State intrusion into small business retirement plans

ferree-steveSteve Ferree,
Chair of Small Business Advisory Council to the City of Portland

I am a small business owner with 34 employees. For 14 years, I have operated a service business. The notion of a state retirement fund for the private sector is of great concern to me.

I have been following HB 3436 since it was passed in 2013 and the resulting Oregon Retirement Savings Investment Task Force meetings, including reading the draft report. I understand the identified problem: How do we get Oregonians to save for retirement? However, I do not agree with the proposed solution in the draft report.

We offer a generous 401(k) program to our employees, matching $.50 on the dollar — up to 5 percent of the employee’s annual income. Although we educate our employees on this benefit, and several have wages double Oregon’s average wage, only a small percentage participate. The reason for non-participation is financial demand, living paycheck-to-paycheck and financial uncertainty. Ease of access is not the hindrance.

Education is a key ingredient to stave off this future tsunami of need by older Oregonians. This prescription needs to start as early as kindergarten with curriculum that creates a state of savers from young adults to retirement age.

Small business owners like me are troubled by the report’s recommendation for an automatic enrollment, state retirement plan that is facilitated through the employer. The question of federal Employee Retirement Income Security Act (ERISA) liability for the state and employers has not been answered. Until this is determined, continuing efforts should be stopped as HB 3436 clearly states that the task force must not make any recommendations that would kick in ERISA laws.

Testimony was provided during the task force meetings suggesting the likelihood that ERISA laws would apply under the draft recommendations. This provision of HB 3436 has not been given proper priority.

The recommendations of the draft report also effectively places the state in competition with the private sector, which is replete with banks, companies, agents and programs to offer simple, basic retirement savings to individuals, employers and employees. The recommendations of the task force represent needless growth of government bureaucracy on the backs of small businesses.

As many of us are just now recovering from the recession, the last thing small businesses need on top of the existing regulatory threats of paid sick leave, increased minimum wage, health care mandates and proposed road fees is another program of mandates, regulations, liabilities and costs for small businesses to administer.

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