On Sept. 28, 2012, California Governor Jerry Brown signed legislation that will create the nation’s first state-run retirement plan for private sector employees. The legislation, Senate Bill 1234, establishes the California Secure Choice Retirement Savings Trust for more than 6 million low-income, private sector employees whose employers do not offer retirement plans.
The plan will require all employers with more than five employees to withhold 3 percent of employees’ pay unless employees opt out of the plan. The new retirement plan is designed to supplement Social Security and provide low-income workers with a portable savings plan with a guaranteed return. The plan will be administered by a board chaired by the state treasurer, which will select either a private investment firm or the state’s public pension system to invest and maintain the plan’s funds.
Source: Barnes and Thornburg, LLC