California Dreamin'

California Gov. Jerry Brown has signed legislation to create the nation’s first state-administered retirement savings program for private-sector workers. The new law will establish the California Secure Choice Retirement Savings Program for more than 6 million lower-income, private-sector workers whose employers do not offer retirement plans. Under the new program, employers will withhold 3% of their workers’ pay unless the employee opts out of the savings program, which can be done every two years. It would be administered by a seven-member board chaired by the state treasurer. The board would select a professional fund manager, which could be a private investment firm or the state’s public pension system, to maintain the money. State Sen. Kevin De Leon, D-Los Angeles, introduced the bill earlier this year in response to what he called the “looming retirement tsunami” as millions of lower-wage workers face financial hardship in their retirement years. The new law will not be implemented unless the savings program is projected to be self-sustaining and exempt from federal rules that cover private-sector defined benefit plans. Such plans have to meet minimum standards under the federal Employee Retirement Income Security Act. The legislation also requires the board to submit an annual audit. It was initially opposed by businesses, insurance companies and financial services firms.