CalSavers, the automatic-enrollment state-run retirement plan for people who do not have an employer-sponsored retirement plan, has issued a participation and funding snapshot report as of 12/31/19.
SB 1234 created CalSavers and requires that all employers with five or more employees who don’t already offer a retirement plan to either begin offering a qualified plan from the private market or register for CalSavers in accordance with a series of staggered deadlines rolling out over the next three years. The registration deadline for employers with more than 100 employees is June 30, 2020; those with more than 50 to 100 employees must register by June 30, 2021; and employers with 5 to 50 employees must register by June 30, 2022. All eligible employers are encouraged to join at any time prior to their registration deadline.
The program went live July 1, 2019, and as of 12/31/2019, 628 employers have registered and 142 are submitting payroll deductions for employees. The data shows 3,762 accounts are funded and 4,033 accounts are pending their first contribution.
Total assets in the program as of 12/31 are $1,421,847.18, with a $377.95 average account balance. The average contribution rate of employees with funded accounts is 5%.
However, data on opt-outs and distributions shows the “stickiness” of the program is less than supporters would like to see. The effective opt-out rate is 30.07% so far, and 258 account holders have made full withdrawals within 120 days of the initial contribution. In total, 382 participants have made full withdrawals and 60 have made partial withdrawals.
The program has only just begun, and with deadlines extending into 2022 for employers to register, it is too early to tell if this initial data shows whether employees will stick to the program going forward. Two years after its launch, OregonSaves, a state-run retirement program for private-sector employees, reported $25 million saved for retirement.
OregonSaves is demonstrating success by a number of measures, with workers saving at a higher percentage of pay than anticipated (an average of $117 per month), and millions of dollars saved by workers who were not saving before. The data released in August 2019 showed program assets climbing by more than $2.5 million a month, and most of those contributing are first-time savers.
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