The lag between registration in the OregonSaves program and submission of payroll deductions is longer than originally anticipated, but the rollout is accelerating, says a new study.
Meanwhile, the Oregon Retirement Savings Board (OSRB), which administers the state-run plan that offers a way to save for retirement for employees whose employers do not offer a retirement plan, is proposing that a temporary extension of two deadlines related to OregonSaves be made permanent.
Six states—California, Connecticut, Illinois, Maryland, New Jersey and Oregon—have enacted similar auto-IRA programs for employers without a retirement plan. “Auto-IRA Gradually Speeding Up,” a study by the Center for Retirement Research at Boston College, focuses on Oregon’s program because it was the first one to become operative and therefore the one for which the most data exists.
Authors Anek Belbase, Laura D. Quinby and Geoffrey T. Sanzenbache rreport that most employers participating in OregonSaves:
- are in the services and restaurant industries;
- have 10-49 employees; and
- are in non-urban areas.
They also note that 59% of employers register for OregonSaves in the last month before the deadline by which they must or later. And they add that employers that miss that deadline also may be likely to take longer to complete rolling out the program.
The study notes that the legislation that created OregonSaves set a timeline of 90 days between registration in the program and submission of the first payroll deductions; however, an additional 30 days was allowed before such submissions would be considered to be late.
In the first three months of 2018, approximately 77% of employers took longer than those 120 days, say Belbase, Quinby and Sanzenbacher. They also say that employers in the farming sector are “significantly slower” to submit the first payroll deductions and that employers with 20 employees or fewer are “especially likely” to do so.
But there is good news. The report says that in the last three months of the period studied, February-April 2019, a majority of employers still were failing to meet the 120-day period, but the percentage stood at 60%, a 17-percentage point improvement.
“Perhaps the most important finding is that, even controlling for the characteristics of employers that are registering, the rollout process is getting faster over time,” Belbase, Quinby and Sanzenbacher write. And the improvement appears to be accelerating: they say that the number of employers that miss the 120-day deadline is falling by 2 percentage points each month. They note that the improvement could be attributable to a number of factors, including:
- OregonSaves strengthened its call centers’ support capability;
- OregonSaves redesigned user interfaces and communication material to make the overall process more employer-friendly; and
- characteristics of employers.
Belbase, Quinbyand Sanzenbacher suggest increasing field visits to employers may help in increasing the speed of program rollout, especially employers: (1) in the farming sector, (2) with a small number of employees and (3) that registered close to their deadline for doing so.
OSRB Would Further Extend Registration Deadlines
Separately, the Oregon Retirement Savings Board is proposing that a temporary extension of two deadlines related to OregonSaves be made permanent.
The OSRB had adopted a temporary rule in October 2019 extending the registration deadlines for client employers and for employers with four or fewer employees. Subsequently it extended that deadline to May 15, 2020, which was also the deadline by which employers with four or fewer employees were to register. Now, however, the board has determined that these deadlines need to be extended once again. “Through feedback from the small business community, we decided it would be best for them and the program to extend the registration process of their wave,” the board says in its notice of proposed rulemaking (NPR).
The board also says that it discovered that the original May 15, 2020 deadline for employers with four or fewer employees “is not possible due to the sheer number of employers in this category and the fact that we need to move the Client Employer deadline back to this same date.” The board extended that deadline to Jan. 15, 2021.
The board is now proposing that the required registration deadline for Client Employers of May 15, 2020 and the deadline for employers with four or fewer employees of Jan. 15, 2021 be made permanent. In addition, it is proposing that a current requirement that employers recertify with OregonSaves every three years be eliminated.
The board is accepting comments on these amendments through 1:00 AM PST, April 21, 2020. Contact information can be found in the NPR.`
