It’s one step forward, two steps back for some states’ attempts to set up state-run retirement plans.
While AARP launched a website, SecureChoiceCA.aarp.org, Tuesday to inform the public about the California Secure Choice Retirement Savings Act, the House finance committee in Colorado postponed indefinitely a vote on the state’s Secure Savings Plan.
The Investment Company Institute had complained to the Colorado House Finance Committee in a letter that while “proponents of state retirement programs for private-sector employees — like the Colorado plan — claim that such programs do not expose taxpayers to significant startup and ongoing administrative costs, these claims often are based on data that exaggerate the financial feasibility of the programs.”
ICI said that it was concerned that “Colorado plan participants or Colorado taxpayers — or most likely both — will find themselves bearing unanticipated costs as a result of the Colorado plan.”
The plan, ICI said, “appears to be based on a similar program being considered by the California legislature, the California Secure Choice Retirement Savings Plan.
ICI also voiced complaints to California’s treasurer about the state’s Secure Choice plan, which would require employers that have elected not to offer their own retirement plans to automatically enroll workers in payroll-deduction IRAs.
But the California Secure Choice Retirement Savings Investment Board met on March 28 and voted to move forward on the state-run plan.
AARP said that it “strongly supports” the bill, which, if passed by the legislature and signed by Gov. Jerry Brown, would create an auto-enrolling, supplemental retirement savings program for more than 7 million private-sector workers in California who do not have access to a retirement savings plan through their job.
SecureChoiceCa.aarp.org will provide up-to-date information and news about the bill, S.B. 1234, AARP said, and will allow supporters to join a diverse coalition of other proponents of the plan, such as The Small Business Majority, National Council of La Raza, the Service Employees International Union, and many other organizations.
Twenty states are “actively working” on state-run retirement programs for private-sector workers.
— Check out ICI Tells California to Halt State-Run Retirement Plan on ThinkAdvisor.