Oregon becomes first state to launch auto-IRA program

Some see the implementation as a watershed moment for these retirement plans

Jul 5, 2017 @ 5:20 pm

By Greg Iacurci

Oregon has become the first state to launch an automatic-enrollment, payroll-deduction IRA program, known as an "auto-IRA," for private-sector workers. It brings to fruition a concept that's been discussed among policymakers for more than a decade, and represents a shot of sorts at the Trump administration.

A pilot phase of the state's auto-IRA program, OregonSaves, began Saturday with more than 10 participating employers. It is scheduled to roll out in phases, starting with larger employers in early 2018, ultimately coming on line for all employers in 2020.

"I do not think it can really be understated: Oregon is a watershed moment for this movement," said Sarah Gill, a senior legislative representative for government affairs at AARP.

Four other states — Illinois, California, Connecticut and Maryland — have passed legislation to create similar auto-IRA programs, in a play at boosting retirement-plan coverage through the workplace and ultimately boosting retirement security.

Illinois was the first state to pass legislation establishing such a program. It looks set to go live with its auto-IRA in early 2018, with California and Maryland likely following shortly behind in late 2018 or early 2019, and Connecticut a bit further behind, Ms. Gill said.

Auto-IRA programs generally mandate that private-sector employers offer a retirement plan to employees, whether a private-sector option such as a 401(k) or the state auto-IRA, which is largely hands-off for employers other than facilitating payroll deduction.

"I do think it's significant. Now we're going to start learning how well all these work," Aron Szapiro, director of policy research at Morningstar Inc., said of Oregon's launch. "This is something the policy community has been talking about for going on a decade, and now we're going to have one."

Critics of the programs, such as the Investment Company Institute, Insured Retirement Institute and Financial Services Institute Inc., say the auto-IRAs will lead to a patchwork of plans nationally, provide a competitive advantage over private-sector retirement plans, and reduce investor protections.

The Trump administration undid an Obama-era regulation promoting establishment of auto-IRAs by the states. States such as Oregon that have already passed legislation to create the programs have vowed they'd move forward despite this outcome.

Observers believe the legality of programs such as Oregon's will be tested in the courts.

Other states, such as Washington, New Jersey, Vermont and Massachusetts, have passed legislation to create additional types of state retirement programs from auto-IRAs, such as retirement-plan marketplaces or multiple employer plans.

0
Comments

What do you think?

View comments

Recommended for you

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Featured video

Events

How are broker-dealers helping 401(k) advisers adapt to a changing market?

Bryan Hodgens, co-head of LPL Financial's Retirement Partners group, says the industry is getting much better at connecting advisers to wealth management opportunities and helping scale their businesses.

Latest news & opinion

IBDs with the most CFPs

How many of the more than 83,000 certified financial planners are employed by the big independent broker-dealers?

InvestmentNews announces 2019 Innovation Awards winners

Sheryl Garrett is this year's InvestmentNews Icon.

Morgan Stanley rides wealth management train to solid first quarter

Chairman and CEO James Gorman expresses excitement about expanding into workplace plans with purchase of Solium.

Fate of New Jersey fiduciary standard could come down to politics, court

With strong support from N.J. Gov. Phil Murphy, the proposal has momentum out of the gate.

Growing wealth fuels demand for family offices

The market for serving wealthy families may be bigger than some data suggest.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print