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State-Run Retirement Plan Gaining National Attention, Some Say

California Healthline, October 09, 2012

 

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).

Background

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. Kevin de León (D-Los Angeles) and Darrell Steinberg (D-Sacramento) — would create a state-run retirement program and require all private companies 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, the retirement trust would be administered by a seven-person panel, which would be chaired by the state treasurer and include the state controller, finance director and several appointees (California Healthline, 9/10).

Brown signed SB 1234 last month, along with another bill (SB 923) that requires a feasibility study and a final legislative vote before the program can take effect (California Healthline, 10/1).

According to de León, 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.

National Attention

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 real retirement crisis."

According to de León, officials from other states have expressed an interest in the program. The states include:

  • Connecticut;
  • New York; and
  • Pennsylvania.

In addition, de León said that he has discussed the law with U.S. Labor Secretary Hilda Solis (Los Angeles Times, 10/6).

Original Article


 
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