Only half of America’s private-sector workers are covered by employer sponsored retirement savings plans, which means that roughly one-third of all retired households rely solely on Social Security for income. In the absence of federal action to close the coverage gap, several states have implemented auto-IRAs, which require employers who do not offer a retirement plan to automatically enroll their workers in an IRA-based saving program sponsored by the state.
A recent analysis of Oregon’s auto-IRA program conducted by the Center for Retirement Research at Boston College concluded that while delays have occurred getting payroll deductions up and running, on balance, the OregonSaves program is off to a promising start.
“Nearly 22,000 previously uncovered workers have begun to accumulate assets in this first-of-its-kind program,” stated the report, titled How Have Workers Responded to Oregon’s Auto-IRA? “Preliminary data suggest that the majority of eligible workers are participating and that those participants are, by and large, remaining passive with respect to their contribution rate.”
The most immediate challenge appears to be helping employers unfamiliar with OregonSaves to provide timely and accurate data, process payroll deductions, and stay on top of changes to employees and payroll deductions. Speeding up this process should result in a larger participant pool and ensure that the employees affected – who tend to be more mobile than the average worker – have a chance to save before they leave any given employer, according to the authors of the report.