California Senate Passes Bill To Investigate Creating Guaranteed Retirement Savings Plan
The California State Senate passed SB 1234, a bill that would set up a portable, guaranteed retirement savings plan for employees of private businesses that do not offer retirement plans to their employees. If passed by the Assembly and signed by Governor Brown, studies would be launched concerning creating a California Secure Choice Retirement Savings Trust which would provide private sector California workers with a guaranteed retirement income to supplement social security and help to ensure the retirement security of working Californians.
Each eligible employee would automatically be enrolled in the program. However, any employee could opt out of it if he or she wished to do so. Unless otherwise specified by the employee, a participating employee would contribute 3 percent of the employee’s annual salary or wages to the program. That program would pool all the funds it receives and invest them to build its value over the years. When each enrolled worker reaches retirement age, he or she would get a monthly check from the program to supplement any other retirement payments available to the retired person.
The program would not be available to some railroad and airline employees or employees covered by a valid collective bargaining agreement that expressly provides for a multiemployer Taft-Hartley pension plan. The program would also not be available to employees of the federal government, the state, any county, any municipal corporation, or
any of the state’s units or instrumentalities, or employees of employer with less than five
employees.
The program is intended to address the risk that middle class families in California face of not having enough retirement income to meet even basic expenses, as nearly 50 percent of middle-income California workers will retire at or near poverty.
Author: Russell Naymark
