Nationwide, it is estimated that 55 million Americans do not have access to retirement savings plans through their employer, but the state of California is working hard to expand access to employees of small businesses.
The CalSavers Retirement Trust Act made it law that all California businesses with more than five employees must offer either employer-sponsored or state-sponsored retirement plans. The requirement has been rolling out for the last three years starting with the largest companies first, and the final deadline is June 30. All plans must be in place by Friday, July 1.
caught up with the KSBY team to explain the program and its importance. She said, “Unfortunately, the reality is that nearly half of working Californians are on a path to retire into economic hardship if they can retire at all,” explained Katie Selenski, CalSavers Board Executive Director.
At the end of June, the state is taking a big step in closing that gap and making sure that retirement plans are available to everyone who works at a company with at least 5 employees, plus have benefits available for self-employed and freelance individuals through the CalSavers portal.
“This is a great way for the state to try and start to hopefully stem the tide of having folks have enough resources to go through retirement,” said Jim Dantona, President and CEO of the San Luis Obispo Chamber of Commerce.
Companies can either provide their own retirement plans or sign up for the state-provided CalSavers program. Either way, they must be signed up by the start of business on July 1 or risk initial fines of $250 per employee. Those fines can increase to $500 per employee if the situation is not resolved.
Dantona continued, “Most of our businesses in this community have already been providing retirement plans, 401Ks as they're usually known, for their employees. Just because it's one of those things seen as a kind of keystone benefit that employees are looking for, and as we are always trying to battle for staff, having that is almost a must.”
Selenski explained, "When people have access to a retirement plan at work, they're 15 times more likely to save, and that's across the socioeconomic spectrum. So we think a big, big driver of this retirement security crisis is that, you know, over 7 million Californians don't have access to a workplace retirement plan.”
In San Luis Obispo County, there are 2,200 employers and 30,000 employees all now with these required benefits.
Selenski continued, "It's about 71,000 employers statewide that have yet to respond to the deadline on Thursday, but we are really proud of the response rate. So far, about 70% of employers throughout the state have already gotten on board and done what they need to do ahead of Thursday.”
All employers with more than five employees must be providing or registered to provide retirement savings plans by the start of business this Friday, July 1.
For more information visitCalSavers.com
