Calif. Legislature Proposes Required Pensions for Employees
February 24, 2012 (PLANSPONSOR.com) – The California Legislature submitted Senate Bill 1234 to require businesses with five or more employees to enroll them in a new “Personal Pension” defined benefit program or to offer an alternative employer-sponsored plan.
According to The Sacramento Bee, employees would contribute approximately 3% of their wages through payroll deduction, although they would have the option to opt out of the plan. Employers would be able to make voluntary contributions into the fund.
The news report said the “Personal Pension” fund would assume lower investment returns than the California Public Employees’ Retirement System. Also, unlike a public pension fund that can pass investment shortfalls onto taxpayers, this private fund would have losses assumed by private underwriters.