California Enacts Groundbreaking Pension Legislation
|For Immediate Release||Contact: Nancy Hwa, 202-296-3776|
|October 04, 2012||www.pensionrights.org|
The Pension Rights Center and the Schwartz Center for Economic Policy Analysis (SCEPA) join in applauding Governor Jerry Brown for signing into law the California Secure Choice Retirement Savings Trust Act. The Act, championed by Senator Kevin de Leon and Senate President Pro Tem Darrell Steinberg, lays the groundwork for a broad-based, state-administered retirement savings plan that will expand coverage for private-sector workers who do not have an employer-provided pension or retirement savings plan.
“This legislation will help millions of hard-working Californians save for retirement, and we thank Governor Brown for signing it,” said Karen Friedman, executive vice president and policy director for the Pension Rights Center. “While Congress is exploring solutions at a national level, the passage of the California law is further recognition of the retirement crisis and the need to expand coverage to low- and moderate-wage earners.”
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, New York, New York City, 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.
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