Jul. 1--Nearly half of Californians will retire into economic hardship, and half have no retirement assets, according to the UC Berkeley Labor Center.
On Monday, the state unveiled a government-run retirement savings program, CalSavers, aimed at helping the 7.5 million Californians who are on their own when it comes to retirement.
"With California's size and diversity, this pioneering program represents a major milestone -- for California and the entire nation," Treasurer Fiona Ma said in prepared remarks. "Creating CalSavers solidifies our position as a leader in growing the national movement to help all Americans retire with dignity."
CalSavers is a public-private partnership overseen by a nine-member board, chaired by Ma. The state is partnering with companies Ascensus, which will serve as program administrator, State Street Global Advisors and Newton Investment Management, which manage the program's assorted funds, and AKF Consulting, Meketa Investment Group and K & L Gates, which will provide various forms of consulting.
Employers often cite administrative difficulties, fiduciary liability and additional cost as reasons for not offering retirement plans to their employees.
"CalSavers addresses all three of these challenges head-on: it's easy to facilitate, employers have no fiduciary liability, and there are no fees for employers. Employers are only responsible for providing us with their employee roster and then remitting employee payroll contributions each pay period," CalSavers Executive Director Katie Selenski said in a statement.
Ma's office called the CalSavers unveiling the culmination of "a decade-long dream" first introduced into the Legislature by former Sen. Kevin de León in 2008. De León later authored two bills that formed the framework for CalSavers.
The state launched a pilot program of CalSavers beginning November 2018, which now has 1,647 contributing accounts with an average monthly contribution of $91 across all full- and part-time workers, with an average savings rate of 4.93 percent per month.
Starting Monday, eligible employers of all sizes can visit www.calsavers.com to sign up.
California law requires employers with more than 100 employees to offer a retirement plan by June 30, 2020; employers with more than 50 employees by June 30, 2021; and employers with more than five employees by June 30, 2022.
Self-employed and "gig economy" workers, such as Uber and Lyft drivers, will be eligible to sign up beginning Sept. 1.
The Howard Jarvis Taxpayers Association last year sued to block CalSavers, arguing the program violates a federal consumer protection law that sets standards for retirement plans offered by employers.
The state won the first phase of the lawsuit in March when a federal judge dismissed the complaint from the taxpayers association, allowing California to move forward with the savings program.
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