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‘Generational Crisis’ Requires Action, Oregon Treasurer Says

Oregon State Treasurer Ted Wheeler has presented the legislature with recommendations for increasing Oregonians’ retirement savings, access to a retirement plan and ability to enroll in one. The recommendations are the work of the state’s Retirement Security Task Force, which the legislature created in 2013 to formulate recommendations for a retirement savings plan in which Oregonians who do not have access to an employer-provided retirement plan could participate.

“More needs to be done, and quickly, to reduce the profound impact of what I believe is a generational crisis that threatens to plunge seniors into poverty, disrupt entire families, and impact our overall economy,” said Wheeler in a press release concerning the recommendations.

Part of the motivation of the legislature in forming the task force is that half of private-sector employees in Oregon lack access to an employer-sponsored retirement plan. “The national retirement savings crisis deeply affects far too many Oregonians,” says the task force report.

The task force recommends developing and making a retirement savings plan available to all Oregonians who lacking access to an employer-sponsored plan. It says that the plan should have the following nine characteristics:

1. Voluntary participation with auto-enroll. Employees should be automatically enrolled with the right to opt-out. Employees should be notified of and provided financial education about their enrollment upon employment.
2. Auto-escalation of contribution levels with employee control. Employees should have the opportunity to choose their initial and ongoing automatic contribution rates or rely on the default rates. The default rates for employee contributions should be automatically increased over time.
3. Contributions from payroll deductions. Defined contributions should be made from employee payroll deductions. Existing payroll systems should be used wherever possible to reduce costs. Persons who are self-employed or unemployed should also be able to make contributions.
4. Tax benefit. The plan should meet the qualification requirements to receive federal and state tax deductions for the participants.
5. No required employer contribution. Employers should not be required to contribute to employee accounts. If possible, voluntary employer contribution arrangements on behalf of employees should be accepted.
6. Reports to savers. Accounts should be individual and account information should be regularly reported to each participant.
7. Portability. Accounts should be portable, allowing savers to maintain their accounts from one job to the next and during periods of unemployment or self-employment.
8. Pooled and professionally managed. Funds should be pooled and professionally managed to maximize returns for participants.
9. Self-sustaining. The costs to manage the accounts should be paid from employee payroll contributions and/or account earnings.

The task force suggests creating a state board responsible for sponsoring and overseeing the retirement program it outlined. It further recommended that the board consist of members from the private, for-profit and tax-exempt sectors; consumers who would enroll in the plan; the legislature; the Office of the Governor, and the Office of the Treasurer.

The task force further recommended that the legislature appropriate funds for a request for information or request for proposal so as to receive input from financial service providers, experts and scholars to conduct a market analysis and refine the program and its delivery.

The task force also sees increased financial literacy as a way to help Oregonians attain retirement security. It recommends additional research into the preferable components of an education program, including its inclusion in public schools, employee orientations, small business resources and public awareness campaigns.