Democratic lawmakers are promoting legislation that would automatically enroll thousands of Oregon workers in retirement savings accounts, a move that proponents said Monday would help ensure nobody is forced to work until they die or to spend their retirement years in poverty.
House and Senate bills would create a state-run retirement plan. Workers who don’t have access to a retirement account from their employer would automatically be enrolled, unless they opt out, and a percentage of their earnings would be withheld from each paycheck.
Legislative committees in the House and Senate heard public testimony on the bills in recent days, but neither has advanced out of committee.
“I’m proud to sponsor these bills with my colleagues because they’ll give Oregonians the means and the opportunity to take control of their retirement and the chance to retire comfortably and with dignity,” said Rep. Tobias Read, D-Beaverton.
Critics include business interests concerned about higher costs. They object to making it mandatory for businesses to participate.
“What we found is the true barrier to savings is not a lack of plans,” John Mangan, regional vice president of the American Council of Life Insurers, told a House committee Friday. “It’s debt. It’s job insecurity, slow wage growth. … Very few young people even have an emergency fund to fix their car if it breaks, much less the kind of discretionary income to put into a plan.”
A 2011 study by the Oregon State Treasury found that about 45 percent of workers in Oregon do not have access to an employer-sponsored plan.
Proponents envision a saving program similar to the existing 529 college savings plan. Money saved from a worker’s paycheck deduction would be pooled with other people’s savings, invested and professionally managed. Unlike defined-benefit pension plans that have become decreasingly common, the investments would have no guaranteed returns.
The account would be portable so workers can continue contributing to the same account as they move from job to job.
Proponents said they’d like to have an option for employers to offer a match, but it wasn’t immediately clear whether that’s possible under complex federal tax laws governing retirement savings.
Source: FOX Business