Of course this sounds like a great idea, because saving early and often is the best way to secure a comfortable retirement. However, there are some drawbacks to a savings system with the government so closely involved.

Anne Tergesen writes at The Wall Street Journal:

Opponents—including some company owners, a trade group for small businesses and the main mutual-fund trade association—have lined up against the state initiatives. They argue that state-run programs may encourage companies to scrap 401(k) plans. They also say that lower-income workers who participate may wind up in worse financial shape if they run up debt to make up for the income they tuck away.

With several states considering legislation to authorize programs, “everybody is looking at how Oregon does,” said John Scott, director of the Pew Charitable Trusts’ retirement savings project. “If Oregon can get off to a good start, that will have a big impact” on confidence in these programs, he said.

By many accounts, Oregon’s program, called OregonSaves, has begun relatively smoothly. While only 160 employees are eligible to participate in the pilot program that launched July 1, the number is expected to surge by the Jan. 1 deadline for companies with 100 or more employees to enroll participants….

Luke Huffstutter, owner of Annastasia Salon in Portland, who was referred to The Wall Street Journal by the state, said “retirement savings is essential to morale. This is a relationship business. When a hairdresser is in a good place in life, they provide a better experience for customers.”

But other employers say they worry about the burdens the program could impose on them. Gary Peck, owner of five greeting-card and gift stores, said he spends about four hours every other week on his payroll. He said the payroll process is labor-intensive because all but five of his 35 to 40 employees work hourly and change their hours each week.

“Now I’ll have to take another step and submit money to OregonSaves,” said Mr. Peck, who is a member of the National Federation of Independent Business, which represents small employers and opposes state-based retirement savings programs.

Read more here.