California will create a board to start implementing a proposed retirement savings plan for those in the state whose companies do not offer a retirement plan.
California Gov. Edmund Brown Jr. on Sept. 28 signed legislation to create the board, although the plan won't be fully implemented until the Legislature votes again to do so.
Under the new law, the board is authorized to develop a plan that would automatically place 3% of pay from workers without any type of employer sponsored retirement plan in portable retirement accounts that could be moved from job to job.
Employees would need to opt out of the plan or the deductions would be automatic.
If ultimately created, California would be the first state in the nation to have such a plan.
Mr. Brown did not issue a statement on his reasons for approving the legislation and Evan Westrupalls, a spokesman for Mr. Brown, said in an e-mail that Mr. Brown had nothing to add.
The California Chamber of Commerce, which had opposed the bill when it was passed by legislators in September, dropped its opposition after chamber-sponsored amendments were inserted into the bill requiring lawmakers to vote again before the retirement savings plan could be put into effect.
The legislation calls for the employee contributions to be pooled and professionally managed by independent investment managers or by 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.
CalPERS spokesman Brad Pacheco said he did not believe officials of the retirement system had discussed the issue.
The National Conference on Public Employee Retirement Systems in a statement praised the legislation. NCPERS has been pushing states to adopt retirement savings plans for employees without pension coverage.
“We applaud Gov. Jerry Brown for making California the first state in the nation to address the retirement security crisis that faces millions of American private-sector workers and will impact not just individual retirement security, but future government revenues and the country's overall economic well being,” said Hank Kim, NCPERS executive director and counsel, in a statement.
