Oregon is among the states that is the furthest along in the launch of a government-administered retirement savings program for private-sector workers.
This week, the OregonSaves program revealed enrollment numbers for its first full year of operation. According to state authorities, the combined savings of the first groups of participating savers is already approaching $5 million. In addition, the state says, hundreds of thousands of additional eligible workers are on track to join as the program continues to expand statewide over the next two years.
Other states including California, Illinois and Connecticut are developing programs that are similar to the Oregon approach. In a broad statement marking the first anniversary of the program, State Treasurer Tobias Read suggests the pace of signups is advancing, with an average of more than a thousand people now being registered a week to start contributing. Most of the participants are first-time savers, according to Read. The average monthly contribution is $106.
The OregonSaves approach makes available an automatic enrollment payroll deduction Roth individual retirement account (IRA) to workers whose employers do not offer them a retirement savings option. As Read points out, this is a “key attribute.”
“Research from the AARP shows that people are 15-times more likely to save for retirement if there is a work-based option,” he observes.
OregonSaves takes a private-public partnership approach, with investments managed by the private sector in low-cost mutual funds. The program was passed into law by the 2015 Oregon Legislature and is overseen by the State Treasury, which is responsible for public finance and investment programs.
Read also points to strong demand for savings opportunities among workers in the gig economy as a big potential driver of growth in OregonSaves, and he says Treasury is accelerating the availability of OregonSaves to self-employed workers. That option will become available by the end of the year.
According to the State Treasury, OregonSaves improves the state’s business climate and economy by reducing the long-term rate of retirement poverty. In addition, Read points to research showing that even modest savings can help retirees to delay claiming Social Security benefits, allowing them to qualify for a higher level of monthly payments.
Looking ahead, the registration phases are now completed for employers with Oregon workforces between the size of 50 and 99. The next signup deadline is December 15, 2018, and applies to employers with between 20 and 49 Oregon workers.
According to the independent Register-Guard newspaper, OregonSaves now has enrolled more than 32,000 private-sector employees who previously didn’t have access to a retirement savings option at work, with an average payroll withholding of 5.14% of salary.