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Human Resources & Payroll

Is California’s CalSavers Program a Bad Deal for Retirement?

There has been a trend recently for states to mandate that employers offer some type of a retirement plan for their employees. California, Illinois and Oregon have launched their programs, and Colorado, Connecticut, Maryland, New Jersey and Virginia ...

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OPINION.

There has been a trend recently for states to mandate that employers offer some type of a retirement plan for their employees. California, Illinois and Oregon have launched their programs, and Colorado, Connecticut, Maryland, New Jersey and Virginia are developing them. In theory this is a positive development as there are currently many employers who do not offer any type of retirement plan to their employees, especially in small businesses, retail, service occupations and restaurants with high employee turnover.

For example, California Employers with 5 or more full or part time employees that do not offer a retirement plan by June 30, 2022, are required to offer a payroll deduction ROTH IRA called “CalSavers” or face fines of up to $750 per eligible employee.

California, historically aggressive in worker rights legislation, has failed in its CalSavers program, which can leave employees less well off then they would be without the state’s intervention.

For example CalSavers has: