Oregon's new retirement program has a rocky start

(AUGUST 11, 2023) Monday, July 31, 2023 was the last day for Oregon businesses to join a special savings plan called OregonSaves. But many businesses didn't know about this or what OregonSaves is.

Tobias Read is Oregon's state treasurer. He says OregonSaves is a special plan to help workers save for the future. Back in 2014, he and other state leaders created this plan because many people in Oregon didn't have enough money saved for when they stop working.

“And if that doesn’t change, people are faced with a pretty tough choice when they get to a typical retirement age: Retire into poverty, or don’t retire at all. And that’s no kind of choice,” he said.

OregonSaves uses a special type of savings called Roth IRA. Some people can get this kind of savings on their own, but not many do. If people can save money through their work, more of them do it.

A new law in Oregon says all businesses without a plan for workers must join OregonSaves. OregonSaves takes 5% of what workers earn and saves it for them. Workers can choose to not do this or change the amount. About 23% of employees in Oregon choose to not participate.

Some workers, however, didn't know they were saving because it happened automatically. One worker said, "I don't even notice it in my paycheck, and if I'm saving it, I don't have to think about it. It's great."

Some business owners didn't know about the new law, either. Mike Pumphrey is a financial coach. He found out about the program from an email. He called OregonSaves, but they couldn't find his business in their system. Other people received emails, but they didn't understand that it was important. Some businesses missed the last day to sign up. They might have to pay money as a penalty.

The program is the first of its kind in the country. So Read says there will be some challenges at first. But he believes it is worth the effort. “The real power of this is gonna come decades from now. When you can imagine the young person who has their first job and, and even without seeking it out, gets into this habit. Decades from now, they’re going to have choices.”

13 states now have similar retirement programs, and 22 other states are planning to start one of their own.