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First statewide retirement program starts payroll deductions July 1 for 11 Oregonian businesses

The first statewide retirement plan in the nation is set up and ready to enroll Oregon's small businesses, helping employees save directly from their paychecks into a Roth IRA.

Passed by the 2015 Legislature, this affects more than 1 million working Oregonians, who have no access to a retirement savings plan through their employer. That includes those who work for an hourly wage, part-time or freelance for companies that only offer retirement plans to full-time salaried employees.

"Oregon will be the first in the nation, which is something we like to point out," said Joel Metlen, with the Treasury. "We were first with the Beach Bill, first with the Bottle Bill, first to vote by mail — this is one of those things, we're the first state to launch a state-based retirement program."SUBMITTED: ANNASTASIA SALON - Annastasia Salon is one of the larger employers in the pilot program, employing 30 hairdressers and seven support staff.

Joel Metlen, public engagement manager with OregonSaves and with the Oregon State Treasury, said they sat down with the first 11 employers to complete the registration process in May.

"We got them set up in the system and started the enrollment period for their employees," Metlen said. "Right now, we're still in the enrollment period when employers can choose what they want to do, ending this month."

Employers will start payroll deductions in July. Research shows people save more when they can have it directly deducted straight from their paychecks.

"The rules are out, the contracts are signed, the funds are picked so that we know which exact fund the money's going to go into," Metlen said. "Everything is going according to plan — find some wood to knock on."

There are two pilot test stages. Starting in January, OregonSaves goes into full implementation in stages, beginning with larger employers first.

Chocolatiers saving

Eleven employers are part of the first statewide pilot, including three that are Portland-based.

On of them is Alma Chocolate, owned by Sarah Hart, which has about 15 employees currently, although she said it varies.

She said business has been good — even through the ice storms and election season.

"For everybody in the food and restaurant and retail business, this last winter was really brutal," Hart said. "I think because of the snow, the election, all of that … but things are good: people always seem to need chocolate."

Yet she hasn't grown enough to offer this type of benefit.

"We're interested because it's not something we've been able to offer our employees, because we're just too small," Hart told the Business Tribune. "We try to help with health insurance, as we can."

OregonSaves can enroll both full- or part-time employees.

"It's more of a way to give access," Hart said. "We want our employees to be cared for, and to have access to things that can make their lives better. That's another way of taking care of them, even if we can't offer a more traditional savings plan, it's at least a route for them to be able to save for their futures."

Hart said it's been easy for her to implement because she uses a payroll service, and it took a minimal amount of time to set up.SUBMITTED: ALMA CHOCOLATE - Sarah Hart, owner of Alma Chocolate.

"But mostly that's because my bookkeeper has done most of it, and she's good with that kind of stuff," Hart said. "They (the Treasury) have also been right there to walk us through it all."

Savings infrastructure

Annastasia Salon, owned by Luke Huffstutter, is in Multnomah Village. He also owns the Summit Salon beauty school in Tigard along with his brother, the director.

Huffstutter enrolled Annastasia Salon in the OregonSaves pilot.

"The school is new, so we decided to hold off on OregonSaves until January," Huffstutter said. "The salon has been around for 11 years, our structure's a lot stronger and we felt we could take on being in the pilot at the salon much easier than at the school."

The salon's business is payroll-heavy, with 55 percent of sales going to paychecks. Over the last year, Huffstutter met with three companies that organize 401(k)s and saw different bids from each of them.

"What I found was it's either really expensive for the company, or they pass that cost on to the employee," Huffstutter said. "I didn't feel it was in the benefit of our staff to put the cost burden on them. We're not hitting the goals we want to hit, and so it wasn't financially reasonable for us to invest in that, either. I was stuck between a rock and a hard place."

He's owned Annastasia for 11 years, although it's been in business for 17. It used to be a rental salon, where stylists would rent a chair, but now it's a commission salon and all the staff are employees of the salon.

Since they made the switch, the company has grown more than $2 million in sales over the past 10 years, during which they've seen double-digit growth year over year.

"Almost 100 percent of it is our commitment to our team and helping them develop their career and life," Huffstutter said. "This is one of those missing pieces that has been in place. OregonSaves fills a gap for me that I wasn't able to provide before, which I know will just increase my staff retention — which is already very high."

A joke in the stylist industry is that you don't see a stylist retire. Huffstutter said 90 percent of stylists in Oregon are independent contractors — but at his salon, they are on staff.

"It's because our industry doesn't have infrastructure or education to support that type of financial planning," Huffstutter said. "This created opportunity for us to increase awareness, make it easy, get them to start saving now so they'll be in a more strong position to have a retirement."

The average age of employees at Annastasia Salon is around 28 years old, and it's one of the larger employers in the pilot program.

Huffstutter employes 30 hairdressers and seven support staff. Nine of the hairdressers and three of the support staff are part-time.SUBMITTED: ANNASTASIA SALON - Luke Huffstutter, owner of Annastasia Salon.

"If we can get them to start saving now, their future is really bright," Huffstutter said. "It's cool that it's all about being easy, making it accessible, and they don't have to feel like they know everything to make a plan, they just get a start, and if they leave the company it stays with them, they don't have to fear they're not going to be able to access their money or be confused because it's all worked out."

Smooth setup

"We've done other things, invited financial planners in to talk about Roth IRAs, trying to find ways to encourage them to save. OregonSaves solves all the problems, they've created very easy ways for them to participate. I have staff who are going to participate who've never done anything for saving," Huffstutter said. "That's really cool news that it's so easy for them to participate in this Roth IRA OregonSaves program. What that means for me is that my people will be saving for retirement."

Huffstutter spent one hour setting everything up and introducing it to his payroll company.

"All in all, that's not a very big commitment on my part, so it's been really easy for me," Huffstutter said. "The time I've spent has mostly been encouraging them to save and what the benefit of saving is. I'm just encouraging them, the rest of the stuff's been fairly simple."

He didn't have to employ another accountant, he uses a payroll service already.

"We're a small business and we don't have the leverage or the resources. This program provides those benefits until we're in a position to offer even more," Huffstutter said. "I'm honestly really proud to be an Oregonian: We're part of the forefront of creating a structure that helps the little guy, and allows them to have a better future without having to leave a company they really enjoy in their backyard."

By Jules Rogers
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Rollout Schedule

OregonSaves is scheduled to roll out in phases starting with larger employers. The registration deadlines for employers are as follows:

  • An employer employing 100 or more employees: November 15, 2017
  • An employer employing 50 to 99 employees: May 15, 2018
  • An employer employing 20 to 49 employees: December 15, 2018
  • An employer employing 10 to 19 employees: May 15, 2019
  • An employer employing 5 to 9 employees: November 15, 2019
  • An employer employing 4 or fewer employees: May 15, 2020
  • Employers with a deadline of November 15, 2017 can expect to receive notice about the program from the State starting in July. In October, they will receive another notice with instructions about how to either register with the program or certify their exemption from it. They will have until November 15, 2017 to complete the registration or certification process.

    "We're also getting into the part where people are going to start getting ready for when their actual launch date is," Metlen said. "Employers with more than 100 employees will start getting letters in July letting them know their (November) deadline to sign up, or certify they already have a retirement plan and won't participate in OregonSaves."

    Payroll deductions for employees of those businesses that register by the deadline will begin in January 2018.

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