The state of Oregon has become the latest state to create its own retirement savings plan.

The Oregon Retirement Savings Plan, which will begin enrolling workers in July of 2017, is overseen by the Oregon Retirement Savings Board, in the office of the state treasurer, and will be run by a private-sector provider, with a minimum employer role.

Employers are required to participate, unless they already provide their employees with a retirement plan. However, employers will not be required to contribute to the plan, and the plan will not be available to workers at small employers at the plan’s inception. Small employers will be added in later.

Oregon’s retirement savings plan website did not specify which businesses will need to comply, or the dates by which they must do so.

Participants 18 years old and older will be automatically enrolled in the plan (although they can opt out if they choose) at a contribution rate of 5 percent of salary, and there will be no automatic escalation of the contribution rate at the beginning of the program.

The plan is set up as a Roth IRA. Roths are subject to annual contribution caps, limited to approximately $6,000 for individuals under age 50. Those annual caps are considerably lower than those for 401(k)-type plans. Critics of state-run programs say the IRA option, while better than nothing, does not go far enough to ensure retirement readiness.

Currently about half of Oregon’s workers lack access to a retirement plan at work—more than a million people. The plan will be implemented in stages in years to come, and the state expects the plan to have 500,000 active accounts within 15 years.

A study from the Pew Charitable Trusts said that nationally, 58 percent of full-time, full-year private sector workers have access to a retirement plan at their workplace. That drops to just 22 percent at firms with fewer than 10 employees.

Other plans state-sponsored retirement plans already passed include those of Connecticut and the state of Washington.

Instant Insights /

Oregon is latest state to approve retirement savings plan

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