Bill Helps Address Massive Personal Retirement Savings Deficit
SACRAMENTO, CA – Addressing the looming “retirement tsunami” represented by the massive shortfall pending in most people’s retirement, 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), today unveiled Senate Bill 1234 (SB1234) the California Retirement Savings Act, which creates a comprehensive 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 allows 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.
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. 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. If workers contributed just 3% of their earnings towards a retirement fund, the fund would generate an estimated $6.6 billion in the first year alone.
“We should be doing all we can to help all workers in both the public and private sector have an opportunity for a secure retirement,” said Senate Pro Tem Darrell Steinberg. “For millions of Californians now working without a retirement plan, this proposal can provide a better financial future as a safe, low-cost supplement to their Social Security and personal savings.”