Oregon, which recently launched a statewide program to ensure all private-sector workers have access to an employer-based retirement plan, will partner with other states that want to adopt a similar framework, with the aim of easing the launch of these so-called auto-IRA programs.
Oregon
became the first state to automatically enroll workers without access to a 401(k) or similar plan into an individual retirement account, with money contributed via payroll deduction. The state launched the program,
OregonSaves, in July 2017.
California and Illinois began their own pilot programs this year, and Connecticut and Maryland are in the process of rolling out their own. The states are trying to spur greater retirement savings through the workplace, where research shows individuals are the most likely to save.
Oregon has been approached by other states looking to partner and leverage the OregonSaves framework to launch their own statewide initiative, said James Sinks, spokesman for the Oregon state treasury. He declined to disclose which states have shown interest.
"If there are states out there who don't have the means, resources or human capital but would like to do it in their state, we do offer some sort of collaboration," said Michael Parker, executive director of the Oregon Savings Network. "States could have a program operating off the Oregon rails."
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Mr. Sinks described the conversations as "really early" and that it is too soon to provide specifics around what form the collaboration will take.
"We have an existing program that is working quite well," he said. "Other folks have expressed interest in utilizing some of the work we have already accomplished rather than starting from scratch, and we are happy to work with partners if it makes sense."
Oregon has partnered with some other states around ABLE plans, which help cover disability expenses, and that may serve as a blueprint, he said.
John Scott, director of retirement savings at The Pew Charitable Trusts, envisions some sort of private-label arrangement, whereby another state or group of regional states (the Mountain States, for example) piggyback off of Oregon's program but market it as their own.
While these states would still have to pass legislation to be able to offer an auto-IRA program, being able to leverage existing technology, platforms and know-how could make it more attractive to do from the perspective of cost and financial viability, Mr. Scott said.
Echoing that sentiment, Mr. Sinks said the Oregon Retirement Savings Board "put substantial time and energy into crafting OregonSaves, spoke to experts nationwide, and used investment best practices to come up with both the investment model and back-end systems that are working well."
(More: State auto-IRA programs poised to catch advisers' attention)
It took Oregon roughly two years from the time the state legislature passed House Bill 2960, which established the auto-IRA program, to launch it. OregonSaves has more than $10 million in assets, and roughly 48,000 employees have enrolled in the new program. It's being rolled out in phases through 2020.
Some opponents of the state auto-IRA concept believe the programs offer a level of competition with the retirement industry and will create a patchwork of programs across the country.
Proponents downplay these critiques, saying the programs don't vary much state to state and the programs are public-private partnerships. They also believe the state initiatives will spur greater use of 401(k)s since employers will be mandated to offer some sort of workplace retirement plan, whether it be the auto-IRA or a 401(k)-type plan.
