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Barbara Perrin of Eugene says she’s an example of why Oregon should require employers to offer automatic enrollment in a state-sponsored savings plan for retirement.

For years, she did the accounting and marketing for her husband’s work as an artist. But after their divorce, she was left with only Social Security. She had put savings into a house — the equity from which all but disappeared during the past several years, although she was finally able to sell the house.

“I never had any kind of job, except for one, where I was offered a retirement benefit,” says Perrin, who’s 68.

“As a single mother, I was often putting together a part-time job here and a part-time job there. Unfortunately, I do not see a huge change for women in this regard, even though it’s changing to some degree. It does not happen overnight.

“Had I had the opportunity to participate in something like this when I was younger, I would have.”

Nationally, and in Oregon, half of all private-sector workers lack access to a traditional pension or a retirement savings plan, such as a 401 (k) or an individual retirement account.

One in every six Oregon workers between the ages of 45 and 60 has saved less than $5,000 for retirement, and those between ages 25 and 45 have average retirement savings of less than $25,000.

Sarah Gill, a senior legislative representative for AARP in Washington, D.C., says those factors have prompted a push in Oregon and elsewhere for legislation aimed at automatic enrollment in state-sponsored retirement savings plans.

“If we can help people get the access they need to be self-reliant and live in dignity in retirement, that is a good thing for taxpayers and individuals,” she says. “Although education is necessary, it is not sufficient. We need to take action.”

TRIBUNE FILE PHOTO - Rep. Bill Kennemer of Oregon City is the lone Republican sponsor of HB 2960.

Pending proposals

Two bills — House Bill 2960 and Senate Bill 615 — are pending in legislative committees, which have already conducted public hearings. Both would set up a board within the Oregon State Treasury to develop state-sponsored plans that employees can enroll in through payroll deductions by mid-2017. Enrollment would be automatic, although employees could opt out, and employers would not be required to contribute to the plans.

The plans offered through the proposed board would have to comply with nine recommended standards set out by a task force led by state Treasurer Ted Wheeler. Lawmakers created the task force in 2013 in lieu of proceeding directly to a state-sponsored plan.

Unlike pending bills to increase Oregon’s minimum wage or require paid sick leave, “this is not a cost for employers,” says Sen. Lee Beyer, D-Springfield, a chief sponsor of SB 615 and HB 2960 and chairman of the Senate Business and Transportation Committee.

“This is an option for employees to save. We are trying to save money for future taxpayers and make sure young people have the ability to retire when they get my age,” says Beyer, who’s 66.

Rep. Tobias Read, D-Beaverton, is also a chief sponsor of both bills.

He says when workers have access to a savings plan, 71 percent take advantage of it, compared with only 4.6 percent when they must seek one on their own.

“My feeling is that this concept of retirement security is where a lot of people come together — people who are in different places on different issues” such as the pending bills on other employee benefits, he says.

HB 2960 had just one Republican sponsor, Rep. Bill Kennemer of Oregon City. He has since withdrawn, citing potential conflicts with federal law.

The state-sponsored retirement savings plans have been likened to the Oregon 529 College Savings Plan, which is managed by a private contractor, not directly by the state.

Oregon is one of several states considering such action, although none has acted yet.

For and against

The concept has been endorsed by such diverse figures as Ken Mehlman, now with the private equity firm KKR & Co., and formerly a Republican Party national chairman and director of President George W. Bush’s 2004 re-election campaign, and Kathleen Kennedy Townsend, now with the Georgetown Public Policy Institute, and also eldest daughter of Robert F. Kennedy and Democratic lieutenant governor of Maryland from 1995 to 2003.

Both joined Wheeler last fall at a forum of the City Club of Portland to endorse the concept.

But Oregon and national business interests have testified against the bills at legislative committee hearings.

Elizabeth Howe of the Portland Business Alliance says the bills give incentives for participation only to employers who offer state-sponsored plans — and the plans put the state in direct competition with the private sector.

“The state could take steps to better inform small employers about their options for private-retirement plans and to provide incentives for all small employers, not just the ones who participate in a state plan,” she says.

Tom Simpson, director of government affairs for Standard Insurance based in Portland, says, “There are better plans” already offered on the private market, but neither employers nor employees are aware of them.

Elise Brown represents the Securities Industry and Financial Markets Association, which opposed the original 2013 study bill.

“Our goal is to turn nonsavers into savers, but this (2015) bill is not the answer,” she says.

As an alternative, Simpson and Brown promoted an amendment to give state tax credits to all employers setting up retirement savings plans, linked to household-income limits in federal law.

They also promoted a new myRA account, which the U.S. Treasury created after President Barack Obama called for it in his 2014 State of the Union address. However, such accounts are aimed primarily at principal preservation — the money is invested in government securities, similar to the Thrift Savings Plan available to federal employees — and are limited to $15,000, beyond which the money must be rolled over into a private-sector individual retirement account.

The average annual return for government securities between 2003 and 2012 was 3.6 percent.

Also, participation in a myRA is voluntary. Obama has said he would like to see automatic enrollment of workers who do not have access to other savings plans, but that step would require congressional approval.

What’s next?

During a recent hearing of the House Business and Labor Committee on HB 2960, Rep. Paul Evans, D-Monmouth, voiced skepticism about the alternatives raised to a state-sponsored plan.

“I am assuming this problem did not happen just last night,” Evans said.

“I am a little bit confused as to why, only after the treasurer’s office decides to take on this issue, there is a flurry of activity to try to find alternatives.”

Evans compared the current debate to that 80 years ago over the federal Social Security system, which mandated participation by workers and their employers. Social Security was created in an era when life expectancy was 61, and the retirement age was 65.

Committee Chairman Paul Holvey, D-Eugene, says, “There is going to be a lot of conversation among our colleagues and stakeholders” before any action on the legislation.

At the hearing, Alexandria Jones-Patten, a senior case manager for the Urban League of Portland, said she has worked with many seniors who have to get by on $1,000 or less each month. She says 20 percent of blacks 65 and older — and 19 percent of Hispanics in that age group — live under the federal poverty level.

Nevertheless, she adds, “many of my peers have not gotten the message that it is never too early to save.”

Perrin, the Eugene retiree who relies on Social Security, has a daughter who is a teacher covered by the Public Employees Retirement System, which still pays traditional defined-benefit pensions.

“But she does not want to stay a teacher, so I try to convince her that this proposal is a good thing,” Perrin says. “Young people are nervous that Social Security is going to go away.”

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