In exactly one year, Oregon will begin enrolling thousands – and eventually hundreds of thousands – of its private-sector workers into a newly launched retirement initiative called the Oregon Retirement Savings Program (ORSP). That much we know for sure. But exactly how the new program will be designed, marketed, and managed is still being determined. To help inform those decisions – most of which will fall to the Oregon Retirement Savings Board (ORSB) – Aspen FSP co-hosted a forum with State Treasurer Ted Wheeler last month in Portland, the third such event Aspen FSP has hosted in the states over the last year.
Watch the entire event here:
Like California and Illinois (and now Maryland and Connecticut), Oregon is showing the rest of the country how a state can help its citizens meet their retirement needs. Simply put, Oregonians – like Americans generally – are not saving enough for retirement. Half of the Oregon workforce has less than $25,000 saved for retirement, and nearly two-thirds of Oregon retirees receive zero income from private retirement accounts – meaning they likely rely almost entirely on Social Security.
Signed into law by Governor Kate Brown in June of 2015, ORSP promises to begin righting the ship, eventually allowing 400,000 workers who currently lack access to a retirement plan at work to begin contributing to a portable, low-cost individual retirement account (IRA) administered by the state. As the Governor – a former Aspen Rodel Fellow – explained during her introductory remarks at the June forum, “Oregonians are rarely content to follow the herd. We like to blaze our own trail.”
That trailblazing attitude was on display throughout the morning, as an esteemed group of government officials, advocates, journalists, researchers, and members of the ORSB, came together to discuss how Oregon can best implement the program and serve as a model for the rest of the country. A packed house at the University of Oregon-Portland heard first from Governor Brown, Treasurer Wheeler, and Aspen FSP Executive Director Ida Rademacher. Wheeler outlined the history of Oregon’s plan – a version of which was first proposed by a state task force all the way back in 1997 – and noted that a “semblance of economic security after a lifetime of hard work” is a “basic fundamental value” that all Oregonians should enjoy. Rademacher commended Oregon for “the commitment, the vision, [and] the holistic solution that they’re trying to drive forward.”
A panel of state retirement policy experts came next, featuring Wheeler, U.S. Treasury Department senior official J. Mark Iwry, and California Treasurer John Chiang. Moderated by Oregon Public Broadcasting reporter Kristian Foden-Vencil, the conversation focused on the promise and peril facing states pursuing retirement reform. Wheeler, who made retirement security one of his signature priorities as Treasurer (but will be leaving that post to serve as Portland’s next mayor at year-end), candidly discussed the ideological opposition that he and other ORSP proponents faced in their push to pass the bill. As a result of their perseverance, Oregon is now on the “brink of a breakthrough,” according to Iwry, one of the architects of the federal auto-IRA proposal that is now being emulated on the state level. Chiang, who is leading the effort to establish a similar state retirement program in California, highlighted how beneficial these plans will be for Latinos, African-Americans, and other communities who have historically been left out of the country’s retirement savings system.
Following the first panel, Will Sandbrook, Strategy Director for the United Kingdom’s National Employment Savings Trust (NEST) program, gave the keynote sharing some of the lessons he’s learned from implementing a plan that shares many features with Oregon and other states. , where he serves as. NEST is a state-administered pension plan made available to private-sector workers in 2012, which is also when UK employers began to be required to automatically enroll their workers in a retirement program (either NEST or a private plan). As Sandbrook explained, this dual reform has been quite successful, boosting plan access and savings for millions of workers. Though not identical to what Oregon and other U.S. states are currently pursuing, many of the choices Sandbrook and his team confronted when they established NEST closely resemble what the Oregon Retirement Savings Board is currently grappling with:
- How many workers will opt-out of the automatic enrollment system in Oregon? Very few, if the UK’s experience is any indication (a mere 7.5% opt-out rate so far).
- What’s the best way to minimize the burden on employers? Keep the program – including worker eligibility determinations – as simple as possible, said Sandbrook.
- How can the government minimize the risk of an operational snafu? Consider following NEST’s lead by phasing in the program gradually.
The second panel of the day provided key insights from industry leaders, including Barbara March, CEO of the Bridgepoint Group, a financial services consultancy; Tom Simpson, Director of Government & Regulatory Affairs at Oregon-based Standard Insurance Company; Anthony Bunnell, Chief Product Officer at financial technology firm Honest Dollar, which helps contingent workers sign up for IRAs on their smart phones; and Lew Minsky, President and CEO of the Defined Contribution Institutional Investment Association. Moderated by Aspen FSP Associate Director Jeremy Smith, the discussion covered the importance of simplicity and scale (March), financial education (Simpson), user experience and data security (Bunnell), and fostering a culture of saving (Minsky).
Lisa Massena, the Executive Director of ORSP, led the third and final panel, which focused on the practical next steps for making Oregon’s program work well. Director of Retirement Policy at the American Retirement Association Judy Miller and University of Oregon Professor of Finance John Chalmers discussed the pros and cons of annuitizing program participants’ savings. While Nita Shah of Micro Enterprise Services of Oregon and Jessica Junke of Neighborhood Partnerships drew on their experiences working at nonprofits dedicated to expanding economic opportunity for underserved communities to give the participants’ perspective. One key take-away from that dialogue: the state must work hard to build trust with the largely low-income population that it will be serving.
State Representative Tobias Read, who co-authored the legislation creating the ORSP, is a non-voting member of the ORSB, and is now running for State Treasurer, brought the event to a close by recalling the words of the Beaverton sandwich shop owner and ORSP supporter Chuck Wilson: “I want to [provide retirement benefits] for my employees, but I don’t have an HR Department. I have sandwiches to make.” Read urged the audience to keep Wilson and other small business owners and workers in mind as the state attempts to expand retirement security in a way “consistent with our values and…both practical and innovative at the same time.”
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