Michael Parker, Executive Director of the Oregon Savings Network – whose charge includes OregonSaves – recently provided a closer look at the state-sponsored retirement plan for private-sector workers.
OregonSaves has been open to participation since July 2017. Since then, it has been made available to those workers gradually in waves based on employer size, and was expanded late last year to allow individual Oregonians, such as self-employed or gig economy workers, to join the program.
Earlier this month, OregonSaves reported that after two years in operation, $25 million had been saved through the program. The number of participants and statistics concerning contributions seem straightforward, but there are nuances to their measurement, as Parker indicated in a recent interview with NAPA-Net.
Q: OregonSaves reports that as of Aug. 1, 104,348 employees – 71% of those eligible – have enrolled in the program, which at least implies that there actually are 146,969 eligible for the program.
A: Counting the number of eligible [employees] isn’t straightforward. [As of Aug. 15,] 181,993 people have been entered into the system; 24,000 of those are in pending status, which means that they are still in their 30-day enrollment window or that we are waiting on documentation from them to set up their accounts. We usually don’t count that group when talking about the eligible employees; instead, we just focus on the number of people who either enroll or who have opted out by the end of the enrollment period. In other words, 106,500 enrolled plus 44,000 opt outs equals 150,500 total eligible.
Q: The Aug. 1 figures indicate that 48,800 have made contributions, but that 44,830 currently have funded accounts. Does that mean that 8% of participants have cashed out?
A: As of [Aug. 15], 4,578 savers contributed at some point but now have a zero balance. Most of those seem to have cashed out entirely, but we do see instances where folks contribute and then withdraw multiple times.
There is a significant timing gap for starting contributions, since the program is still rolling out. Of the 106,500 who enrolled, 50,700 have made a contribution. The remaining 55,800 who haven’t contributed can be lumped into three general buckets:
- Their employer hasn’t started payroll deductions. It can take months to get started, and new employers are added on a daily basis.
- They were terminated before contributions could begin. We serve a lot of seasonal businesses, like farms and resorts, where the staff doesn’t work long enough for payroll deductions to start for them.
- They were hired but never earned a paycheck. We also serve a lot of temp agencies. They hire thousands of workers but only a handful may actually get work through the agency.
Q: Could you provide some insight into the dynamics of OregonSaves relative to 401(k)s?
A: OregonSaves is definitely different from traditional retirement plans, mostly because it serves a different population of industries and savers. The majority of our savers work in food service, agriculture and temporary labor, all of which are high-turnover industries. This means the dynamics of when and how people save will be different. But one of the key advantages of OregonSaves is that accounts are portable, so savers can keep saving over time as they move from employer to employer. We already have 10,000 savers who have worked for more than one facilitating employer.