CA Governor Signs Landmark Legislation, Expands Access to Retirement Saving Plans to More than Six Million Californians
SCEPA applauds California Governor Jerry Brown for signing the California Secure Choice Retirement Savings Trust, SB 1234, into law. The Act will expand access to retirement savings plans to the 6.3 million private sector workers who currently have do not have access to a retirement plan through their employer. The law creates the first retirement savings plan for private-sector employees administered by the state.
Statements of support for the law from State Senator Kevin de Leon, who co-sponsored the bill, and the National Conference on Public Employee Retirement Systems (NCPERS) are available online. Articles from the New York Times, which recently came out in support of the law, the Sacramento Bee, and 89.3 KPCC Southern California Public Radio also cover this landmark legislation.
The California Secure Choice Retirement Savings Program will provide a low-fee, low-risk savings vehicle that would be a win-win for employers and employees in the state. Employers will not have to worry about fiduciary or administrative duties; they will have to do nothing more than send a small percentage of an employee’s paycheck via payroll deduction into the new program, unless the employees opt out. Employees will have an efficient way of saving for retirement through the workplace. The new savings program would achieve economies of scale that would be passed on to employees in the form of lower fees without adding to the state’s pension obligations. The state must conduct a feasibility study before implementing its plan.
“When half of the workforce has no retirement plan, it is more important than ever that we come up with innovative solutions – and the states are at the forefront of this fight,” said Teresa Ghilarducci, director of SCEPA. “We hope they will be an incubator for a comprehensive national solution.” Ghilarducci is the author of Guaranteed Retirement Accounts, a policy proposal that served as a model for the California legislation.
On September 14th, the Pension Rights Center, SCEPA, and Dēmos, a New York-based advocacy nonprofit, hosted a forum with state officials to discuss proposals to expand pension coverage for private sector workers at the state level. Titled “Retirement Security for All: A Forum for State Action,” the event included officials from California, Connecticut, New York, North Carolina, Pennsylvania, and Rhode Island. With an emphasis on collaborative reform efforts, the forum was an acknowledgement of the increasingly urgent need to address a lack of retirement security.
Earlier this year, Massachusetts became the first state in the nation to pass a state-administered retirement plan for the private sector. Its plan covers employees at nonprofit organizations, while California’s plan would cover any eligible private-sector worker. Other states and New York City are considering similar arrangements.