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Thu Sep 29, 2016, 02:15 PM

State-managed retirement plan becomes reality with Brown’s signature

Source: The Sacramento Bee

Saying it offers the promise of retirement security for millions of Californians, Gov. Jerry Brown signed sweeping legislation Thursday that creates a state-managed savings program for private-sector workers without one.

The Democratic governor told a roomful of supporters that the California Secure Choice Retirement Savings Program is “very important in today’s age of spend now, worry about it later.”
Experts estimate that almost one-half of middle-income workers are at risk of falling into poverty when they retire. Monthly checks from the federal Social Security program increasingly fall short of covering seniors’ costs in retirement.

The Secure Choice program, supporters say, would take advantage of economies of scale to automatically put a share of workers’ wages into a retirement fund at low cost, unless they opt out. Proponents said it offers the most significant enhancement of retirement security since federal lawmakers approved Social Security during the Great Depression of the 1930s.

Read more: http://www.sacbee.com/news/politics-government/capitol-alert/article104911716.html

This is what it means to have a Democratic governor. Instead of trying to take away state workers' pensions, he's giving private-sector workers an ability to have a pension.

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Reply State-managed retirement plan becomes reality with Brown’s signature (Original post)
SunSeeker Sep 2016 OP
haele Sep 2016 #1
SunSeeker Sep 2016 #2

Response to SunSeeker (Original post)

Thu Sep 29, 2016, 05:44 PM

1. The Republicans are mad because this competes with financial firms...

Totally ignoring the fact that individual LLC's and small businesses typically do not have pension or 401K plans for their partners and employees, not to mention the businesses that are on such a shoestring they categorize their workforce as "contractors" and provide workers with 1099's instead of W-2's, leaving the employees totally on their own when it comes to retirement.
These businesses and their workforce they afford to get more than a savings account at a bank or credit union, if they do have enough profit to start thinking about retirement for themselves or their employees. They're not going to go to Vanguard and pay additional fees to get into a lower ranked managed retirement account pool; they'll go to a bank and let the manager be their "financial consultant" on a money market or the limited number of CD's or Roths, and end up with far less to live off when they reach their 70's than they would with a typical company 401K.
I don't make enough to go to a financial advisor on my own; I'm lucky that I can manage to part with $100 a month to put into some form of retirement.
At least my current company provides me with either a Prudential or a Vanguard retirement account, and matches every dollar up to $200 a month, which helps a lot.

Managed pension pool accounts like this are the way to go for the million or so independent or small business workforce typically grossing between $40K and $60K annually. They may not have much when they retire, but at least the State account will be more reliable than most commercial accounts available to them.


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Response to haele (Reply #1)

Thu Sep 29, 2016, 10:02 PM

2. Exactly. It is a great deal for low and middle-income workers.

It allows workers to take advantage of economies of scale to allow lower fees and to get a substantial pension, as opposed to the skimpy payments of an individual IRA. This state plan, Secure Choice, would yield about one-fifth of the person's pre-retirement income by the time the person retires.

51% of California workers (7.5 million people) have no access to an employer-sponsored retirement plan, not even a shitty, no-employer-contribution 401k.

Plus, it would auto-enroll workers; they would have to opt out to not get it. This addresses the problem of people failing to save for retirement or being daunted by paperwork.

This is a huge improvement in the lives of workers.

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