Governor approves Secure Choice Retirement Plan
Millions of Californians soon will have an easy way to save for a more comfortable and dignified retirement now that Gov. Jerry Brown has signed Senate Bill 1234, landmark legislation creating the California Secure Choice Retirement Plan.
Secure Choice was authored by Senate President Pro Tem Kevin de León of Los Angeles. State Treasurer John Chiang oversaw the market studies and legal analysis driving the design of the new program.
The new program will offer a retirement savings plan for about 6.8 million California workers, who currently have no access to an employer-provided retirement savings account.
Passage of Secure Choice is “the most significant step toward providing Californians with a dignified retirement since the establishment of Social Security in 1935,” said Chiang in a press release. “It offers hope and protection to millions of Californians who are careening toward an impoverished retirement where they face the all-too-real scenario of whether to spend their meager retirement draw on food or rent.”
When the program becomes operational, businesses with five or more employees that do not provide their own pension, 401(k) plan or similar retirement program will be required to offer Secure Choice. This requirement will be phased in over three years, starting with businesses that have 100 or more employees. After three years, businesses with five or more employees will need to comply.
The Secure Choice plan enables participation through payroll contributions. However, employees will have the option to opt out of the benefit. The program will be self-sustaining through participant fees and will impose a minimal cost to employers and no cost to taxpayers.
The benefit, Chiang stressed, will be at minimal cost to employers and no cost to state taxpayers.
“Creating Secure Choice will pay benefits for decades to come,” said Sen. de León.
“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,” he said. “This will benefit our current workers and younger generations who will finally have an easy and reliable way to save for the future.”
This new law will go into effect on Jan. 1, 2017 and will authorize the build-out of Secure Choice.