants.

Table 2

Illinois Secure Choice (ILSC) Participants Saw Decreases in Average Credit Balances, but Smaller Than General Population

Change in average balance on credit accounts over a year, April 2020 to April 2021

Average total balance on credit accounts

Overall, average total balances on credit accounts—the debt carried from credit cards and other revolving lines of credit—decreased over the course of the year, as shown in Table 2. This mirrors national trends in credit card balances following the onset of the COVID-19 pandemic. Analysis from the federal Government Accountability Office suggests that many people used stimulus payments to reduce this debt.

The data from Experian shows that the reduction in total balances for program participants was only slightly smaller than the decrease for the general Illinois population. Pew researchers could not calculate average changes in balances for workers who opted out of the program because of the low number of observations. However, when combining both participants and opt-outs, the decrease in credit account balances becomes smaller. The good news is that participating in Illinois Secure Choice does not appear to lead to increases in credit debt load.

Despite concerns about the effects of program participation, evidence suggests that participants in Illinois Secure Choice showed improvements, as measured through credit scores and self-reported feelings of financial security. Although Pew was only able to analyze a small group of savers, the trends are consistent with other research. Researchers should continue to monitor the financial security of participants in state-sponsored retirement savings programs to ensure that any unintended consequences are mitigated. Still, the early evidence shows positive results that should alleviate many concerns about how automated savings programs affect the financial situation of participating workers.

Mark Hines works with The Pew Charitable Trusts’ retirement savings project.