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California Employee Savings Program
Retirement Benefits Without Cost to Employers
A bill proposed by Assembly Member Kevin de León and supported by the Governor would extend retirement benefits to millions of California workers at no cost to their employers. Assembly Bill 2940 (AB2940) would create the California Employee Savings Program (CalESP) to offer voluntary, portable retirement savings accounts for workers, helping prepare them for their retirement at no cost to taxpayers. If passed, workers and employers will be able to voluntarily contribute to their savings account through a simple and easy automatic payroll deduction.
Who Benefits?
Businesses, workers, and the state will all benefit should AB 2940 become law. More than 20 percent of California businesses do not offer retirement savings accounts or pensions to their employees. Small employers are disproportionately unlikely to offer retirement plans as many lack the necessary capacity and resources. As a result, they find themselves at a competitive disadvantage to larger employers.
Low-wage Workers Do Not Have Savings
Approximately 41 percent of the state’s workforce is employed in jobs that do not offer pensions or retirement accounts. Nearly 65 percent of workers earning less than $40,000 do not participate in employer plans. Workers today are spending more than they are saving and thus accruing debt and risking their future financial security. Nationally, the personal savings rate for individuals has fallen to 0.5 percent of one’s income. Workers are more productive and focused when they are confident in their financial stability, resulting in higher financial returns for businesses. Additionally, the more workers save, the less they will be dependent upon public programs for support during their retirement.
The win-win nature of AB2940 has helped secure support from diverse stakeholders including not only SF Works and the San Francisco Chamber of Commerce, but also Small Business California and California ACORN as well as its sponsor, the New America Foundation.
Click here for more information. Click here to express your support for AB2940 and write state legislators.
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