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Tobias Read, OregonSaves

Oregon treasurer, in from the start, follows through on auto-IRA plan

As a state representative, Tobias Read sponsored legislation that created the OregonSaves program.

OregonSaves is the first state-based automatic IRA program, and Tobias Read has been there from the beginning.

As a state representative, he sponsored the enabling legislation for the program, which offers employees in the private sector a chance to invest in a retirement savings program if their employers don't offer one.

As the Salem-based Oregon treasurer and chairman of the Oregon Retirement Savings Board, he has led the design, implementation and management of the program, which rolled out across the state in late 2017.

"The effort was both groundbreaking and building from the ground up," one of the program judges wrote about OregonSaves and the role of Mr. Read, who won an Innovation Award. "It took vision and great organization while overcoming several significant barriers. It should provide a playbook for other states to follow."

OregonSaves enables workers whose employers don't have a retirement plan to invest in a Roth IRA. The program sets an automatic deferral of 5% of pay per year, plus an annual 1% auto escalation until the retirement contribution reaches 10% of pay. Employees can opt out, and they can contribute more up to the limits set by Roth IRA rules.

Although there was "a certain level of skepticism and a certain amount of inertia with a new approach," Mr. Read said it was important to conduct a methodical, comprehensive study of retirement issues before offering a program.

The law was enacted in 2015; a pilot program with about a dozen employers was launched in July 2017. The program was made available to about 40 employers November 2017 and to all employers a month later.

"We tried very hard to make it as easy as possible," said Mr. Read, adding that the path between the law's passage and the pilot program required extensive research, such as that from the Boston College Center for Retirement Research, and meetings with retirement experts, such as executives of AARP.

OregonSaves also held a series of public meetings with employer groups, financial services providers and consumers. "We got a lot of feedback from employers and employees" after the legislation was enacted, he said.

Mr. Read said OregonSaves executives settled on 5% even though many private-sector defined contribution plans use a 3% deferral. "We did a bunch of research and we didn't see a significant drop-off" among participants at the 5% level vs. the 3% level, he said.

As for the combined auto features' amount, "that's a pretty good spot if they can get to 10%," he said.

By mid-October 2018, 1,275 employers had registered for the program. The number of employees who were auto-enrolled or who enrolled on their own is 42,989, or 73% of eligible employees. The average contribution is $115.46 per month, the average savings rate is 5.15% and the total invested assets in the program is $8.33 million.

"It's evident how much effort was put into building this program," one judge wrote. "The program has the potential to put many employees on the path to retirement security and raise the conversation around the importance of retirement plans."