Oregon, along with six other states, has taken steps to confront the growing social crisis of too many Americans being woefully unprepared for retirement. Congressional action has undermined this effort. And Oregon employers are caught in the cross-fire.
Last month, Oregon’s Legislature passed HB 2960 that established a state-sponsored retirement plan called OregonSaves, an IRA-based, auto-enrollment plan seeking employee deferrals equal to 5% of compensation. Oregon employers with 100 or more employees—unless exempt because they already offer a tax-qualified retirement plan—will need to comply with the program starting November 15, 2017. All others Oregon employers will be subject within a 2 ½ year phase-in period.
During the Obama administration, the Department of Labor issued safe-harbor rules exempting states’ and municipalities’ auto-IRA programs from ERISA, thus making it safer for states to offer a program like OregonSaves. Congress, using Congressional Review Act resolutions 66 and 67, voted recently to overturn the DOL’s rules. Despite this setback, Oregon’s Treasurer indicated the state will move forward with its program.
Some opponents to programs like OregonSaves objected to the ERISA exemption made available only to state and municipality-sponsored retirement plans. Why not create some relief for all employers?
Other opponents objected to states and municipalities competing with financial service firms. Are they afraid governments can do a better job at this than they? Are these the same special interest groups fighting the Fiduciary Rule?
We congratulate Oregon employers who sponsor retirement plans despite the liability, operational burdens, and costs of contributions. Access to such retirement plans can make a significant difference in your employees’ ability to enjoy a comfortable and secure retirement. If any consolation, know this: The design flexibility of your retirement plan offers a superior benefit to OregonSaves. And ERISA does offer you the ability to claim important safe harbor and statutory liability protection.
We understand the arguments against the DOL’s favorable treatment for OregonSaves. As a Certified B Corp™, NWCM supports all efforts to confront the growing crisis of too many Americans with inadequate savings for retirement. An estimated 55 million Americans—half of all private sector employees—do not have access to a workplace retirement plan. If a state-sponsored plan helps more people save for retirement, we at NWCM are all for it!
Click here to access the OregonSaves website.