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Oregon’s Auto IRA Mandate Takes Shape

With the official report not due until September, a draft report released by the Oregon legislature's Task Force on Oregon Retirement Savings offers a blueprint of a proposed new mandatory auto-IRA program for the state. 

According to a report in the Oregon Statesman-Journal, the proposal calls for a retirement plan that: 
• Would be available to anyone employed in Oregon, both full time and part time, no matter the size of the company they work for.
• Would accept contributions automatically deducted from worker paychecks at a minimum starting percentage, though employees could opt out of participating. The employee contribution will be automatically increased each year after enrollment, up to a maximum. Employees will be notified of their enrollment upon employment.
• Would not require employer contributions, but would require that employers provide enrollment paperwork.
• Would offer accounts aggregated in one pooled fund, invested by private fund managers but overseen by a state-appointed board.

Additionally, the draft report says that an education component will make the public aware of the importance of retirement savings and of programs available for workplace participation. 

The Task Force was specifically restricted from recommending plans or products that would:
• subject the State of Oregon or private-sector employers to responsibilities under ERISA, or that would result in tax treatment that is less favorable than that provided under existing provisions of the Internal Revenue Code;
• create any guarantee by the State of Oregon, or cause the State of Oregon to incur any liability or obligation for payment of savings or benefits earned by plan participants; or
• create any financial obligation, liability or guarantee on the part of private sector employers whose employees participate in the plan, with regard to investment or investment performance of the plan. 

The recommendations for the new statewide plan are similar to State Treasurer Ted Wheeler's original proposal in House Bill 3436, which evolved into a bill creating the task force to study the issue. That legislation sunsets the Oregon Retirement Savings Task Force on Jan. 2, 2017. The proposal notes that the Task Force “…should use its time to seek an advisory opinion from the U.S. Department of Labor verifying ERISA is not applicable.” 

The Task Force was also charged with continuing to facilitate the creation and establishment of the program. It will bring its findings before the legislature in September, and the issue is expected to be on the table during the 2015 legislative session.

ASPPA GAC Perspective: ASPPA and NAPA have been supportive of state initiatives that intend to address the retirement plan coverage gap in the workplace. However, the proposal outlined in the Oregon task force’s draft blueprint is unworkable. It would unduly burden private employers who already are offering a retirement plan to their eligible employees by requiring them to offer this option to workers who would be ineligible for inclusion in the ERISA plan. Additionally, it will be critical to see how “access to an employer sponsored retirement savings program” is defined in the final proposal. Would access to an employer-sponsored automatic payroll deduction IRA satisfy this definition?