By ERIC A. HOWALD
Of the Keizertimes
The Oregon State Treasury (OST) is trying to make it easier for employees to start saving for retirement – without employers incurring additional costs.
Last week, Joel Metlen, a retirement analyst with the Oregon State Treasury, stopped by the Keizer Chamber of Commerce monthly luncheon on Tuesday, April 11, to tell members about the coming changes.
“The Oregon Retirement Savings program is an attempt at a solution to a large and growing program. People are living longer and not saving enough,” said Metlen.
The retirement program, dubbed Oregon Saves and spearheaded by OST, will attempt to make it easier for employees to establish and grow retirement savings. Metlen said movement away from employer-based savings programs to privately-held ones, like 401(k)s, has left a gap for employees where there aren’t work-based plans.
“It matters because people are 15 times more likely to save with an employer-based program,” Metlen said.
Oregon Saves is a public-private partnership, but once the program is fully rolled out all Oregon employers that do not currently offer retirement savings plans will be required to offer it to employees. It was created with the passage of HB 2960 during the 2015 legislative session.
Employers who don’t offer savings plans will need to provide employee data to to the state so that accounts can be set up, pass along information to employees, maintain payroll deductions and keep track of contributions.
Employees will be able to opt out of the program and adjust their contributions. Without action on the part of the account holders, an automatic 5 percent will be deducted from each paycheck. That amount will increase by one percent each year until it maxes out at 10 percent. Savings will be placed into a Roth Individual Retirement Account and managed by professionals. A 1 percent fee of employee assets under the plan will be taken to cover the management cost. There is no employer fee.
Metlen said one of the most frequently asked questions is what the state is getting out of the deal.
“There is a huge self-interest for the state. Social safety nets are strained and without employees saving on their own, it will create greater strain on state budget,” he said. “Every employer will have to do something whether it’s facilitating the Oregon Saves program or establishing their own retirement plan through private provider.”
A secondary goal of the effort is to encourage more innovation in employer-provided plans, he added.
Metlen said a test group of businesses will begin offering the savings account this summer and a larger group will start this fall. Metlen already has a number of businesses set for the second phase, but is accepting additional businesses willing to join the pilot program. Metlen can be contacted at [email protected]
Larger-scale roll-outs will begin in 2018 with the goal of complete coverage by 2020.