A study published in Contemporary Economic Policy highlights the substantial benefits observed following the initial implementation of Oregon’s state-run retirement savings program, OregonSaves, in 2017.

OregonSaves targets Oregon workers employed by entities that do not offer a workplace retirement plan, self-employed individuals, and others in similar situations. Employers who do not provide retirement plans are mandated to automatically enrol their employees, although workers can opt-out at any point.

The study’s analysis reveals a significant increase in retirement savings among previously uncovered private sector employees, a clear testament to the program’s effectiveness. Furthermore, Oregon workers experienced a noticeable 12% rise in Individual Retirement Account (IRA) ownership after the program’s introduction.

Of particular significance are the substantial gains observed among lower-income, single, and older workers, as well as employees of very small-scale businesses. This underscores the program’s inclusive nature and its ability to benefit a wide range of individuals who previously lacked access to retirement savings options.

According to Ngoc Dao, PhD, corresponding author from Kean University, “State-mandated retirement savings policies represent an effective strategy for narrowing savings disparities, particularly among low-income workers. The Oregon model demonstrates significant public policy benefits in enhancing retirement savings for individuals without access to employer-sponsored retirement plans.”

More information: Ngoc Dao et al, Does a requirement to offer retirement plans help low-income workers save for retirement? Early evidence from the OregonSaves program, Contemporary Economic Policy. DOI: 10.1111/coep.12648

Journal information: Contemporary Economic Policy Provided by Wiley