Monday was the final deadline for all Oregon businesses to enroll in the state’s mandated retirement plan, OregonSaves. But many Oregon businesses didn’t know about this deadline — or even what OregonSaves is.
“The first-of-its-kind program in the country that mandates that employers who don’t offer their own retirement plan” do so, is how Tobias Read, Oregon’s state treasurer, describes it. Back in 2014, he was one of the state legislators who set out to fix the fact that Oregonians weren’t saving enough — or at all — for retirement.
“And if that doesn’t change, people are faced with a pretty tough choice when they get to a typical retirement age: Retire into poverty, or don’t retire at all. And that’s no kind of choice,” he said.
OregonSaves was built around existing retirement accounts called Roth IRAs. Workers can already get a Roth IRA independently without their employer’s help. But as Treasurer Read points out, few people do.
“Three-point-five percent of people do that, whereas if people have an opportunity to save through a plan at work, 70% of people do that,” Read said.
Oregon’s new law requires all employers, if they don’t offer their own retirement plan, to enroll in OregonSaves. OregonSaves defaults to employees setting aside 5% of their salary into their own IRA via payroll deduction, unless they choose to leave the program or change their contribution amount.
“It’s hit or miss on how many people participate” at each business, said Christina Barbeau of Firefly Bookkeeping, who administers OregonSaves for several small businesses. Statewide, 23.3% of employees opt-out of OregonSaves.
Barbeau said several employees didn’t even realize they had joined the program because of the automatic enrollment. One worker told her, “‘I’m not even noticing it in my paycheck, and if I’m saving it, I don’t even have to think about it. It’s great.’”
Skye Blue Sprawl, who manages a small estate management business in rural Clackamas County with four employees, signed up for OregonSaves in March.
“At that point we had zero employees saving for retirement in any shape or form,” Blue Sprawl said. “Once we signed up for OregonSaves, we had 100% enrollment at the full 5% deduction from every paycheck. [...] All of our employees are in their 50s with little to no retirement savings. So, it was a really big step to get everyone on board. Everyone was very excited and really eager to join.”
The program is now in the final wave for small businesses with one to four employees.
But many small business owners haven’t received communication from the state — even though July 31 was the final in a series of deadlines for OregonSaves.
“I only just recently heard about this. I’ve gotten no information at all, no email or mailers,” said Mike Pumphrey, a self-employed financial coach. Even though he’s in financial services, he didn’t hear about the program from the state.
“I mean, I help my clients sign up for Roth IRAs, as it’s kind of part of what I do in my business, so I probably should get this, right?”
Katie Pryde, who owns the comic book shop Books with Pictures, says she got many emails about the OregonSaves deadlines starting in 2018, but not from the state.
“Nearly all of them are from ADP, which is my payroll processor,” Pryde said, “because they wanted to sell me [other] retirement savings services!”
The first email she received from the state about the program didn’t make it clear it was a mandate.
“It’s just written as a fun thing that you can do!” She polled her employees about whether they wanted a retirement plan through Oregon, and none of them were interested, so she ignored it.
She eventually signed up for OregonSaves when she realized it was a requirement, but none of her employees participated. Pryde ended up switching over to a different retirement plan through her payroll provider. It cost her a little more, but was less frustrating to use.
Pryde said she wishes lawmakers would empathize more with busy small business owners when creating programs like this.
“I love that Oregon as a state is taking care of its workers,” she said of initiatives like OregonSaves and Paid Leave Oregon. “These are all really great, well-intentioned initiatives.”
But she said that keeping up with new programs is hard for small businesses like hers without a human resources team.
“Every time something gets more complicated, more business owners are going to drop out, stop listening, stop administrating, stop paying attention,” Pryde said.
‘They can’t find businesses in their systems’
Businesses that missed the July 31 deadline to either enroll in OregonSaves or certify that they already offer another retirement could face penalties of $100 per employee. However, the state of Oregon says that as of yet, no penalties have been assessed.
And many businesses were surprised by the deadline.
Mike Pumphrey, the self-employed financial coach, found out about the program from a listserv email a week before the deadline—instead of from Oregon. When he called OregonSaves, the staff couldn’t find his business in their database, even though it’s registered with the Oregon Secretary of State, so they couldn’t enroll him.
Jenna Goldin co-owns a tax preparation business, Shift Accounting, which has two owner-employees and is an s corporation registered with the Oregon Secretary of State. When she called OregonSaves, they couldn’t find her business in the system either. Shift Accounting already has a retirement plan, but Goldin was frustrated that she couldn’t register her exemption to comply with the law. None of her business clients had received communication from the state.
“It’s not clear how to make oneself exempt,” said Goldin, “especially when they can’t find businesses in their systems.”
The bookkeeper Christina Barbeau encountered similar roadblocks when registering five of her clients for OregonSaves. One client acquired a pizza restaurant this year, and the workers were excited to start saving for retirement. But, when Barbeau called to set up an account, the OregonSaves hotline employees said that new businesses could not enroll in OregonSaves for their first two years. Oregon Treasury staff said Vestwell hotline staff were incorrect; and that there is no waiting period for new companies.
Vestwell, the brokerage company that has managed OregonSaves funds since 2021 as part of a public-private partnership, has been sending out three notices to all employers letting them know about approaching deadlines. Treasury Department records state that more than 59,000 small businesses received letters or emails this year as part of the final wave letting them know about the program.
The Oregon Treasury said the mailing list was cobbled together from other state agencies, such as the Bureau of Labor and Industries. OPB confirmed that every business mentioned has active business registration with the Oregon Secretary of State.
Treasurer Read said that outreach has been a learning curve. “It’s a battle to make sure that we’re, we’re getting to all the people in a way that they register and receive and are aware of. So it’s not perfect.”
“This is one of the downsides of being first. The upside, from a national perspective, is that a relatively smaller state like Oregon is figuring a lot of these things out,” Read said.
Earlier this year, OregonSaves celebrated a milestone: It passed more than $200 million invested by over 100,000 savers. The average enrollee is investing $174 per month and setting aside 6.5% of their gross income.
Read said that even with the hiccups, the ground-breaking program will be worth it. “The real power of this is gonna come decades from now. When you can imagine the young person who has their first job and, and even without seeking it out, gets into this habit. Decades from now, they’re going to have choices.”
Now 13 states have followed Oregon with similar retirement programs, including California. Twenty-two other states have proposed legislation this year to copy OregonSaves to their own state.