California will require employers to offer a retirement savings plan for workers
California will soon require employers to offer their workers a retirement savings plan.
Private companies were able to start registering for the state-run program, called CalSavers, on Monday, but deadlines won’t go into effect until later.
According to the CalSavers website, the program is expected to help 7 million employees in California start saving for retirement. At least 300,000 businesses will have to register, The Los Angeles Times reported.
If employers don’t already offer a retirement plan, they will be required to register with CalSavers over the next three years.
Employers with more than 100 workers will have to register by June 30, 2020, while employers with more than 50 workers will have to register by June 30, 2021, and employers with five or more workers will have to register by June 30, 2022.
According to the program’s website, employers won’t have to pay any fees and won’t be able to contribute to their employees’ accounts.
Meanwhile, workers will be automatically enrolled but will be able to opt out or change their savings rates.
During the program’s 50-business pilot run, starting in November 2018, only about 22.5 percent of employees opted out of the plan, according to The LA Times.
The program isn’t expected to cost taxpayers, because it will run using administrative fees, according to the California treasurer’s website.
Oregon and Illinois already have state-run retirement savings programs and several other states are working toward similar programs, The LA Times reported.
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Because Americans struggle to save for retirement, they often end up relying on Social Security benefits -- which doesn’t leave retirees with much to live on.
In 2017, an average retired worker reportedly received nearly $1,400 per month in Social Security benefits. That number fluctuates based on a person's status (i.e. a disabled employee, widow or widower, etc.).
Fox Business’ Jennifer Earl contributed to this report.