The California Assembly on Thursday approved implementing a state-run Secure Choice retirement savings program for private-sector workers without a retirement plan.
The legislation requires companies with five or more employees that do not offer a 401(k) plan or similar retirement benefits to set up a retirement plan.
Initially, workers would contribute 3% of their wages. Employers would not be required to make contributions. The retirement savings plans would be portable. Employees would automatically be enrolled in the plan unless they opt out.
The bill had previously been approved by the state Senate, but after the Assembly made amendments it must go back to the Senate for a final concurrence vote, which is expected to pass it. It then will go to the desk of Gov. Edmund G. Brown Jr., who is expected to approve the measure.
State Treasurer John Chiang hailed Assembly passage of the bill and said he expects the Senate to approve it next week. Mr. Chiang was the original backer of the legislation.
“Today's historic vote by the Assembly marks the biggest improvement in retirement security since the passage of Social Security in 1935. We are one step closer to providing a more comfortable retirement for generations of elderly in the decades to come,” Mr. Chiang said.
The Assembly vote came on the same day the Department of Labor finalized rules for states to set up plans for private-sector workers.
Senate President Pro Tempore Kevin de Leon, who sponsored the legislation, applauded its passage in a statement.
“The California Secure Retirement Saving Program will offer a hand — not a handout — to 6.8 million working Californians whose employers do not offer a retirement plan,” Mr. de Leon said.
“Without a secure plan, retirement for millions of hard-working Californians will remain a mirage, always on the horizon but never materializing,” Mr. de Leon said. “And their golden years — a time to enjoy the fruits of lifelong toil — will be fraught with financial uncertainty, poverty and government dependency.”
In a statement, Yvonne R. Walker, president of the California Service Employees International Local 1000, said ”every Californian who works hard over a lifetime deserves the opportunity to retire with a basic level of dignity. With Gov. Brown's signature on SB 1234, California will strike a significant blow against an epidemic of senior poverty and lift up those people most at risk: our state's women, people in low-wage jobs and people of color.”
