Last week, the state Senate passed the California Secure Choice Retirement Savings Act and moved it to the Assembly. The law, SB1234, was proposed by Sen. Kevin de Leon, D-Los Angeles, and Darrel Steinberg, D-Sacramento and Senate President Pro Tem.
Essentially, this legislation would create a retirement savings program that would be initiated by the government and ran by a private, third-party contractor. This specific policy would guarantee both the principal invested in the program and the interest made on that money. As most people know, the assurance of a returned investment on interest is not something private retirement accounts, such as IRAs and Roth IRAs, guarantee.
But the target demographic of this legislation most likely isn’t aware of that fact. The law is aiming to help private-sector workers who make less than $50,000 a year and don’t have access to a retirement plan at their place of work. Instead of relying simply on Social Security when the time comes, de Leon and Steinberg want to have this supplementary income in place for those who will most likely need it most.
Republicans are opposing the plan due to the fact that California is already dealing with the burden of its own retirement program going bankrupt, and point out that individuals can easily set up an IRA. Even some Democrats are wary, citing the language in the legislation as guaranteeing far too much for account holders. The worry is that, without proper investment regulation and oversight, the money could be mismanaged, leaving taxpayers to foot the bill.
What do you think about this proposed plan for retirement? Should everyone be required to save a little extra for their later years? Would you buy in to such a program? Why or why not?
Kevin de Leon (D-Los Angeles), State Senator representing California’s 22nd Senate District, which includes Los Angeles, Alhambra, East Los Angeles, Florence-Graham, Maywood, San Marino, South Pasadena, Vernon, and Walnut Park.
Richard Wiebe, spokesperson for the Association of California Life and Health Insurance Companies