When Oregon began to roll out its state-sponsored retirement savings program — Oregon is the nation's first to do so — Bridget Towles decided to sign up for herself and her six employees.
Towles is a teacher and director of B's Preschool, based in North Portland's Kenton neighborhood. She said she was approached by Joel Metlen, public engagement manager for the new OregonSaves program.
"I had been interested in having my own retirement plan and also providing some kind of benefit to my staff," Towles said. "It was a no-brainer to say yes, we will do it."
All six employees are in their 20s or 30s — the target population for the new program, which enables them to amass savings over three or four decades.
Towles was among the employers participating in two pilot projects for the program, which began its first statewide rollout in mid-October. Large employers with 100 or more workers can enroll in the program now or inform the state by Nov. 15 that they are exempt because they already offer such plans.
The pilot projects involved about 50 mostly smaller employers, and total contributions from employees have topped $100,000.
The program, which will phase in over three years, is intended to reach about 1 million Oregon workers at 64,000 businesses who now have no access to a retirement savings plan at work. Nationally, 55 million workers fall into that category.
The program is based on payroll deductions and is similar to individual retirement accounts. Based on the pilot projects, workers are contributing an average of just under 5 percent of their pay. Employers do not make contributions.
Although enrollment of all workers is automatic, individuals can choose to opt out. However, among the 2,400 workers covered in the two pilot projects, participation averaged 75 percent, far greater than the 4 percent average for purely voluntary participation.
The program has no connection with Oregon's Public Employees Retirement System.
Oregon is first
Towles was part of a panel sponsored by AARP Oregon, which has advocated such a program since 2013, when the Oregon Legislature authorized a study. Lawmakers approved it in 2015 with a starting date of July 1 of this year.
"We saw this national crisis in retirement savings, and there has been a lot of research into what can help," said Joyce DeMonnin, spokeswoman for AARP Oregon based in Clackamas.
"A national organization like ours would be a good leader and partner in this kind of opportunity to let people save their own money as the retirement landscape has shifted."
Pensions have shifted from defined-benefit plans of employers to defined-contribution plans, under which employees assume more risk in investments.
Among the participants in a recent Oregon survey willing to disclose it, more than half said they had saved $25,000 or less — and 63 percent of all participants said they worried about having enough in retirement.
The national average for savings is estimated at just $12,000.
Other states have authorized similar programs — Illinois in 2014, and California, Connecticut and Maryland in 2016 — but Oregon is the first to launch one.
A public opinion survey conducted by DHM Research of Portland for AARP Oregon indicates strong support for OregonSaves, although only about 20 percent of the 1,003 survey participants had heard of it.
Of the sample, questioned between July 27 and Aug. 3, 52 percent strongly support it and 27 percent support it somewhat. The margin of error is within 3.1 percentage points.
John Horvick, DHM vice president and political director, said Democratic support was in the 80s, Republicans in the 70s, so there is no partisan divide among the public — yet.
When the Oregon Legislature approved the program in 2015, however, just one Democrat in the Senate and two in the House voted against it — and no Republican voted for it.
"What you are doing today is something people genuinely want," said David John, senior strategic policy adviser for the AARP Public Policy Institute and deputy director of the Retirement Security Project at the Brookings Institution, the nation's oldest think tank.
"What you are involved in is going to change people's lives."
Before he went to AARP, John was a senior research fellow at the Heritage Foundation, a conservative think tank.
A 'culture of saving'
The chief House sponsor of HB 2960 in 2015 was Tobias Read of Beaverton, who was elected state treasurer in 2016 and who leads the Oregon Retirement Savings Board.
"It's clear to me Oregonians recognize that saving for retirement makes sense, but doing so on your own can be daunting," Read said in closing comments. "That is exactly why we developed OregonSaves.
"What we are doing here is important to create a new culture of saving in Oregon and give an important leg up to people who have not had the easiest time saving."
Read said he hopes women and minorities will be among the new savers.
A panel at the forum focused on how to reach them.
"A lot of people have this frame of mind that Social Security is going to be my retirement, or my kids are going to be my retirement. That is not reality," said Carlos Romo of Beaverton, an AARP Oregon volunteer who focuses on Hispanic outreach.
Others represented Black Parents Initiative, Asian Pacific Chamber of Commerce and Slavic Radio.
The public opinion survey for AARP Oregon indicates that 75 percent of the sample believes retirees will depend more on public assistance if their savings are inadequate. A new analysis by the AARP Public Policy Institute says if the bottom 40 percent of earners were able to increase their retirement income by $1,000 more per year, Oregon's budget could save $98.9 million in public assistance between 2018 and 2032 — and total federal and state savings would be $453.5 million.
Oregon's program faces a lawsuit from the ERISA Industry Committee, which informed the state in October it plans to challenge a requirement for employers to invoke an exemption if they already offer a retirement savings plan.
Earlier this year, Republican majorities in Congress rolled back a rule by the U.S. Treasury Department — which issued it in 2015 while Democrat Barack Obama was still president — that would have shielded states and small businesses from lawsuits under the 1974 Employee Retirement Income Security Act.
The state has not yet offered a response to the lawsuit.