Governor Brown Authorizes Feasibility Study for New Retirement Savings Plan
On September 28, 2012, Governor Jerry Brown signed two bills that represent the first steps toward creating a defined benefit retirement plan for private sector workers. SB 923 and SB 1234 authorize a feasibility study of a retirement savings program, intended to pay a defined rate of return for private workers who contribute 3% of their salaries through payroll deductions. The program could benefit millions of workers who do not have access to pension plans. The new retirement fund would be administered by a nine-member board, and managed by professional investors, but with conservative investment policies set partially by the Legislature.
Before the program can take effect, SB 923 requires a feasibility study and a final confirming vote of the Legislature. The study should determine that this plan is not a pension plan under ERISA, and must assess the cost and level of risk for the State. State Senator Kevin de Leon, the primary sponsor of the bill, hopes that the feasibility study will be completed in time for the Legislature to grant final approval by the end of 2013.
For more information about retirement savings plans, please contact your Trust Fund counsel.
By Daniel S. Brome