California Governor Signs Bill To Create State-Managed Savings Program For State’s Private-Sector Workers

LG California Governor Signs Bill To Create State Managed Savings Program For States Private Sector Workers

September 30, 2016

September 30, 2016

 

 

In early January 2016, WIA reported on a VPR story about an AARP study that revealed how 45 percent of Vermonters working in the state’s private sector do not have any retirement benefit whatsoever. The scary finding was cited in a early winter hearing at the State House, where a committee of lawmakers was exploring ways for workers without any retirement plan to save some money, including looking at if it’s feasible to create a pension system for private-sector workers—possibly modeled on existing plans for state employees, teachers or others. No action was taken this session, but this is not the case in California.

The Sacramento Bee reports on September 29 that Governor Jerry Brown signed legislation this week to create “The California Secure Choice Retirement Savings Program;” a state-managed savings program for private-sector workers without one. The program could begin accepting its first contributions in 2018, and the program is open to Californians working someplace with 100 or more employees. Within a year, it applies to all companies with five or more workers.

From the story: “The Secure Choice program, supporters say, would take advantage of economies of scale to automatically put a share of workers’ wages into a retirement fund at low cost, unless they opt out. Contributions would start at 3 percent of a worker’s salary. While employers would be required to set up the plans to accept contributions from workers’ paychecks, they would not be required to contribute to the retirement funds.”

Washington, Illinois and Oregon are also working to set up similar programs.  

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