Does the requirement to offer retirement plans help workers save for retirement?

A study published in Contemporary Economic Policy reveals significant benefits gained from the first implementation of the state-run retirement savings program in Oregon, known as OregonSaves, in 2017.

OregonSaves is available to Oregon workers whose employers do not offer a workplace retirement plan, self-employed individuals, and others. Businesses that do not offer retirement plans are required to automatically enroll employees, but workers can opt out at any time.

The analysis found that the program substantially boosted retirement savings among previously uncovered private workers. Investigators also found a 12% increase in Individual Retirement Account ownership among Oregon workers after the program’s roll-out.

Of particular note, there were considerable gains for lower-income, single, older workers, as well as workers of very small-size firms who previously lacked retirement savings plans.

“State-mandated retirement savings policies are an effective tool to narrow savings gaps, especially among low-income workers,” said corresponding author Ngoc Dao, Ph.D., of Kean University. “The Oregon model proves significant public policy gain in boosting savings for retirement among workers who lack access to workplace retirement savings plans.”