Should State Provide Retirement Fund for All Californians?

retirement_road_signState policy makers on Monday inched closer to a state-run retirement system for workers who don’t have access to employer-run accounts.

Secure Choice, if implemented, would require employers of five or more people to automatically enroll employees into portable retirement accounts, with an opt-out clause for the individual.

While everyone has the ability to go check-in-hand to invest in a retirement account at any time, proponents of the measure point to the fact that many are not. The theory behind the bill is that the approximately 7 million people in the state who don’t have employer-based retirement accounts need to be nudged into planning for the future.

The program would be administered by a nine-member California Secure Choice Retirement Savings Investment Board, which is chaired by the state treasurer.

On Monday, the board accepted recommendations based on a market analysis and feasibility study prepared by an outside vendor. The study was paid for with $1 million in private funds raised by Senate pro Tem Kevin de León of Los Angeles, the bill’s sponsor.

The study’s recommendations will be added to an amended version of the 2012 bill, which is to be heard in the Senate Public Employment and Retirement Committee by April 22.


The plan is for the state to provide the opportunity for saving. There is no state contribution to the fund, so proponents say there is little to no risk to the state.

The state would incur administrative costs, but those would be covered by participant fees, according to Grant Boykin, deputy treasurer for retirement security and health care.

Businesses will not be required to offer financial advice about the plans, said Boykin. Instead, they will pass on information determined by the board and then set up payroll deductions.

“Education will be hugely important, but that will fall on the board,” Boykin said.

Behavioral economists contacted by de León advised that people are 15 times more likely to save once the account has been opened than if left to open an account on their own, according to Boykin.

De León conceded that there was an element of risk to the employees when investing in retirement funds, but he said that the types of investments would be relatively low-risk.


When the initial measure passed in 2012, it was over the opposition of groups like Howard Jarvis Taxpayers Association, which opposed on the grounds that the private sector was already performing this service, and business groups, like the California Chamber of Commerce, which opposed largely on concerns of the impact on employers.

Key findings of the study

  • “About 6.8 million workers are potentially eligible for the California Secure Choice Retirement Savings Program.”
  • “Likely participation rates (70-90 percent) are sufficiently high to enable the program to achieve broad coverage well above the minimum threshold for financial sustainability.”
  • “Eligible participants in California are equally comfortable with a 3 percent or 5 percent contribution rate. The vast majority of likely participants are also comfortable with auto-escalation in 1 percent increments up to 10 percent.”
  • “To start, the program should offer a default investment option consisting of a diversified portfolio with long-term growth potential and the choice to opt into a low-risk investment.”

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  1. Anything that de Leon is for, I’m against. Another liberal buffoon like Jerry the Stupid running this State into bankruptcy.

  2. Unless and until the State of CA guarantees financial backing for the retirement fund, this can prove to be a total disaster for the investors.

  3. Donald J. says

    Keep in mind the tax and spend politicians of California enact only what benefits them first. Approx 51% of California is already on the dole!

    • THE CAPTIVE says

      All the above reasons are good enough NOT to invest in such a program.
      We do know that the gov. J. Brown doesn’t know or care about the people still here —but he wants their money. Are you anxious to see what the 15% min. wage will do? There will be less jobs-more robots-and more on the dole .

  4. The education system should add retirement planning to the curriculum and then allow the public to decide who they trust to handle their retirement fund. At this point most of the public is not qualified to make the decision on who should manage their retirement.

  5. JLSeagull says

    What a crock of BS! Another program run by the same people who brought you the gas tax, CALPERS, CALSTRS, etc. These folks have a track record showing they couldn’t organize a booze up in a brewery. I wonder if their “study” calculated what it would cost employers to set up a program, automatic deduction, etc.? How long will it be before employers are required to contribute matching funds? I wonder if the state is going to be required to set up retirement funds for each person on welfare and those drawing unemployment? Just another pot of money for the politicians to raid. BS! Pure BS!

  6. Bohdan Knianicky says

    Nonsense!! Slice it, dice it, anyway you want it, NONSENSE. All that this state has ever done to help Californians is to pick their pockets. May we count the ways of the state has ripped us off. Going down memory lane, Prop M, bullet train, various bonds and measures, increase sales tax. How about Obama care and the exchanges. Increase in water rates. Oh, sanctuary cities. Maybe drivers licenses for the illiterate? Wonderful idea.. free education for non serious students. Now the $15.00 per hour pay increase for the inexperienced and the future village idiots of America. Thats just for starters. However, I have a plan. Get rid of the useless, lazy, incompetent union teachers and start teaching things that matter. Another novel idea, work, work and work a forty hour week.

    • That hits the spot perfectly…You captured the majority in that paragraph, to bad they won’t read it or even care what others think. The idea was they work for us but they’ve conveniently turned it around so we work for them.
      Bunch of political morons in this state. and De Leon is at the top of the stack.

  7. Same system as Social Security, the Demon-crats will have your investment spent before you even retire. This is purely a Scam!

  8. Oblamo binLyen says

    Aren’t they required to use truthful names, might I suggest InSecure Choice.
    So, Mr. Ghostgun ClipAzine, the genius of Wall Street…or is it a back street, well what..E V AH….this moron probably has his offshore accounts all ready for the money to pour in. This stupid state can’t manage what it’s got and it’s stealing more?

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