California could become the first state in the nation to offer a retirement savings plan for residents who have no retirement plans.
Legislation passed Aug. 31 would create a commission to examine the creation of a retirement savings plan in which workers not covered by employer-sponsored retirement plans would automatically have 3% of their pay placed in portable retirement accounts that could be moved from job to job. The state will not be contributing to the plan, and employers are not required to contribute to it.
Employees could opt out of the plan.
The employee contributions would be pooled and professionally managed by independent investment managers or the $239.3 billion California Public Employees' Retirement System, Sacramento, for a fee. The money manager would be selected by an independent board that would be set up to administer the program.
The legislation was significantly watered down as part of a last-minute agreement between the Democratic legislative leadership and business groups; the changes in the final days of the legislative session led the California Chamber of Commerce to drop its earlier opposition, sources said.
The bill awaits California Gov. Edmund G. Brown Jr.'s signature; he has until Sept. 30 to sign or reject it.
“The governor does not generally comment on pending legislation,” Gareth Lacy, senior research associate in Mr. Brown's office said in an e-mail.
Mr. Brown has not informed California State Senate President Pro Tem Darrell Steinberg, a co-sponsor of the bill, whether he will sign the bill, said Mark Hedlund, spokesman for Mr. Steinberg. “He plays his cards close to the vest on legislation,” Mr. Hedlund said.