Most Employers Report No Costs for OregonSaves Program

Nearly 8 in 10 employers did not report any out-of-pocket (OOP) costs associated with participating in the program.

Of course, one of the selling points of OregonSaves, the state-run retirement program for employees whose employers do not offer one, is that it spares employers the administrative complexities and costs of running a plan. A recent study found that’s true for most participating employers, but that OregonSaves does entail costs... for some employers. 

In “Is the OregonSaves Retirement Program Expensive for Employers?” the Pew Charitable Trusts reports that in a survey of more than 2,500 employers that participate in OregonSaves, a strong majority—78.5%—did not report any out-of-pocket costs associated with participating in the program. The 21.5% that did reported a variety of expenses, including: 

• fees associated with outsourcing program contributions to payroll firms or bookkeepers;
• wages covering additional staff time spent in setting up the program; and
• wages covering time spent registering employees with OregonSaves. 

But they also reported non-monetary OOP costs such as use of copiers and paper, and time in particular. Respondents said costs included time used for: 

• meetings;
• processing deposits;
• setting the plan up;
• and explaining the program.

Pew found that OOP costs were not related to how payroll was handled: The likelihood of incurring OOP expenses was about the same for those that handled payroll themselves and those that outsourced it.

Pew did find, however, that the industry an employer is in appeared to affect the likeliness that it would experience OOP costs. For instance, employers in the leisure and hospitality industry and the administrative and support services sector are more likely to incur OOP costs. High employee turnover rates and consequent frequent payroll changes may explain that, Pew suggests. 

Pew also found that size was related to the likelihood that employers would report OOP expenses. For instance, employers with 10-49 employees were more likely than those with fewer than 10 employees to do so, and employers with 20-49 employees were the most likely of all; nearly one-third of them reported OOP costs. Those with four or fewer were the least likely; 18.3% of them did so. Pew suggests that the effect of workforce size on administrative costs could explain these findings. 

Another finding bolsters the results regarding the relevance of employee size. Pew says that employers that registered earlier in the registration period were more likely to have OOP costs; employer size was relevant to the deadlines by which employers have been required to register. Larger employers were required to register earlier than smaller ones.