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Lisa Massena, Executive Director, Oregon Retirement Savings Plan

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Lisa Massena, Executive Director, Oregon Retirement Savings Plan

  1. 1. OREGON STATE TREASURYOREGON STATE TREASURY Neighborhood Partnerships – Savings & Asset Building Summit November 15, 2016 Oregon Retirement Savings Plan A NEW, EASY WAY FOR OREGONIANS TO START SAVING, COMING SOON
  2. 2. OREGON STATE TREASURY $3,000 $12,000 31 percent Average savings per household Average household savings, nearing retirement age A generational crisis Non-retirees who report that they have saved nothing, and have no pension Sources: Federal Reserve, 2013; National Institute on Retirement Savings Americans are healthier and living longer Source: CDC/National Center for Health Statistics Life expectancy in 194062.9 Life expectancy in 201378.8 50 55 60 65 70 75 80 85 But we’re not saving enough for retirement
  3. 3. OREGON STATE TREASURY The status quo has failed 68 million Americans As many as 1 million Oregonians Sources: Geographic Differences and Trends, 2013, Employee Benefit Research Institute; AARP Oregon Do not have the option to save at work Equivalent to almost half the workforceSources: Geographic Differences and Trends, 2013, Employee Benefit Research Institute; AARP Oregon Do not have the option to save at work
  4. 4. OREGON STATE TREASURY Oregon is a pioneer • The 2015 Legislature created the Oregon Retirement Savings Plan to improve access and outcomes • Oregon is on track to be the first to launch a state-based plan • Beneficial for everyone: workers and families, employers, taxpayers, and communities
  5. 5. OREGON STATE TREASURY What is it? A simple and convenient way to save • A state-sponsored plan that shares many key features of 401(k) and other IRA plans but does not compete with them • Standard options: Roth IRA, target date fund, 5% contribution rate, 1% automatic escalation Features 401(k) IRA ORSP Governed by experts   Available at work   Contributions through payroll deduction   Automatic enrollment   Automatic escalation   Professionally managed   Employer matching contribution  Portable from one employer to the next  
  6. 6. OREGON STATE TREASURY Who’s it for? Don’t have a retirement plan at work? • The Oregon Retirement Savings Plan is for Oregonians 18 years and older who have reported income and who have no savings option at work. • Estimates: 600,000 Employer offers no plan 200,000 Employer offers a plan, not included 200,000 Self employed (opt-in) Source: Boston College Center for Retirement Research, Market Research Report: Oregon Retirement Savings Plan, July 2016
  7. 7. OREGON STATE TREASURY What employers are included? Most employers in Oregon affected • The plan will be for the 66% of all employers in Oregon that do not offer a retirement plan • It is for businesses owners as well as their employees • It is not for public sector employers or employers who offer a plan to all of their employees • Employers have no fiduciary responsibility • The plan will be phased in by the number of employees businesses have, starting with larger employers, on a “join by” date Source: Boston College Center for Retirement Research, Market Research Report: Oregon Retirement Savings Plan, July 2016
  8. 8. OREGON STATE TREASURY How will it work? Employers automatically deduct a portion of worker pay (unless workers have opted out) Savings are invested in a low-fee “Roth IRA” account that belongs to the worker, with the goal to grow in value over time. A private sector plan administrator communicates directly with the worker about options and performance 1 2 3 Workers can take their savings with them wherever they go and now have access to money for retirement 4
  9. 9. OREGON STATE TREASURY What do I need to do? Employers • When notified, certify that you have a plan or register for the ORSP • Pass along information about the plan to employees • Provide employee data to the ORSP • Collect opt-out decisions • Keep records to show compliance • Handle payroll deductions • Resolve employer-related errors Employees • You do not need to do anything to enroll and start saving • You can make choices about: • Saving more or less • Choosing a different type of investment • Opting out
  10. 10. OREGON STATE TREASURY Helping all Oregonians More Oregonians will save. That’s good for all of us. • A new statewide culture of saving. • Retirement security is vital for everybody, including families, employers, communities, and taxpayers. • The cost of inadequate savings is extreme for taxpayers and strains our social services system.
  11. 11. OREGON STATE TREASURY What’s next Outreach and Engagement (now through implementation) Improving awareness for employers, workers, and stakeholders Plan manager selection (late 2016 ) Private sector firm to handle collections and records Rulemaking (late 2016) Wonky but important! Pilot launch! (July 2017) Small group of employers join the plan Phased implementation (Starting 2018) Plan will phase in slowly to ensure roll out success It’s a public process. We want your input and feedback! Get involved in our discussions. Join our mailing list.
  12. 12. OREGON STATE TREASURY Thank you. Questions? www.oregon.gov/retire Lisa Massena, director Oregon Retirement Savings Plan RetirementSavings@ost.state.or.us

Editor's Notes

  • A healthy 65 year old is looking at 20 years, on average.

    Treasurer Wheeler has called inadequate savings a generational crisis that will impact families from coast to coast. Savings of that amount will not take an individual through one year of retirement, much less 20 or more.
  • A recent U.S. Government Accountability Office (GAO) study13 found that only about 14 percent (one in seven) of businesses with 100 or fewer employees offer their employees such a plan, and that between 51 percent and 71 percent of the roughly 42 million people who work for a small business lack the ability to save for retirement.

    The rate of savings varies widely by industry, ethnicity, and education level. The PEW Charitable trusts released a study in January that highlighted the lack of access to a work-based retirement plan across demographics, geography and industry sectors. The bottom line is that too many workers don’t have the option to save.
  • 600,000 people are estimated to work for an employer who doesn’t offer a plan at work. 200,000 more aren’t included in their employer’s plan. Another 200,000 are self employed. This is their plan: their money; their accounts. They work hard. Their money should work hard for them.

    Further, large gaps in coverage exist:
    38% Private-sector Hispanic workers
    23% At companies with fewer than 10 employees
    32% Workers earning less than $25,000 a year
    29% Workers with less than high school diploma
    34% Workers in leisure and hospitality sector





  • Employers want to offer plans, but "Many businesses simply decide that it's not worth the hassle, risk or cost to start a plan.“ (US News and World Report). Reasons? Small company size
    Workers earn low wages, or are short term
    Complexity, paperwork
    Fees higher for small business
    Benefit costs / company match


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