State-Run Retirement Plan Gaining National Attention, Some Say
A new law (SB 1234) that requires certain California businesses that do not offer retirement plans to join a state-run retirement program is gaining national attention, according to supporters of the law, the Los Angeles Times reports (Lifsher, Los Angeles Times, 10/6).
A study released this summer by researchers at the UC-Berkeley Labor Center found that 6.3 million California residents work for a private employer that does not sponsor a retirement plan.
The report states, "Without significant policy intervention to improve the retirement income security of private sector workers, California will face a serious elder poverty crisis in the coming decades."
Details of New Law
The law -- sponsored by Sens. KevinÂ de LeÃ³n (D-Los Angeles) and Darrell Steinberg (D-Sacramento) -- would create a state-run retirement program and require all private companiesÂ with more than five workers that do not offer retirement plans to join the program.
The law guarantees workers a return on their investment.
According to the law,Â the retirement trust would be administered by a seven-person panel, which would be chaired by the stateÂ treasurer and include the state controller, finance director and several appointees (California Healthline, 9/10).
According to de LeÃ³n, the retirement program also must be vetted by the US. Department of Labor to ensure that it is not preempted by a federal employee benefits law.
Steve Smith -- a spokesperson for the California Labor Federation, which supports the law -- said the bill "is definitely getting quite a bit of attention" from national leadership of the AFL-CIO and other unions.
He said that the program is "really trying to address a problem that very few people are trying to address in this economy: the realÂ retirement crisis."
According to de LeÃ³n,Â officials from other states have expressed an interest in the program. The states include:
- New York; and