Last Monday was the final deadline for all Oregon businesses to enroll in the state’s mandated retirement plan, OregonSaves. But many Oregon businesses didn’t know about this deadline — or even what OregonSaves is.
“The first-of-its-kind program in the country that mandates that employers who don’t offer their own retirement plan” do so, is how Tobias Read, Oregon’s state treasurer, describes it. Back in 2014, he was one of the state legislators who set out to fix the fact that Oregonians weren’t saving enough — or at all — for retirement.
“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 was built around existing retirement accounts called Roth IRAs. Workers can already get a Roth IRA independently without their employer’s help. But as Treasurer Read points out, few people do.
“Three-point-five percent of people do that, whereas if people have an opportunity to save through a plan at work, 70% of people do that,” Read said.
Oregon’s new law requires all employers, if they don’t offer their own retirement plan, to enroll in OregonSaves. OregonSaves defaults to employees setting aside 5% of their salary into their own IRA via payroll deduction, unless they choose to leave the program or change their contribution amount.
“It’s hit or miss on how many people participate” at each business, said Christina Barbeau of Firefly Bookkeeping, who administers OregonSaves for several small businesses. Statewide, 23.3% of employees opt-out of OregonSaves.
Barbeau said several employees didn’t even realize they had joined the program because of the automatic enrollment. One worker told her, “‘I’m not even noticing it in my paycheck, and if I’m saving it, I don’t even have to think about it. It’s great.’”
Skye Blue Sprawl, who manages a small estate management business in rural Clackamas County with four employees, signed up for OregonSaves in March.
“At that point we had zero employees saving for retirement in any shape or form,” Blue Sprawl said. “Once we signed up for OregonSaves, we had 100% enrollment at the full 5% deduction from every paycheck. … All of our employees are in their 50s with little to no retirement savings. So, it was a really big step to get everyone on board. Everyone was very excited and really eager to join.”
The program is now in the final wave for small businesses with one to four employees.
But many small business owners haven’t received communication from the state — even though July 31 was the final in a series of deadlines for OregonSaves.
Rocky rollout
“I only just recently heard about this. I’ve gotten no information at all, no email or mailers,” said Mike Pumphrey, a self-employed financial coach. Even though he’s in financial services, he didn’t hear about the program from the state.
“I mean, I help my clients sign up for Roth IRAs, as it’s kind of part of what I do in my business, so I probably should get this, right?”
Katie Pryde, who owns the comic book shop Books with Pictures, says she got many emails about the OregonSaves deadlines starting in 2018, but not from the state.
“Nearly all of them are from ADP, which is my payroll processor,” Pryde said, “because they wanted to sell me (other) retirement savings services!”
The first email she received from the state about the program didn’t make it clear it was a mandate.
“It’s just written as a fun thing that you can do!” She polled her employees about whether they wanted a retirement plan through Oregon, and none of them were interested, so she ignored it.
She eventually signed up for OregonSaves when she realized it was a requirement, but none of her employees participated. Pryde ended up switching over to a different retirement plan through her payroll provider. It cost her a little more, but was less frustrating to use.
Pryde said she wishes lawmakers would empathize more with busy small business owners when creating programs like this.
“I love that Oregon as a state is taking care of its workers,” she said of initiatives like OregonSaves and Paid Leave Oregon. “These are all really great, well-intentioned initiatives.”
But she said that keeping up with new programs is hard for small businesses like hers without a human resources team.
“Every time something gets more complicated, more business owners are going to drop out, stop listening, stop administrating, stop paying attention,” Pryde said.
‘They can’t find businesses in their systems’
Businesses that missed the July 31 deadline to…
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