For more than two years, Oregon State Treasurer Tom Wheeler has been pushing for legislation that would require employers to automatically enroll their workers in a state-sponsored retirement plan. Currently, that push exists as House Bill 2960, which is making its way through the Oregon legislature.
In 2013, lawmakers set up a task force led by Wheeler to determine recommendations for standards and plans. More recently, Wheeler has tried to move the focus away from committee work and into a definite law. His work has been supported by big names around the country, including AARP and former Republican Party chairman and current KKR advisor Ken Mehlman.
Wheeler cautions that the legislation would not benefit Baby Boomers, but it would help current workers between the ages of 25 and 45 who will be in desperate need of retirement funds very soon.
“That cost to taxpayers down the road will be staggering,” Wheeler said. “More and more people will rely instead on costly government safety-net services to get them through their retirement years, instead of a practical, low-cost, portable way for them to save their own resources for their retirement.”
The 2013 task force found that workers in the potentially affected age range have average retirement savings of only $25,000. While defined retirement plans covered 60% of workers in 1980, they currently only cover 7%…which means employees are in danger of a serious lack of funds once it comes time to retire.
California was the first to enact a state-sponsored retirement savings program in 2012, with Illinois following in January of this year. Oregon, along with twenty other states, has considered steps but has yet to officially enact any laws.
The program would be modeled after an IRA and would involve an automatic 3% payroll deduction with employees given the ability to opt out if they so choose. According to a March report by the Northwest Economic Research Center at Portland State University, about 400,000 workers would benefit from this sort of program, tallying up to $2 billion in retirement savings.
The future of such a program is still very much up in the air, however. Some business organizations, such as the Portland Business Alliance, Standard Insurance, and the Security Industry and Financial Markets Association, currently oppose Bill 2960.
“But I have yet to hear the owner or operator of a single business come to me, in all of the meetings I have had with chamber of commerce groups, and say that this proposal is costly and burdensome,” Wheeler noted.