Auto-Enrollment Retirement Plans for the People: Choices and Outcomes in OregonSaves

61 Pages Posted: 29 Jul 2020 Last revised: 5 Mar 2021

See all articles by John Chalmers

John Chalmers

University of Oregon

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

Jonathan Reuter

Boston College - Department of Finance; National Bureau of Economic Research (NBER)

Mingli Zhong

University of Pennsylvania, The Wharton School

Multiple version iconThere are 2 versions of this paper

Date Written: February 7, 2021

Abstract

Oregon recently launched an automatic-enrollment retirement savings program for private sector workers who lack access to other workplace retirement plans. We analyze participation choices, account balances, and inflow/outflow data using administrative records between August 2018 and April 2020. Within the small to mid-sized firms served by OregonSaves, estimated average after-tax earnings are low ($2,365 per month) and turnover rates are high (38.2% per year). We find that younger employees and employees in larger firms are less likely to opt out, but that participation rates fall over time. The most common reason given for opting out is “I can’t afford to save at this time,” but the second most common is “I have my own retirement plan.” At the end of April 2020, 67,731 accounts had positive account balances, holding $51.1 million in total assets. The average balance is $754, but there is considerable dispersion, with younger workers accumulating the fewest assets due to higher rates of job turnover. Overall, we conclude that OregonSaves has meaningfully increased employee savings by reducing search costs. The 34.3% of workers with positive account balances in April 2020 is comparable to the marginal increase in participation at larger firms in the private sector. Nevertheless, there are significant constraints to the savings that auto-enrollment savings plans can achieve when provided to workers in industries and firms with low wages, volatile wages, and high turnover. Our evidence suggests that employees who are opting out of OregonSaves are often doing so for rational reasons.

Keywords: Retirement, pension, government retirement plan, workplace retirement plan, saving for retirement, low-paid employees

Suggested Citation

Chalmers, John and Mitchell, Olivia S. and Reuter, Jonathan and Zhong, Mingli, Auto-Enrollment Retirement Plans for the People: Choices and Outcomes in OregonSaves (February 7, 2021). Wharton Pension Research Council Working Paper No. 2020-15, Available at SSRN: https://ssrn.com/abstract=3659731 or http://dx.doi.org/10.2139/ssrn.3659731

John Chalmers

University of Oregon ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States
541-346-3337 (Phone)

Olivia S. Mitchell (Contact Author)

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

University of Pennsylvania - The Wharton School, Pension Research Council ( email )

3302 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Jonathan Reuter

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Mingli Zhong

University of Pennsylvania, The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104
United States

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