If approved, rules would create legal safe harbor for new Oregon Retirement Savings Plan
State Treasurer Ted Wheeler is applauding proposed new federal guidelines, released Monday, that could make it easier for Oregonians to save and improve their retirement security.
Roughly half of Oregon workers are saving for retirement today through plans offered by their employers – but hundreds of thousands of workers do not have that opportunity now and have saved little if anything.
That daunting statistic helped convince state legislators — in partnership with Wheeler and a broad coalition — to support creation of a state-facilitated savings option. The Oregon Retirement Savings Plan was approved in the 2015 session and will allow workers to begin socking money away in professionally managed Individual Retirement Accounts as soon as July 2017.
The proposed rules from the U.S. Department of Labor are designed to smooth the path for state-based retirement plans like the one envisioned in Oregon.
“We want to create the best-possible plan to help improve the retirement security of Oregon families who lack a savings option at work, and these proposed federal rules would move us closer to reaching that goal,” Treasurer Wheeler said. “The Oregon Retirement Savings Plan will create a new Oregon culture of saving.”
The proposed rules clarify that states may set up payroll deduction savings programs for workers who do not already have access to a retirement savings plan at work, without creating any obligations for employers under the Employee Retirement Income Security Act.
States have been seeking clarity about how proposed state-level IRA-based retirement plans would fit under the federal act. Monday’s proposed guidelines provide a set of legal safe harbors for envisioned plans like Oregon’s, as long as workers have an ability to opt out. The proposed rule now has a 60-day comment period.
Other states that are formulating their own plans for non-covered workers include Illinois and California, and 23 additional states are investigating the possibility or have had legislation proposed.
The Oregon vision would automatically enroll workers (who do not already have a retirement plan offered by their employer) for payroll deductions with the opportunity to opt out, and those funds would be deposited in Individual Retirement Accounts that would be professionally managed with the goal to grow over time. The accounts would follow participants from job to job, and funds could be rolled over into another retirement account.
The program would serve a population that is not currently being served, would not be a pension, would not be connected in any way to the Oregon Public Employee Retirement Fund, and would not offer any guarantee of returns by the state or employers.
The Oregon Retirement Savings Plan Board, which was appointed by the governor and is chaired by the Treasurer, began meeting this month to design the specifics of the Oregon program and to start interfacing with workers and employers who will be able to take advantage of the new plan.
The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies are set by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices.
