Bill Helps Address Forgotten Masses Left Behind in Retirement Planning
Five nationally-recognized retirement savings experts are available for interviews.
SACRAMENTO, CA – Addressing the looming “retirement tsunami” represented by the massive shortfall spending in most people’s retirement, today the California State Senate passed Senate Bill 1234 (SB1234) the California Secure Choice Retirement Savings Act creating a reliable, affordable, and completely portable retirement savings plan for the seven million private sector workers without access to a workplace retirement plan.
“California threatens to become home to a sea of discarded seniors unless we wake up and address the looming retirement tsunami,” said Senator De León referencing the $600 billion personal retirement savings deficit in the state. This bill empowers people to take personal responsibility for their own retirement without a cost to taxpayers helping us avoid potentially catastrophic conditions in California.”
According to experts, nearly 50% of middle-income Californians will retire at or near poverty given present conditions. Social Security is the foundation of retirement income for the vast majority of retirees in California, but these payments alone, averaging $1,181 per month, are not enough to sustain workers in retirement. Although Social Security has reduced the poverty rate among retirees in general, women and minorities are disproportionately represented among retirees living in poverty and among low-income retirees. In California, approximately 2/3 of the retirees living in poverty are women.
California workers in the private sector need a lifelong retirement savings system that provides them with the opportunity to build their assets and achieve financial stability in retirement. And the retirement planning industry completely neglects this workforce segment with absolutely no outreach or planning to assist it with preparing for the future. SB1234 would provide a vital supplement to Social Security income and pool employee and employer contributions into a professionally-managed retirement fund that leverages economies of scale to offer portable, efficient, low-cost defined benefit retirement plans.
SB1234 establishes the California Secure Choice Retirement Savings Investment Board under the State Treasurer’s office, modeled after the public-private partnership ScholarShare, California’s College Savings Plan. It directs the board to conduct a market analysis and then establish a retirement savings program that offers participants a guaranteed rate of return tied to the 30-year Treasurery bond rate. Employees would have the ability to opt out at any time, and their employers’ only obligation would be to allow their employees to use the workplace payroll system to make regular payments to their savings accounts.
SB 1234 is authored by Senator Kevin de León (D-Los Angeles), Senate President Pro Tempore Darrell Steinberg (D-Sacramento), and Chair of the Assembly, Public Employees, Retirement and Social Security Committee, Warren Furutani (D-South Los Angeles County). The bill is also being hailed by small business owners, who are challenged to offer any type of retirement plan because existing offerings are too costly or burdensome.