The nation’s first state-run IRA program for private sector employees just celebrated its first year of operation. How’s it going?
Though it’s now been a year, the OregonSaves program began with a small pilot of employers who volunteered to join early. Having now completed the first two waves of its statewide roll out, covering employers with 50 or more employees, a total of 990 employers have now registered for the program. Tellingly, 571 of those employers opted to join ahead of that mandate.
As a result, OregonSaves reports that “more than 58,000 employees who previously didn’t have a way to save for retirement at work now do.” They are saving $46.42 per pay check or $100.21 per month on average – and the average savings rate is currently 5.14% of gross pay (that’s more – though just slightly more – than the 5% default rate, and the assets in that program now total $4,559,107.75.
OregonSaves notes that 73% of those eligible have enrolled, and while that 27% opt-out is considerably higher than the 5% -10% we’ve come to see as “normal” in the private sector, that’s with a 5% (rather than the private sector’s customary 3%) default savings rate, no employer match, and not even the incentive of pre-tax savings treatment (the OregonSaves contributions are Roth).
Not that there hasn’t been support; OregonSaves says that over the past year, they’ve done 200 events and presentations for groups like chambers of commerce and business associations and 95 education sessions with employees and employers. Additionally, their client services team has handled more than 12,000 phone calls and answered more than 4,000 emails.
The next big program milestone is its third “wave”, which arrives December 15, 2018 for employers with 20-49 employees (though they don’t have to wait until then to sign up).
The program is also working on some new features, including the ability for workers to opt in to an OregonSaves IRA without needing to work for a facilitating employer and the addition of a traditional IRA option as an alternative to a Roth IRA.
Illinois, the nation’s first state to authorize a state-run retirement plan in which private-sector employees can participate
Illinois Treasurer Michael Frerichs said eight businesses have volunteered to be in the Secure Choice pilot program that just started. By November 2019, all companies with 25 or more workers must be part of the program or contract directly with firms that handle employee retirement accounts. The Illinois Secure Choice Savings Program Act, the law establishing the program, was enacted on Jan. 4, 2015. It called for the program to be implemented by June 1, 2017; however, a measure was later enacted that delays enrollment of employees until 2018.
Ascensus has been named to administer both the Oregon and Illinois programs.