States Strive to Assist Private-Sector Workers without Retirement Savings
Only about half of workers participate in a workplace retirement plan according to The Pew Charitable Trusts. In other words, more than 30 million full-time, full-year private-sector workers ages 18 to 64 don’t have access to an employer-based retirement plan and most Americans aren’t confident they will have enough money for a comfortable retirement. States have taken notice and are taking action.
More than half of states have now introduced measures that are designed to study or create state-sponsored retirement savings plans for employees that don’t have access to one at their workplace.
The most recent state to take this issue on is California. Last month, Governor Jerry Brown signed Senate Bill 1234 into law, which created the California Secure Choice Retirement Savings Trust. The law will provide access to a voluntary, low-risk, low-cost, portable retirement savings plan that enables direct payroll contributions into a personal Individual Retirement Account for California’s private-sector workers who currently lack access to employer-sponsored retirement plans.
“Regardless of socioeconomic status, the hard-working people of California who have made our state a global economic powerhouse deserve a measure of financial security in their golden years," Senate President Pro Tem Kevin de León, who authored the legislation, told CNN.
According to California State Treasurer John Chiang’s website, the new law will go into effect on Jan. 1, 2017 and will authorize the Secure Choice Board – chaired by the Treasurer – to begin the development and build-out of the retirement program. The program will be phased in: eligible employers with more than 100 employees will need to participate within 12 months after the program is open for enrollment; employers with more than 50 employees will be mandated to participate within 24 months after the program is open for enrollment; and within 36 months all other eligible employers will be required to participate.
California joins seven other states that have already started to implement their own programs, according to Georgetown University's Center for Retirement Initiatives including Connecticut (2016), Maryland (2016), New Jersey (2016), Oregon (2015), Washington (2015), Illinois (2015), and Massachusetts (2012).
For more information on state programs, check out Georgetown University's resources here: http://cri.georgetown.edu/states/all-states/