Retirement Savings for all California Workers

Imagine a California where every employee has the option to participate in a work based retirement savings plan.

Imagine a California where all workers retire with enough savings to sustain them through old age, so they do not have to depend on the government for assistance.

Well, this may not be too far-fetched of an idea, because California is taking strong steps in this direction.

Yesterday, the California State Senate Public Employment and Retirement Committee passed Assembly Bill 125, the California Employee Savings Program. Authored by Assemblyman De Leon, AB 125 aims to create a voluntary, universal, portable retirement account for California workers who do not have access to a retirement savings plan. Furthermore, AB 125 would enable thousands of small businesses to offer low-cost retirement savings to their employees.

The truth is that California’s economy is built on its dedicated workforce, so it is important to nurture their enthusiasm and reward their hard work by giving them the tools to secure a financially stable future. Currently, 43% of California’s workforce does not have the option to save through payroll deduction. That means that despite their years of hard work and economic contributions to the state, they will most likely end up depending on government aid when they retire. Also, 78% of today’s seniors did not build sufficient assets to sustain their standard of living, reports the Institute on Assets and Social Policy.

In a recent AARP survey, 63% of respondents whose current employers do not offer a retirement plan said they would be likely to use it if their employers offered one. In other words, a majority of the employees are interested in building retirement savings if they are given the adequate tools to do so on the job.

At the national level, President Barack Obama has endorsed the idea of creating automatic workplace retirement savings plans. After all, a California where every worker has the option to secure retirement savings is not an imaginary scenario. It is a realistic possibility, favored by California workers and small businesses and supported by the California Legislature.