Though state and municipal- run retirement plans have been met with much opposition from the Trump administration, at least one state has decided to move forward anyways.

Oregon has launched a program that requires private employers to either offer their own 401(k) plans or automatically sign employees up for state-run individual retirement accounts.

According to this article from TIME, one in three Americans have saved $0 for retirement. The Fiscal Times reports than in Oregon alone, more than one million workers don’t have a retirement plan option through their employers. So, it’s clear that saving for retirement is very difficult.

Dubbed OregonSaves, the program kicked off as a pilot phase but will gradually extend to all businesses by mid-2020.

How it will work

Employees will be automatically enrolled in the program unless they choose to opt out. If they do want to opt out, they will have 30 days to do so. Their contributions of up to 10 percent of pre-tax income will be made through automatic payroll deductions.

Employers won’t be responsible for contributing to the retirement accounts. Their primary duty will be to pass along information about the program and to handle payroll deductions.

States such as Illinois, California, Connecticut and Maryland have all passed similar auto-IRA programs and are set to begin phasing out over the next couple years. You can read more details on those from our blog post here.

To refresh: The Obama administration’s Secure Choice plan required companies with five or more employees to either offer their own 401(k) account or automatically sign up employees for state-run retirement accounts like the Roth IRA.

The OregonSaves plan requires employees to pay an annual service fee of 1.05 percent of their investments to an Oregon Retirement Savings Board handling their accounts and overseeing investments.

Employee contributions to their IRAs would begin at the initial rate of five percent of their compensation and gradually reach the maximum of 10 percent.

Support and criticism

The AARP has strongly supported state retirement plan approach saying they offer an alternative to all those U.S. workers who don’t have any retirement savings through their employers.

Critics, including the Investment Company Institute, Insured Retirement Institute and Financial Services Institute Inc., warned that the approach would place private-sector retirement plans at an economic disadvantage.

Whatever your thoughts on state and municipality-run retirement plans, states are seemingly going to go through with their plans. PrimePay can help. To learn more about our EZIRA solution, please send a note to

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