More than 1 million Oregonians lack work retirement plans

New market research shows that the retirement savings crisis in Oregon is more profound than initially believed: More than 1 million people currently lack the ability to save for retirement through employers, according to the updated figures.

The statistics help to underscore the importance of the under-development Oregon Retirement Savings Plan, which was passed by the 2015 Legislature and will provide a simple path for workers and employers to allow every Oregon worker to start saving. The plan is being designed by the Oregon Retirement Savings Board and will launch in mid-2017.

“More than 1 million Oregon workers and their employers have much to gain with the Oregon Retirement Savings Plan,” said State Treasurer Ted Wheeler, the chairman of the Retirement Savings Board. “In addition to improving the quality of life for hundreds of thousands of people, more retirement savings will help lighten the burden on already strained, taxpayer-financed safety net programs.”

The updated figures – compiled by the Center for Retirement Research at Boston College — were presented last week to the Oregon Retirement Savings Board, and include Oregon workers whose employer does not offer a plan, workers who are ineligible for a plan that is offered, and self-employed Oregonians who do not have a retirement savings plan.

The largest portion, about 834,000 people, represents workers whose employers do not offer any savings option.

The new figures represent a more than 40 percent increase in the estimated Oregon population of workers who do not have access to a work-based plan.

The number of workers without access to a retirement-savings plan at work, by region, were:

Portland area – 538,938 total (349,704 without a savings option at work, 94,577 self-employed with no option, 94,657 with a plan at work but not eligible)
Salem area – 112,777 total (80,981 without a savings option at work, 11,117 self-employed but no option, 20,679 with a plan at work but not eligible)
Eugene-Springfield area – 103,174 total (50,150 without a savings option at work, 23,712 self-employed but no option, 29,312 with a plan at work but not eligible)
Bend area – 77,738 total (42,157 without a savings option at work, 24,924 self-employed but no option, 10,657 with a plan at work but not eligible)
Medford area – 58,605 total (28,401 without a savings option at work, 10,981 self-employed but no option, 19,223 with a plan at work but not eligible)
All others – 160,162 total (80,766 without a savings option at work, 36,546 self-employed but no option, 42,850 with a plan at work but not eligible)

The percentage of those without access to a savings option is higher among women, minorities and people with a high school education level or less. Small businesses are less likely to offer a savings option to their employees, and a simple state-based plan will allow those workers to accumulate personal assets.

Research shows that workers save much more money, and save more often, when an option is available through payroll deductions.

The state-administered option will serve a population that is not being served by existing retirement-savings plans. The program also includes a strong priority of improving financial literacy to encourage more robust retirement savings for all Oregonians — and to make smart savings choices. A key goal of the program is to promote a new Oregon culture of saving.

The board is establishing the rules and framework for how the state-administered plan will work, and is moving toward selection of a private-sector manager who will oversee the investments of the retirement accounts.

The program will pool contributions from workers into their own personal accounts. The plan will not be a pension, will not be connected in any way to the Oregon Public Employee Retirement Fund, and will not offer any guarantee of returns by the state or employers.