Despite attempts by Congress and the President to block state and city-sponsored IRAS and 401ks, Oregon is moving ahead with its retirement plan for private sector workers.
Backers of the Beaver State initiative launched OregonSaves, a Roth IRA, on July 1.
Passed by the 2015 legislature to address what it sees as inadequate savings, the Oregon retirement plan is available to those Oregonians who do not have access to a retirement savings option, such as a 401k plan, at work.
More than half of the Oregon workforce does not have an available 401k plan at work, the state claims, and studies show that people are 15 times more likely to save if an option is available through payroll deductions. Workers who are eligible will automatically have a portion—initially 5 percent—of their paychecks deposited into their own secure retirement accounts unless they opt out.
Oregon estimates that 64,000 businesses will have employees eligible to participate in the plan.
In early May, the Senate voted to repeal an Obama-era regulation that allowed states to auto-enroll private sector workers. President Trump killed its city-run counterpart in mid-April, and Senate majority leader Mitch McConnell, R-Kentucky said at the time that “we will advance another CRA to protect workers from similar efforts at the state level.”
Democrats and supporters of state-sponsored retirement plans hailed them as a way to slow what they see as a coming retirement savings crisis, while Republicans objected to their exemption from ERISA, adding that nothing would prevent states, cities and municipalities from overloading investment menus with their own government bonds.
California, Vermont and now Oregon, among others, ignored Congressional action and forged ahead with their plans, banking on favorable court challenges to what they see as federal overreach.
“In the face of a multi-trillion dollar retirement savings crisis, Congress chose to side with the special interests over working Americans,” Oregon Treasurer Tobias Read said at the time of the repeal. “Sadly, this attempt to attack state-based retirement plans and the financial security of workers is exactly what we have come to expect from Washington D.C.”
Calling it another example of the “short-term thinking coming out of Congressional Republicans and the Trump Administration lately,” he added that Congress should be spending its time finding ways to help American families save for retirement, “not erecting barriers.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
