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State Treasurer Ted Wheeler continues to be a forceful advocate for legislation that requires employers to offer automatic enrollment of workers in a state-sponsored savings plan for retirement.


He’s been an advocate for more than two years, ever since lawmakers created a task force that he led to lay out recommended standards for plans. The 2013 law substituted a task force in lieu of a direct move to state-sponsored plans.

House Bill 2960, which would set up a board to oversee such plans, is moving through the current legislative session.

Wheeler says the legislation will not benefit people from the post-World War II generation known as baby boomers, who have started to retire already. Instead, he says, it will ease the financial burdens of workers who will retire in another decade or two — and the workers whose taxes will support government services for them — unless Oregon and other states fail to act.

“That cost to taxpayers down the road will be staggering,” he says. “More and more people will rely instead on costly government safety-net services to get them through their retirement years, instead of a practical, low-cost portable way for them to save their own resources for their retirement.”

The task force found that workers between ages 25 and 45 have average retirement savings of less than $25,000.

The median savings for the 25 to 64 age group — half of the group having more, half of them less — was $40,000. The median for the 55 to 64 age group, those closest to retirement, was $100,000.

Meanwhile, the defined-benefit retirement plans that once covered 60 percent of workers back in 1980 now cover only 7 percent. They have largely given way to defined-contribution plans, which shift the burden of managing investments from employers to workers.

Although Oregon took initial steps in 2013, California became the first state to enact a state-sponsored retirement savings plan in 2012, and Illinois followed suit in January. Both are modeled on individual retirement accounts and an automatic 3 percent payroll deduction, although employees can opt out. Massachusetts passed a limited plan for small nonprofit organizations in 2012.

About 20 other states have considered similar steps, according to the National Conference of State Legislatures and Pension Rights Center, based in Washington, D.C.

“While Oregon is in the vanguard of trying to address this national crisis, I want to be clear: We are not alone,” Wheeler says.

Bill advances

Just before Wheeler spoke about the legislation at a luncheon of the Salem City Club, a House committee advanced a bill to the Legislature’s joint budget committee.

HB 2960 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.

Only employers that do not offer retirement savings plans now would be able to offer the state-sponsored plans. Those employers account for about half of Oregon’s private-sector workers, who lack access to an individual retirement account or 401 (k), or a traditional pension.

According to a March report by the Northwest Economic Research Center at Portland State University, an estimated 400,000 workers would benefit from newly created access to plans that could result in up to $2 billion in retirement savings.

Wheeler says the plans would be similar to the 529 College Savings Plan, named after the section of the federal tax code authorizing such plans, and is managed by a private contractor.

He says with the availability of automatic payroll deductions, workers are 15 times more likely to save than if they have to hunt for plans on their own.

Of those with access to plans now, the participation rate is 82 percent, according to the PSU center report.

The bill is in the budget committee because lawmakers would have to draw an estimated $250,000 in startup costs for the new board from the tax-supported general fund, although the costs would be repaid.

The bill lost its sole Republican sponsor, Rep. Bill Kennemer of Oregon City, who says he is concerned that it will trigger federal requirements under the 194 Employee Retirement Income Security Act.

But Wheeler says it will not, because employers will not be required to make contributions.

Crossfires

Wheeler says he is concerned that the bill will get caught in partisan crossfires on other issues, such as raising Oregon’s minimum wage or requiring paid sick leave for employees.

“We are working hard to have a bipartisan coalition in support of retirement savings,” he says.

One of the letters offered in support of the bill came from Ken Mehlman, now with the private equity firm KKR & Co., and formerly a national chairman of the Republican Party and director of President George W. Bush’s 2004 re-election campaign.

Some business interests — Portland Business Alliance, Standard Insurance and the Securities Industry and Financial Markets Association, which also opposed the 2013 study bill — have come out against House Bill 2960.

“But I have yet to hear the owner or operator of a single business come to me, in all of the meetings I have had with chamber of commerce groups, and say that this proposal is costly and burdensome,” Wheeler says.

AARP is one of the bill's leading champions.

A state task force made similar recommendations back in 1996. But lawmakers took no action.

“I can report to you that this problem has only grown much worse,” he says.

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