Lawmakers take step toward retirement fund for all Californians

pension retirementState policy makers on Monday inched closer to a state-run retirement system for workers who don’t have access to employer-run accounts.

Secure Choice, if implemented, would require employers of five or more people to automatically enroll employees into portable retirement accounts, with an opt-out clause for the individual.

While everyone has the ability to go check-in-hand to invest in a retirement account at any time, proponents of the measure point to the fact that many are not. The theory behind the bill is that the approximately 7 million people in the state who don’t have employer-based retirement accounts need to be nudged into planning for the future.

The program would be administered by a nine-member California Secure Choice Retirement Savings Investment Board, which is chaired by the state treasurer.

On Monday, the board accepted recommendations based on a market analysis and feasibility study prepared by an outside vendor. The study was paid for with $1 million in private funds raised by Senate pro Tem Kevin de León of Los Angeles, the bill’s sponsor.

The study’s recommendations will be added to an amended version of the 2012 bill, which is to be heard in the Senate Public Employment and Retirement Committee by April 22.

Details

The plan is for the state to provide the opportunity for saving. There is no state contribution to the fund, so proponents say there is little to no risk to the state.

The state would incur administrative costs, but those would be covered by participant fees, according to Grant Boykin, deputy treasurer for retirement security and health care.

Businesses will not be required to offer financial advice about the plans, said Boykin. Instead, they will pass on information determined by the board and then set up payroll deductions.

“Education will be hugely important, but that will fall on the board,” Boykin said.

Behavioral economists contacted by de León advised that people are 15 times more likely to save once the account has been opened than if left to open an account on their own, according to Boykin.

De León conceded that there was an element of risk to the employees when investing in retirement funds, but he said that the types of investments would be relatively low-risk.

Opposition

When the initial measure passed in 2012, it was over the opposition of groups like Howard Jarvis Taxpayers Association, which opposed on the grounds that the private sector was already performing this service, and business groups, like the California Chamber of Commerce, which opposed largely on concerns of the impact on employers.

Key findings of the study

  • “About 6.8 million workers are potentially eligible for the California Secure Choice Retirement Savings Program.”
  • “Likely participation rates (70-90 percent) are sufficiently high to enable the program to achieve broad coverage well above the minimum threshold for financial sustainability.”
  • “Eligible participants in California are equally comfortable with a 3 percent or 5 percent contribution rate. The vast majority of likely participants are also comfortable with auto-escalation in 1 percent increments up to 10 percent.”
  • “To start, the program should offer a default investment option consisting of a diversified portfolio with long-term growth potential and the choice to opt into a low-risk investment.”

39 comments

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  1. Leaving Soon
    Leaving Soon 29 March, 2016, 16:55

    Seriously…people can’t be responsible enough to set up their own retirement savings? Talk about a nanny government. We are making people so dependent. Good grief.

    Reply this comment
  2. Dude
    Dude 29 March, 2016, 17:24

    More Nanny state socialism.

    Reply this comment
    • NTHEOC
      NTHEOC 29 March, 2016, 20:54

      Because Capitalism has worked so well huh?

      Reply this comment
      • Dyspeptic
        Dyspeptic 30 March, 2016, 10:55

        Do you have to try hard to be this insufferably ignorant or does it just come naturally? If you think socialism is the answer then please explain the socialist hell holes of Cuba, Venezuela and North Korea. The semi-socialist island of Puerto Rico is now bankrupt and begging for a Federal bailout thanks to policies that every leftard Commiefornia politician supports. Don’t forget the deadbeat nation of Argentina, another demo-socialist failure that is also bankrupt and stiffing all of it’s creditors.

        China didn’t become the biggest economic success story of the last half century because they decided to try more socialism. They realized what is obvious to any thinking person, that capitalism is a better system. Economic freedom has lifted more people out of poverty and raised global living standards more than any form of socialist tyranny ever could.

        Welfare state socialism is a parasitic system that can only be perpetuated when there is enough free market capitalism to generate abundant wealth and productivity. You collectivist miscreants need capitalism to fund all of your prosperity and liberty destroying schemes. You’re just too foolish and ungrateful to appreciate the goose that lays the golden egg.

        Reply this comment
        • NTHEOC
          NTHEOC 30 March, 2016, 11:05

          Dyspeptic,
          The way Capitalism is ran here in the US really just benefits the very wealthy most. It has created greed amongst the most rich and allowed them to cheat and steal from the people. This is why you are seeing so much support for Bernie Sanders! (GO BERNIE!). Democratis socialism with Capitalism mixed in is coming whether you like it or not. You named a few socialist countries that are struggling, I can name some that are flourishing….

          Reply this comment
          • Rex the Wonder Dog!
            Rex the Wonder Dog! 30 March, 2016, 13:32

            The way Capitalism is ran here in the US really just benefits the very wealthy most.
            AND Trough Feeders like you NTHEOC.. the top 1%-5%, of which many trough feeders are now a part of, and all trough feeders.

            And if Sanders is elected, and he could be, you will most likely take a hair cut.

          • NTHEOC
            NTHEOC 30 March, 2016, 15:30

            AND Trough Feeders like you NTHEOC.. the top 1%-5%, of which many trough feeders are now a part of.
            ———
            Sounds like the private sector needs more unions to help them fight this injustice! Corporate greedy hogs continue to rape the people while the wealthy cheat their way to millions. Bernie Sanders is a sense of hope for all workers.

          • Dude
            Dude 30 March, 2016, 15:34

            We know you really meant Lenin and/or Alinsky?

        • Rex the Wonder Dog!
          Rex the Wonder Dog! 30 March, 2016, 13:34

          Do you have to try hard to be this insufferably ignorant or does it just come naturally?
          Well NTHEOC, we would all like an answer to this perplexing, and fascinating, question 🙂

          Reply this comment
          • NTHEOC
            NTHEOC 30 March, 2016, 15:24

            Public unions prevail as split Supreme Court sinks Friedrichs suit.
            Well Rex, We woukld like a response from you on this. lol, We see you avoided the headline. Just another wrong prediction from you,hah!

        • Standing Fast
          Standing Fast 31 March, 2016, 13:53

          Well-spoken, Dyspeptic. Thank you.

          Reply this comment
      • Rex the Wonder Dog!
        Rex the Wonder Dog! 30 March, 2016, 15:41

        I always said it would be a 5-4 ruling, and then when Scalia kicked I said it would be 4-4 and the status quo would remain, and I was correct. Listen, I was NO FAN of Scalia, or his Mini-Me Thomas, but in this ONE instance I was on his side 100%. Now that the ruling is done it is time for Garland to be confirmed. I personally would NOT have picked Garland b/c he is too old at 63. Scalia was on the bench for 30 years, Thomas has been there for 25, and we need a moderate on the SCOTUS for at least as long as those two….and Roberts, he will ALSO be there for at least 30 years but at least he is not as rightwingnutty as Scalia and Thomas.

        Reply this comment
        • NTHEOC
          NTHEOC 30 March, 2016, 16:06

          ok, I can see your point. you actually made a little sense for once, lol!!

          Reply this comment
        • Ted
          Ted 4 April, 2016, 08:56

          OH MY Poodle Girl!

          You were very silent for awhile! Your HUGE prediction of the end of unions sort of died like EVERY single one of your other predictions!
          LMAO
          tough times in Adelanto!!!!!!!!!!!!!!!!!!!!!!!

          Reply this comment
  3. Dawn Urbanek
    Dawn Urbanek 29 March, 2016, 21:48

    Is the taxpayer going to guarantee these pensions as well?

    Reply this comment
  4. Bill from UCSD
    Bill from UCSD 30 March, 2016, 07:55

    This is a great idea! Seriously. I’m slowly coming around to socialism. Every human being has an inherent RIGHT to housing, clothing, food, medical care. And the rich, esp. in uber-hypocritical California, are decidedly NOT the smartest or most hard-working in the herd. They are simply the most maniacally greed-obsessed, the most evil, the most game-rigging shape shifters. After 40 years of stagnant real wages it really is time for some draconian measures to level the playing field. FEEL THE BERN!

    Reply this comment
    • Dude
      Dude 30 March, 2016, 11:28

      That was a great libtardian rant that qualifies as an anthem against socialism.

      Reply this comment
    • Standing Fast
      Standing Fast 31 March, 2016, 13:41

      Where is it written that human beings have an “inherent right” to housing, food and medical care?

      What you are talking about is making people who can provide for themselves dependent on government. This has been tried before, many times. It has never worked.
      Why do you want to enslave free people by making them dependent on other free people you want to enslave by obligating them to be responsible for people who should be allowed to be responsible for themselves?
      Don’t you believe anybody has an inherent right to be free to be responsible for themselves?

      Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 4 April, 2016, 15:04

      This is a great idea! Seriously. I’m slowly coming around to socialism.

      Teddy Steals has broken you! 🙂

      Reply this comment
      • Standing Fast
        Standing Fast 5 April, 2016, 12:36

        Rex, I’m afraid my education is deficient. Who or what is Theodore Steals?

        Reply this comment
        • Rex the Wonder Dog!
          Rex the Wonder Dog! 5 April, 2016, 13:30

          Rex, I’m afraid my education is deficient. Who or what is Theodore Steals?
          Oh no, you poor baby,, you have just unleashed the bad genie!

          He posts here all the time, just look for the mumbo jumbo non-intelligent comments that appear to come from a 3 y/o baby, and the name “Ted”, or “Ted the Imbecile” as the author …. sometimes with a small trademark symbol next to his name ™ 🙂 But I WARNED YOU!!!!!!!!!

          Reply this comment
  5. Queeg
    Queeg 30 March, 2016, 09:05

    Comrade Bill

    You’re a Peach!

    The village needs to grow-

    Reply this comment
  6. Dyspeptic
    Dyspeptic 30 March, 2016, 09:55

    “The theory behind the bill is that the approximately 7 million people in the state who don’t have employer-based retirement accounts need to be nudged into planning for the future.”

    Today it’s a nudge. Tomorrow a firm push. Someday it will become a violent shove.

    When it becomes obvious that people aren’t saving for retirement because they can’t afford the reduction in current net income then the overlords in Excremento will force all private employers to fund retirement accounts for all employees. Combine that with the just announced $15/hr. minimum wage and the result will be a perfect storm of unemployment and personal bankruptcy when the next depression hits.

    The cherry on top of the cake will be when all of these suckers see their mandatory retirement savings go up in smoke when the stock market evaporates during the next meltdown.

    Reply this comment
  7. Spurwing Plover
    Spurwing Plover 30 March, 2016, 12:48

    Its about time Moonbeam and Feinstein retired

    Reply this comment
  8. Leaving Soon
    Leaving Soon 30 March, 2016, 14:39

    Cradle to grave. That’s the way to control the sheeple. I have no doubt how these sheeple will vote.

    Reply this comment
  9. NTHEOC
    NTHEOC 30 March, 2016, 15:33

    I really hope they involve CALPERS and let them help not only set up this fund, but run it to. CALPERS has been around for decades and really this is great for all Californians!!!

    Reply this comment
  10. Richard Rider
    Richard Rider 30 March, 2016, 20:29

    I suspect that it won’t be long before the government requires such money to be invested in “socially responsible” industries (often defined as who has the best lobbyists in Sacramento), banning companies that “do business with Israel,” etc.

    In addition, assuming there’s an early withdrawal tax (like IRA’s, etc.), this is a future profit center for government. Mostly low income, low saving people will use this program — and then withdraw the funds long before retirement age.

    Reply this comment
    • Standing Fast
      Standing Fast 31 March, 2016, 14:20

      When I was young I heard tell of folks who could barely rub two pennies together put a little extra by every payday so they could open a business, work hard, rent in a better neighborhood or buy a house. Then, they either sold their business to their children or to somebody else and retired on the proceeds of that and whatever they had managed to save.
      These were often immigrants who couldn’t speak English. They would work hard, teach their kids manners and responsibility, and they loved America.
      They didn’t think anybody owed them anything. All they wanted was a chance to pursue the things that they believed would bring them well-being, contentment, prosperity and joy.
      America was the place they could do that, so they came here.
      They may have stayed poor their whole lives, according to the federal government’s guidelines on such things, but they had their self-respect and a good living. Many of them considered themselves rich in the intangible things money can’t buy.
      These people left Socialist countries to come to a place where they could have a better life. They came to America.
      back then America wasn’t Socialist.
      I think Socialism is based on the adolescent pity-party principle that says if I feel sorry for someone it is the fault of the Capitalist system and the responsibility of government to make me feel better. That is why I am compelled to support government programs that enable people to be irresponsible so I can feel good because other people’s money is supporting those programs. Oh, I am such a good person…
      My advice to people who believe Socialism is a good system: Sign up for Co-Dependents Anonymous and go for at least twelve sessions.
      Then read P.J. O’Rourke’s “Eat the Rich: A Treatise on Economics”. It is still in print.

      Reply this comment
  11. Donkey
    Donkey 31 March, 2016, 22:15

    Reading anything posted by ntheoc gives a perfect picture of a Bernie sniffing RAGWUS feeder. 🙂

    Reply this comment
    • Dude
      Dude 31 March, 2016, 22:39

      Sad but true.

      Reply this comment
    • Ted
      Ted 4 April, 2016, 08:58

      LOL I think Duncey Girl also predicted the end of unions with his last epic fail prediction! OMG I LOVE this blog!!!!!!!!!!!!!!!!!!!!

      Poor Duncey Girl!!!!!!!!!!!!!

      Reply this comment
  12. fletch92131
    fletch92131 2 April, 2016, 07:30

    I wonder if they have compared the cost of a simple educational advertisement program versus the cost of setting up this board?Seems like the state could simply educate people better on the benefits of retirement funds and steer them to the private sector.

    Reply this comment
    • Standing Fast
      Standing Fast 2 April, 2016, 12:41

      But, that would make too much sense. Also, how could an advertising campaign promoting your advice to the people compare with the passage of a piece of legislation with your name on it? You just would not feel as good about yourself, would you? So, it has to be another law or it doesn’t count as a good deed. Good deed doers don’t want to do things that don’t count.

      Reply this comment
      • Richard Rider
        Richard Rider 2 April, 2016, 12:56

        It’s all about CONTROL. And currying favor.

        Politicians get no kudos (and votes) if people figure out how to put money aside for retirement without the aid of government.

        Reply this comment

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