PAGE 8 |
April 3, 2015 | NORTHWEST LABOR PRESS
RETIREMENT CRISIS: Oregon lawmakers
consider public retirement savings program
By Richard Schwarz
With nearly half of Oregon’s
workforce laboring without ac-
cess to a retirement savings pro-
gram, a retirement crisis is enter-
ing full bloom as demographics
move more and more toward re-
tirement.
A report by the Oregon Retire-
ment Savings Task Force, estab-
lished by the 2013 Legislature and
appointed by former Gov. John
Kitzhaber, details the trend, noting
that its efforts are the second in
two decades to lay out the threats
to a secure retirement for Oregon
workers. The report was presented
last September to the Legislature’s
joint meeting of the Senate Interim
Committee on Finance and Rev-
enue and the House Interim Com-
mittee on Revenue.
According to the report, “one
out of every 10 Oregonians aged
65 or older lives in poverty. One
in six Oregonians aged 45 to 65
has less than $5,000 in retirement
savings. The annual income of
half of those 65 and older is less
than $18,500. And without Social
Security (the average monthly So-
cial Security benefit is $1,256),
the incomes of some 41 percent of
those aged 65 or older would be
below the poverty level.”
Three out of five families
headed by a person 65 or older
have no money in retirement sav-
ings accounts, the report noted.
A majority of Oregonians, ac-
cording to 2011 figures, have
saved less than $25,000 in retire-
ment savings, with less than
$1,000 in retirement savings
among more than a fourth, the re-
port finds.
Contributing to the growing
gap between retirement savings
and needs are a variety of circum-
stances and conditions, including
the demise of traditional defined
benefit plans. According to the
U.S. Department of Labor, such
plans have declined to 10 percent
of plans in private sector compa-
nies spanning only 18 percent of
private industry employees.
While more than three-fourths
of employees in companies of 100
or more had access to a retirement
savings program, the number
drops to only 50 percent for com-
panies of less than 100. Oregon
also is largely a small employer
state, according to Task Force re-
port data, with 87 percent of
workers employed in businesses
of less than 20 employees, includ-
ing more than 60 percent em-
ployed in businesses of
fewer
t h a n
five.
Even so,
figures
show that
part-time em-
ployees are less
likely to have ac-
cess to an employer-
based plan. Oregon also,
according to the report, is
higher than the national aver-
age in part-time employment at
nearly 25 percent of those em-
ployed.
Meanwhile, the report says
“workers of color, in particular
Latinos, are significantly less
likely than white workers to be
covered by an employer-spon-
sored retirement plan—whether a
401(k) or defined benefit pen-
sion,” according to a 2013 study
by the National Institute of Retire-
ment Security. The report also
found that “only 54 percent of
Black and Asian employees and
38 percent of Latino employees
aged 25-64 work for an employer
that sponsors a retirement plan,”
compared to 62 percent of white
em-
ployees
having ac-
cess to an em-
ployer-sponsored pro-
gram.
To stem the crisis, the Task
Force recommended establishing a
state-sponsored program for Ore-
gon workers who lack access to a
retirement savings program at
work, with automatic enrollment
and payroll deduction — two fea-
tures embraced by the financial in-
dustry — and portable between
workplaces.
Representatives of the financial
industry, which spends more than
$1 billion a year in advertising on
retirement and insurance, argued
that the recommendations should
favor assisting the industry in
reaching out to workers without
workplace access to a plan, and
help with early education in the
importance of retirement savings.
Without action, demands on
social services, for example, are
expected to grow. The Task Force
reported that for 2013, of the more
than 100,000 Oregonians on the
Supplemental Nutritional Assis-
tance Program (SNAP), “those
over age 60 represented nearly 10
percent of those” according to the
Oregon Department of Human
Services. At the same time, of the
more than one million Oregonians
on Medical Assistance Program,
nearly 10 percent are 60 and up.
Task Force Chair and State
Treasurer Ted Wheeler, in deliv-
ering the report, told legislators
“time is not on our side.”
House Bill 2960 and Senate
Bill 615 are moving through the
Legislature, taking up the call
from the Task Force. The full re-
port of the seven-member Task
Force is available from the Oregon
Legislative Information System at:
http://bit.ly/1afupUE.
(Editor’s Note: Richard
Schwarz is a retired executive di-
rector of the American Federation
of Teachers-Oregon. He served on
the governor’s task force.)
The House Business and Labor
Committee on March 25 recom-
mended passage of HB 2960 to the
full House to address Oregon’s re-
tirement savings crisis. It would
establish a seven-member Oregon
Retirement Savings Board, and
charge it with creating a defined
contribution retirement savings
plan for Oregonians without ac-
cess to a plan at work. Elements of
the plan include:
• Automatic enrollment with the
ability to opt-out;
• Automatic increase in annual
contribution rate with ability
to change or opt out;
• Payroll deduction;
• Portability between jobs;
• Minimal employer role and
responsibility.
The Board would reach out to
small businesses, undertake mar-
ket research, investigate incentives
for participation, and increasing fi-
nancial literacy. The plan would
take effect and be available by
June 2017.
The bill was recommended on
a 6-to-5 party-line vote, which in-
cluded notice by Rep. Bill Ken-
nemer (R-Oregon City) of a possi-
ble minority report. The committee
did amend the bill to clarify certain
provisions. The committee turned
back several other proposed
amendments, including one which
would instead create a website
clearing house of available retire-
ment products offered by the fi-
nancial industry.
HB 2960’s chief sponsors in-
cluded Reps. Tobias Read (D-
Beaverton), Jennifer Williamson
(D-Portland), and Senators Lee
Beyer (D-Springfield), Arnie Rob-
lan (D-Coos Bay), and Diane
Rosenbaum (D-Portland). Other
sponsors are Reps. Shemia Fagan
(D-Clackamas), Ann Lininger (D-
Lake Oswego), Susan McLain
(D-Hillsboro), Jessica Vega Peder-
son (D-Portland), and Brad Witt
(D-Clatskanie).