Editorial: Oregon’s scary solution for a scary problem
Published 5:00 am Saturday, May 25, 2013
House Bill 3436 is a well-intentioned, carefully crafted and alarming product of the Oregon Legislature.
It creates a task force, the Oregon Retirement Savings Investment Board, to go about the task of creating the Oregon Secure Retirement Plan.
The idea is to develop something like the Oregon College Savings Plan for retirement. Oregonians could put money into an account that would be invested by the state. People in the private sector who have no retirement option through an employer could sign up.
There are two parts that are frightening about this plan: the problem and the solution.
Oregon has a retirement problem, just like the rest of the country. There are many ways of looking at the numbers, but basically Americans aren’t saving enough for retirement. Social Security is not going to be enough.
“Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts,” wrote Teresa Ghilarducci, a professor of economics at the New School for Social Research, in The New York Times.
Sure, maybe people can work into their 70s these days, but that’s only if they can find a job and are healthy enough to keep it.
The proposed solution comes with its own dose of anxieties.
What could possibly go wrong if Oregonians give the state their money to invest?
The investments could fail. Oregonians could demand compensation from their elected leaders. The elected leaders named the program the Oregon Secure Retirement Plan. Doesn’t that create a promise that it will be secure? Legislators have also been loathe to reduce any benefits in the state employees retirement system called PERS. Surely workers in the private sector would get the same sort of protection, right?
Legislators recognized this would be an issue, so they wove some protection into the bill. The bill says the plan may not include any guarantee or cause the state to include any liability or obligation for savings or benefits of people in the plan.
How can that be? It’s a state program. How can the state hold itself harmless from liabilities for a program it manages? Who is responsible then? Does that mean that nobody can be held responsible if the program is mismanaged? Who would want to invest in that? Lack of accountability is not a selling point.
The other protection woven into the bill is to try to protect employers whose employees participate. The bill says the plan may not require any financial obligation or liability from employers with regard to investment or investment performance. Really? Does that mean state employees are going to go around to every one of these employers and answer all the questions, help people with the forms, and create a payroll deduction that has absolutely no impact on a company’s existing payroll system?
The Legislature has flamboyantly demonstrated with PERS that it cannot manage a retirement system effectively. The task force has a lot to do to give Oregonians confidence in an Oregon Secure Retirement Plan.