Clackamas, Oregon -- OregonSaves, a simple solution to Oregon's retirement crisis, is ready to launch in 2017, but a possible move in Congress could complicate the successful roll out of the program that would help 1 million Oregonians have access to retirement savings.
AARP today announced its opposition to a House of Representatives proposal that would set up a roadblock for states such as Oregon moving to establish workplace savings programs for the millions of employees now without workplace plans.
In a letter to Members of Congress, AARP Executive Vice President Nancy A. LeaMond urged House members to vote no on a Congressional Review Act resolution to overturn a Department of Labor (DOL) rule last year that reaffirmed states have the ability to help support private sector savings programs for small businesses.
Small business owner Saleem Noorani, who owns OLCC liquor stores in the Willamette Valley, said he is looking forward to the start-up of OregonSaves because it will help his employees be more successful in saving for retirement. "My employees are really looking forward to this new program, and we don't want Congress hampering Oregon's efforts," Noorani said.
"Employees are 15 times more likely to save for retirement if they have access to a payroll deduction savings plan at work," said Joyce DeMonnin, Communications and Media Relations Director. "Oregon is the first state in the country ready to roll out a workplace savings plan -- and we're confident it will be a success."
Oregon is one of seven states already have approved private sector workplace programs -- Illinois, Oregon, California, Maryland, Connecticut, Washington, and New Jersey.
Noting that upending the DOL rule would have a "significant chilling effect" on states adopting workplace plans, LeaMond wrote: "Congress should support these important state savings programs, not take steps to end them."
"Today, 55 million working Americans do not have a way to save for retirement out of their regular paycheck...Those who do not save enough for retirement risk become dependent on social safety net programs, costing taxpayers down the line." In Oregon, the average Social Security check each month is just $1,300. There are currently about 800,000 Oregonians who receive Social Security (6% of whom are children), and Social Security lifts 183,000 Oregonians out of poverty. It is the sole source of income for 30% of retired Oregonians.
"With OregonSaves, more Oregonians will be successful in saving for retirement and live a life with greater dignity and choice," said Jerry Cohen, AARP Oregon State Director. "This is a sensible program that will help Oregon workers achieve a better quality of life for themselves and their families."
LeaMond also pointed out that lack of access to workplace savings is notably greater for people of color -- only 54 percent of African American and Asian employees and 38 percent of Latino employees work for an employer that sponsors a retirement plan, compared to 62 percent of white employees.
With strong support from AARP, more than half of the states are considering ways to address economic insecurity in retirement.
The letter noted that the DOL rule last August provides additional momentum for the public-private partnership initiatives that aim at "increasing personal savings rates among small business employees."
The AARP letter follows:
February 8, 2017
Dear Member of Congress:
On behalf of working Americans who struggle to save for their retirement, AARP urges you to vote against a Congressional Review Act resolution to overturn the Department of Labor's final rule on "Savings Arrangements Established by States for Non-Governmental Employees". AARP, with its nearly 38 million members in all 50 States and the District of Columbia, Puerto Rico, and U.S. Virgin Islands, is a nonpartisan, nonprofit, nationwide organization that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse.
Today, 55 million working Americans do not have a way to save for retirement out of their regular paycheck. Despite decades of federal incentives, employer sponsorship of retirement savings plans has remained static. The lack of employer-sponsored savings plans has a direct impact on the retirement readiness of workers, because employees are 15 times more likely to save if they have access to a payroll deduction savings plan at work.
In response to the stubborn lack of growth in employer-sponsored retirement savings plans, numerous states have removed regulatory and operational barriers for small businesses who want to offer a retirement savings vehicle to their workers. These bi-partisan, commonsense solutions are known as OregonSaves, Secure Choice or Work and Save. In the last two years more than half the states considered a variety of options to provide employers and their employees with low-cost savings options, including Arizona, California, Colorado, Connecticut, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin.[i]
In 2016, the Department of Labor promulgated a rule providing states with guidance on how to enter into public-private partnerships aimed at increasing personal savings rates among small business employees. This rule makes it clear that any automatic IRA program established by a state must remove the operational burden of running a retirement plan from small business owners. In fact, it asserts that a small business owner's only interaction with a Work and Save plan would be to facilitate payroll deductions for these individual savings plans.
A Congressional Review Act resolution to overturn this rulemaking will have a significant chilling effect on states, sending the political message that state flexibility is not a priority. There is successful precedent for states to take action to promote personal financial responsibility. When college savings plans, known as 529 plans, were created twenty years ago, less than $2.5 billion had been saved for college in these programs. Today, individuals have put away more than $253.2 billion for college in 529 plans. Similarly, in the retirement context, states are acting as facilitators, aggregating small businesses to get the cost benefit of pooling. All private financial firms can bid to invest the savings from employees. The only employer role is to set up the payroll deduction and forward materials to employees, a role employers already perform for unemployment insurance, workers' compensation, and other similar programs.
Often, states are the pioneers of solutions. State governments more directly interact with both workers and employers, and state policymakers are aware that growth in the number of older Americans who do not have a secure retirement will be felt most acutely in cities and states. As laboratories of change, states are often more willing and able to test creative solutions to improve the retirement security needs of their workforce while respecting the unique characteristics and demographics of each jurisdiction. The lack of options to save for retirement at work is a persistent problem that demands action today. States desire flexibility to move forward with innovative reforms -- Congress should not curtail state efforts to promote retirement savings.
Americans need easy savings options. No one wants older Americans solely dependent on Social Security. Employer plans are not growing and states are trying to meet the needs of their citizens using private investment firms. Lack of access to workplace savings plans is especially acute for people of color-- only 54 percent of African American and Asian employees and 38 percent of Latino employees work for an employer that sponsors a retirement plan, compared to 62 percent of White employees. Those who do not save enough for retirement risk becoming dependent on social safety net programs, costing taxpayers down the line. In fact, states taking action today could save taxpayers as much as $4.8 billion in the next ten years. Congress should support these important state savings programs, not take steps to end them.
AARP urges Congress to support private retirement savings and vote no on a Congressional Review Act resolution to overturn the Department of Labor's rule on Savings Arrangements Established by States for Non-Governmental Employees. If you have further questions, please feel free to contact me or have your staff contact Michele Varnhagen on our Government Affairs staff.
Nancy A. LeaMond
Executive Vice President and
Chief Advocacy and Engagement Officer
[i] Other states considering action this year include: Alaska, Arkansas, Kansas, Montana, Nevada, Oklahoma, Tennessee, and Texas.
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CLACKAMAS -- AARP today launched a comprehensive campaign to protect Medicare in the face of proposals by some in Congress that would hurt hardworking Oregonians who have paid into the program their entire working lives.
Congressional proposals to change Medicare into a voucher system would dramatically increase health care costs and risks for both current and future retirees. Over the next few weeks, AARP staff and volunteers will meet with members of Congress to underscore that this proposal would put seniors' benefits at risk and threaten the guarantee of benefits for 808,504 workers, ages 50-64, who are currently paying into the system.
"Older Oregonians depend on Medicare for affordable healthcare," said AARP State Director Jerry Cohen. "A voucher system would dramatically increase health care costs and risks for current and future retirees. It could mean many thousands of dollars out of their own pockets."
The average senior, with an annual income of under $25,000 and already spending one out of every six dollars on health care, counts on Social Security for the majority of their income and on Medicare for access to affordable health coverage. "AARP will continue to oppose changes to current law that cut benefits, increase costs, or reduce the ability of these critical programs to deliver on their benefit promises." Cohen said. There are currently 709,022 Oregonians who rely on Medicare for health care insurance.
AARP's Public Policy Institute also has put out new, detailed analyses about Medicare, including a fact sheet about Medicare in Oregon and Premium Support and the Impact on Medicare Beneficiaries. The report notes that "premium support could force people with fewer financial resources to leave traditional Medicare and enroll in less-expensive plans, with more limited benefits and restrictive provider networks." (http://www.aarp.org/content/dam/aarp/ppi/2017-01/New%20State%20Fact%20Sheets%20(1.30.2017)/AARP1104_Oregon_FS170130.pdf)
Additionally, the campaign includes television and digital advertising that urges Congress to keep President Trump's commitment on Medicare. During the election, President Trump was very clear about his position, saying, "I am going to protect and save your Social Security and your Medicare. You made a deal a long time ago."
A new website for the campaign -- www.aarp.org/protectmedicare -- also launched today. "We'll be working with our volunteers statewide and our 500,000 members to make sure our members of Congress understand how important Medicare is to Oregon, and we urge others to do the same," Cohen said.
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