Feasibility Study: Oregon Retirement Savings Plan

The Oregon Retirement Savings Plan (ORSP) will require employers who offer no retirement plan to automatically enroll their employees in a Roth IRA. For ORSP to succeed, it has to be financially self-sufficient. The following analysis shows that ORSP will be cash-flow positive (annual revenue will be equal to annual operating costs) within four years and net positive (revenue will cover both start-up and operating costs) in seven years. These results are based on a set of initial assumptions for program design and participant behavior, and include annual fees of 1.2 percent (or 120 basis points) on asset balances. Once start-up costs are paid back, fees can be greatly reduced to as low as 30-50 basis points. These results hold under a variety of scenarios, but the number of years needed to break even would go up if the state chooses a default contribution rate that is below 5 percent, account maintenance costs are higher than expected, or initial fees are set too low. Appendix A contains a range of outcomes based on alternative assumptions. Program costs are based on discussions with Bridgepoint/Segal, other state feasibility studies, international experience, costs faced by existing IRA providers, and discussions with the ORSP Board. …