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Aspen Institute forum focuses on Oregon plan

It's one of three states developing retirement savings for private-sector workers.

TRIBUNE PHOTO: PETER WONG - Panel from left: Kristian Foden-Vencil, moderator, Oregon Public Broadcasting Radio; Oregon State Treasurer Ted Wheeler; J. Mark Iwry, senior adviser, U.S. Treasury; California State Treasurer John Chiang. At Aspen Institute forum on financial security on June 20 at the University of Oregon building in Portland.Oregon’s effort to link workers with automatic enrollment in retirement savings plans at their workplace has drawn national attention from the Aspen Institute.

The Financial Security Program of the Aspen Institute, a think tank based in Colorado, made the still-evolving Oregon program the focus of a forum last month at the University of Oregon center in Portland.

According to Jeremy Smith, associate director of the Aspen program, the national share of private-sector workers whose employers sponsor a retirement plan declined from 59 percent in 2000 to 51 percent in 2013.

In Oregon, up to 1 million people lack access to such a plan at work, according to a Pew Center analysis updated in 2015. Of those who have saved, a state report says, more than half have amassed less than $25,000.

Oregon is among the states — California and Illinois are the others — leading the way toward automatic enrollment of workers in retirement savings plans offered through their employers.

A board created by lawmakers in 2015 is working out details of a state-sponsored savings plan, which involves no obligation by employers other than payroll deductions. The plan will start in mid-2017.

State Treasurer Ted Wheeler, who led the legislative effort and chairs the board, will be six months into his term as mayor of Portland by then. But he says the effort has implications for the public beyond the growing number of future retirees.

“If we cannot help Americans save for their own retirement, the cost to taxpayers in the future will be staggering as more and more people rely instead on costly government safety-net services,” he said in opening the forum.

“If they are doing that, it means one of two things for the rest of us: Either we are going to pay a lot more in taxes, or we are going to see a lot less available for investment in critical services such as education, health care and public safety.

“If we fail to act, we are inviting a generational crisis – one that pits investments in our younger citizens with those who are most seasoned. This would be a violation of the American social contract.”

Many lack coverage

Although expanding coverage of retirement savings plans will not close the gap completely — Oregon hopes to capture about 400,000 private-sector workers — Wheeler said it will help with some groups that have disproportionately less money.

Gov. Kate Brown says only 34 percent of Hispanic workers have access to such plans at work, compared with 60 percent of white and African American workers, and 63 percent of Asian American workers.

Brown also says women are far less likely than men to have amassed significant savings. Women constitute 57.3 percent of all retirees, she says — and are 80 percent of the poorest retirees.

“These figures are absolutely staggering. But there is great hope in Oregon,” she said.

“Oregonians are rarely content to follow the herd and let injustices like these stand. We like to blaze our own trails and let others follow our example.”

Without access to a plan at work, an Oregon report says, only 4 percent of workers choose to save — but the participation rate jumps by more than 15 times if a savings plan is available at work.

California State Treasurer John Chiang said his state’s Secure Choice plan, which has been in the works for several years, awaits legislative approval later this year.

Like Oregon’s pending plan, it also is modeled on an individual retirement account, with automatic enrollment and a 3 percent payroll deduction. Of California’s 7.5 million uncovered workers, Chiang said his hope is to enroll up to 6.8 million.

Investment earnings will pay start-up and operating costs of the plans.

TRIBUNE PHOTO: PETER WONG - Will Sandbrook of Britain's National Employment Savings Trust explains retirement savings plans during an Aspen Institute forum on financial security on June 20 at the University of Oregon building in Portland.

Foes change view

The financial services industry, which opposed state legislation to institute automatic-enrollment plans a few years, now has a different view.

“The financial services industry is excited” at the prospect of up to 72 million Americans enrolled in simple, low-risk retirement savings plans under state sponsorship, said Barbara Marsh, chief executive of BridgePoint Group, a management consultant firm.

As director of government and regulatory affairs for Standard Insurance Co., based in Portland, Tom Simpson testified against Oregon’s 2013 legislation setting up a task force and the 2015 legislation creating a state retirement savings board.

Opponents argued that many retirement savings plans already were readily available, and that lawmakers should concentrate on promoting public understanding of personal finance and offering additional tax incentives for savers.

“When we went through this whole process and realized we were on the wrong side of it politically, we decided to ask what else we can do,” Simpson said.

He said financial well-being is among the factors in the Oregon Healthiest State movement, and that Oregon can do more to encourage better personal management of economic life, where it was ranked 28th among the states.

British plan

Though the United States lacks a national plan, the ideas generated a decade or two ago influenced the development of a similar retirement savings plan in Great Britain.

Like the United States, retirement coverage by employer plans in Britain dropped from 55 percent in 1997 to a low of 45 percent by 2012 — but jumped to 65 percent by 2015 after the changes took effect.

Unlike the pending state plans in Oregon and California, the British plans — which employers can design themselves or buy from others — require contributions from employers.

Will Sandbrook, strategy director for the National Employment Savings Trust, said some workers do opt out of participation — but at 7.5 percent, the rate is far less than the 15-30 percent projected a decade ago. The oldest workers are most likely to opt out, but for those ages 16 to 25, the rate is less than 10 percent.

Will they save enough? Sandbrook said that question remains unanswered, but it’s better for people to start with something instead of how to get them to save at all.

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Oregon Retirement Savings Board:


Aspen Institute Financial Security Program: