Oregon is on track to be the first state to implement a mandatory retirement-savings plan for workers who aren’t already covered by their employers, and there’s no telling how it will go over with thousands of people who don’t currently save at all.

“Oregon will be in uncharted waters, despite the best efforts to anticipate what might be ahead,” according to a market analysis conducted by the Center for Retirement Research at Boston College. The Oregon State Treasury commissioned the analysis to identify the potential assets and pitfalls in carrying out the Oregon Retirement Savings Plan.

About 1 million Oregon workers lack access to employer-sponsored retirement savings, mostly because they work in industries where such plans aren’t a commonly offered benefit. Oregon is one of several states, including California, that passed legislation to remedy the retirement-savings gap, but Oregon is much further along in putting the plan in place, said Joel Metlen, manager of public engagement.

One of the hurdles facing Oregon and other states is persuading workers, who are already financially stressed, to stick with saving for retirement. The assets accumulated under the state-sponsored plan could be the first significant savings for many workers, according to the Boston College analysis.

If those workers slow their savings or cash out, the plan will be more expensive for those who remain.

“There is that risk. That’s why we did the feasibility analysis,” Metlen said.

The State Treasury is drafting rules and soliciting input from employers, who starting next year will have to register their employees. Then the state will automatically enroll workers in a savings plan at a rate of 5 percent.

Automatic enrollment has been shown to increase savings rates in employer-sponsored 401(k) retirement plans, but workers who aren’t already covered by these plans have less capacity to save and weaker understanding of concepts like compounding interest, according to the Boston College analysis.

For example, 27 percent of Oregon workers who aren’t covered by retirement plans spend more than they make, compared with 19 percent of Oregonians who are covered.

Earlier this month the State Treasury chose Ascensus Inc., based in Dresher, Pennsylvania, to administer the plan and is negotiating a contract and fee, which will range from 0.8 percent to 1.2 percent of the assets under administration.

By year 15, the plan could have 534,000 accounts and $8.5 billion in assets, according to the Boston College analysis.

If Oregon is successful in driving high rates of participation, workers could pay less for plan administration in the future, Metlen said. There’s no penalty for withdrawing from the plan, so whether people stick with it could depend on the state’s message.

“There’s more work for us to do in that way,” Metlen said.

Ascensus is one of the top administrators of 529 college-savings plans, so the company has some experience marketing directly to consumers about state-sponsored investment accounts, Metlen said.

In addition, the State Treasury is reaching out to nonprofits that specialize in consumer financial education, Metlen said. But the main point of contact for educating workers will be employers, Metlen said. An estimated 64,000 businesses in Oregon don’t offer retirement savings and so will be required to register their employees, facilitate their enrollment and present the message crafted by the state and Ascensus.

The State Treasury’s approach will be to encourage people to save what they can, Metlen said. More complex concepts will be introduced as assets are accumulated, he said.

“It’s going to be a journey,” he said. “We don’t expect everyone to know everything about retirement on the first day.”

— Reporter: 541-617-7860, kmclaughlin@bendbulletin.com .