AB 2650: CalSavers: retirement savings.
- Session Year: 2025-2026
- House: Assembly
- Latest Version Date: 2026-05-22
Current Status:
In Progress
(2026-08-13: In committee: Held under submission.)
Introduced
In Committee
Awaiting First Chamber Vote
Passed First Chamber
In Committee
Awaiting Second Chamber Vote
Passed Second Chamber
Enacted
What does this bill do?
The bill expands California’s CalSavers retirement program to include household employers—people who hire domestic workers and issue W‑2s—and changes employer enrollment timing and enforcement, adding a $500‑per‑employee penalty for continued noncompliance that can be reimposed no more than once every 180 days. It also removes the board’s authority to use myRAs, requires the program to open IRAs for participants eligible for certain government retirement benefits with notice, raises the cap on automatic contribution increases from 8% to 10%, and simplifies vendor contracting rules.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law, the CalSavers Retirement Savings Trust Act, administered by the CalSavers Retirement Savings Board (board), establishes the CalSavers Retirement Savings Program (program) and the CalSavers Retirement Savings Trust (trust). Under existing law, the trust consists of a program fund and an administrative fund with trust moneys that are continuously appropriated and administered by the CalSavers Retirement Savings Board for the purpose of promoting greater retirement savings for California private employees. Existing law requires eligible employers to offer a payroll deposit retirement savings arrangement so that eligible employees may contribute a portion of their salary or wages to a retirement savings program account in the program, as specified.
Existing law defines eligible employer as a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding, among others, specified federal, state, and local governmental entities, with at least one eligible employee and that satisfies certain requirements to establish or participate in a payroll deposit retirement savings arrangement.
This bill would enact the Savings Access and Vested Empowerment (SAVE) for All Workers Act, which would recast those provisions to expand that definition of eligible employer to include household employers, defined as those who have hired or contracted someone to work in or around their home for the benefit of their personal household and who provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level. form. By expanding eligibility under these provisions, the bill would remove a restriction limiting expenditure of funds and authorize the expenditure of continuously appropriated moneys for a new purpose, thereby making an appropriation.
Existing law requires the board, subject to its authority and fiduciary duty, to design and implement the program. Existing law authorizes the board to provide for investment in myRAs. Existing law requires the program to include, as determined by the board, one or more payroll deduction IRA arrangements. Existing law provides the board with the power and authority to, among other things, make and enter into contracts necessary for the administration of the trust and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program and the federal Retirement Savings Contribution Credit (Savers Credit).
This bill would eliminate the authority of the board to invest in myRAs and would make related conforming changes. The bill would require the program, with board approval, to establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, as specified, and notify participants at least 30 days prior to the creation of the accounts.
This bill would additionally authorize the board to assess the feasibility of multi-state or regional agreements to administer the program and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the successor to the Savers Credit, known as the Savers Match.
Existing law requires the board, prior to opening the program for enrollment, to establish a retirement investments clearinghouse on its internet website and a vendor registration process, if there is sufficient interest by vendors to participate and provide the necessary funding. Existing law requires vendors that would like to participate in the boards retirement investments clearinghouse and be listed on the boards internet website as a registered vendor to provide specified information to the board.
This bill would eliminate the above-described requirement for the board to establish a retirement investments clearinghouse on its internet website and a vendor registration process, and would instead require vendors that would like to contract with the board to provide specified information to the board. The bill would make related conforming changes.
Existing law authorizes an employer to choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board. Existing law requires, by December 31, 2025, eligible employers with one or more eligible employees and do not offer a retirement savings program, as provided, to have a payroll deposit retirement savings arrangement to allow employee participation in the program. Existing law authorizes the board to implement annual automatic escalation of employee contributions and prohibits contributions subject to automatic escalation from exceeding 8% of salary. Existing law provides the board the powers and duties necessary to administer the enforcement of employer compliance, as provided.
This bill would instead, would, beginning December 31, 2027 and by December 31 of each calendar year, require eligible employers with one or more eligible employees employees, as described, who do not offer a retirement savings program, as specified, to have a payroll deposit retirement savings arrangement to allow employee participation in the program. The bill would instead prohibit contributions subject to automatic escalation from exceeding 10% of salary. The bill would require the board to notify participants of this increase in salary subject to automatic escalation.
Existing law requires the board to issue to each employer who fails to allow its eligible employees to participate in the program, as provided, a notice of penalty application. Existing law requires each eligible employer that, without good cause, fails to allow its employees to participate in the program, as specified, after the board serves a final notice of penalty application, to be subject to a penalty of $250 per eligible employee and an additional penalty of $500 per eligible employee if noncompliance continues, as described. Existing law requires the Franchise Tax Board to issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the board informs the Franchise Tax Board of the eligible employers noncompliance. Existing law requires amounts collected by the Franchise Tax Board for these purposes to be transmitted to the board for deposit in the trust.
This bill would additionally subject each eligible employer that fails to allow its eligible employees to participate in the program after the above-described penalties have been assessed to a penalty of $500 per eligible employee. The bill would prohibit the penalties assessed from being imposed more than once every 180 days since the last violation. The bill would require the Franchise Tax Board to issue subsequent notices of imposition of penalties for noncompliance, as specified. By depositing additional penalties into the trust, a continuously appropriated fund, the bill would make an appropriation.
Existing law, the CalSavers Retirement Savings Trust Act, administered by the CalSavers Retirement Savings Board (board), establishes the CalSavers Retirement Savings Program (program) and the CalSavers Retirement Savings Trust (trust). Under existing law, the trust consists of a program fund and an administrative fund with trust moneys that are continuously appropriated and administered by the CalSavers Retirement Savings Board for the purpose of promoting greater retirement savings for California private employees. Existing law requires eligible employers to offer a payroll deposit retirement savings arrangement so that eligible employees may contribute a portion of their salary or wages to a retirement savings program account in the program, as specified.
Existing law defines eligible employer as a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding, among others, specified federal, state, and local governmental entities, with at least one eligible employee and that satisfies certain requirements to establish or participate in a payroll deposit retirement savings arrangement.
This bill would enact the Savings Access and Vested Empowerment (SAVE) for All Workers Act, which would recast those provisions to expand that definition of eligible employer to include household employers, defined as those who have hired or contracted someone to work in or around their home for the benefit of their personal household and who provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level. By expanding eligibility under these provisions, the bill would remove a restriction limiting expenditure of funds and authorize the expenditure of continuously appropriated moneys for a new purpose, thereby making an appropriation.
Existing law requires the board, subject to its authority and fiduciary duty, to design and implement the program. Existing law authorizes the board to provide for investment in myRAs. Existing law requires the program to include, as determined by the board, one or more payroll deduction IRA arrangements. Existing law provides the board with the power and authority to, among other things, make and enter into contracts necessary for the administration of the trust and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program and the federal Retirement Savings Contribution Credit (Savers Credit).
This bill would eliminate the authority of the board to invest in myRAs and would make related conforming changes. The bill would require the program, with board approval, to establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, as specified, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments, and notify participants at least 30 days prior to the creation of the accounts.
This bill would additionally authorize the board to assess the feasibility of multi-state or regional agreements to administer the program and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the successor to the Savers Credit, known as the Savers Match.
Existing law requires the board, prior to opening the program for enrollment, to establish a retirement investments clearinghouse on its internet website and a vendor registration process, if there is sufficient interest by vendors to participate and provide the necessary funding. Existing law requires vendors that would like to participate in the boards retirement investments clearinghouse and be listed on the boards internet website as a registered vendor to provide specified information to the board.
This bill would eliminate the above-described requirement for the board to establish a retirement investments clearinghouse on its internet website and a vendor registration process, and would instead require vendors that would like to contract with the board to provide specified information to the board. The bill would make related conforming changes.
Existing law authorizes an employer to choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board. Existing law requires, by December 31, 2025, eligible employers with one or more eligible employees and do not offer a retirement savings program, as provided, to have a payroll deposit retirement savings arrangement to allow employee participation in the program. Existing law authorizes the board to implement annual automatic escalation of employee contributions and prohibits contributions subject to automatic escalation from exceeding 8% of salary. Existing law provides the board the powers and duties necessary to administer the enforcement of employer compliance, as provided.
This bill would instead, beginning December 31, 2027 and by December 31 of each calendar year, require eligible employers with one or more eligible employees who do not offer a retirement savings program, as specified, to have a payroll deposit retirement savings arrangement to allow employee participation in the program. The bill would instead prohibit contributions subject to automatic escalation from exceeding 10% of salary. The bill would require the board to notify participants of this increase in salary subject to automatic escalation.
Existing law requires the board to issue to each employer who fails to allow its eligible employees to participate in the program, as provided, a notice of penalty application. Existing law requires each eligible employer that, without good cause, fails to allow its employees to participate in the program, as specified, after the board serves a final notice of penalty application, to be subject to a penalty of $250 per eligible employee and an additional penalty of $500 per eligible employee if noncompliance continues, as described. Existing law requires the Franchise Tax Board to issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the board informs the Franchise Tax Board of the eligible employers noncompliance. Existing law requires amounts collected by the Franchise Tax Board for these purposes to be transmitted to the board for deposit in the trust.
This bill would additionally subject each eligible employer that fails to allow its eligible employees to participate in the program after the above-described penalties have been assessed to a penalty of $500 per eligible employee. The bill would prohibit the penalties assessed from being imposed more than once every 180 days since the last violation. By depositing additional penalties into the trust, a continuously appropriated fund, the bill would make an appropriation.
Existing law, the CalSavers Retirement Savings Trust Act, administered by the CalSavers Retirement Savings Board (board), establishes the CalSavers Retirement Savings Program (program) and the CalSavers Retirement Savings Trust (trust). Under existing law, the trust consists of a program fund and an administrative fund with trust moneys that are continuously appropriated and administered by the CalSavers Retirement Savings Board for the purpose of promoting greater retirement savings for California private employees. Existing law requires eligible employers to offer a payroll deposit retirement savings arrangement so that eligible employees may contribute a portion of their salary or wages to a retirement savings program account in the program, as specified.
Existing law defines eligible employer as a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding, among others, specified federal, state, and local governmental entities, with at least one eligible employee and that satisfies certain requirements to establish or participate in a payroll deposit retirement savings arrangement.
This bill would enact the Savings Access and Vested Empowerment (SAVE) for All Workers Act, which would recast those provisions to expand that definition of eligible employer to include household employers, defined as those who have hired or contracted someone to work in or around their home for the benefit of their personal household and who provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level. By expanding eligibility under these provisions, the bill would remove a restriction limiting expenditure of funds and authorize the expenditure of continuously appropriated moneys for a new purpose, thereby making an appropriation.
Existing law requires the board, subject to its authority and fiduciary duty, to design and implement the program. Existing law authorizes the board to provide for investment in myRAs. Existing law requires the program to include, as determined by the board, one or more payroll deduction IRA arrangements. Existing law provides the board with the power and authority to, among other things, make and enter into contracts necessary for the administration of the trust and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program and the federal Retirement Savings Contribution Credit (Savers Credit).
This bill would eliminate the authority of the board to invest in myRAs and would make related conforming changes. The bill would require the program, with board approval, to establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, as specified, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments, and notify participants at least 30 days prior to the creation of the accounts.
This bill would additionally authorize the board to assess the feasibility of multi-state or regional agreements to administer the program and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the successor to the Savers Credit, known as the Savers Match.
Existing law requires the board, prior to opening the program for enrollment, to establish a retirement investments clearinghouse on its internet website and a vendor registration process, if there is sufficient interest by vendors to participate and provide the necessary funding. Existing law requires vendors that would like to participate in the boards retirement investments clearinghouse and be listed on the boards internet website as a registered vendor to provide specified information to the board.
This bill would eliminate the above-described requirement for the board to establish a retirement investments clearinghouse on its internet website and a vendor registration process, and would instead require vendors that would like to contract with the board to provide specified information to the board. The bill would make related conforming changes.
Existing law authorizes an employer to choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board. Existing law requires, by December 31, 2025, eligible employers with one or more eligible employees and do not offer a retirement savings program, as provided, to have a payroll deposit retirement savings arrangement to allow employee participation in the program. Existing law authorizes the board to implement annual automatic escalation of employee contributions and prohibits contributions subject to automatic escalation from exceeding 8% of salary. Existing law provides the board the powers and duties necessary to administer the enforcement of employer compliance, as provided.
This bill would instead, beginning December 31, 2027 and by December 31 of each calendar year, require eligible employers with one or more eligible employees who do not offer a retirement savings program, as specified, to have a payroll deposit retirement savings arrangement to allow employee participation in the program. The bill would instead prohibit contributions subject to automatic escalation from exceeding 10% of salary.
Existing law requires the board to issue to each employer who fails to allow its eligible employees to participate in the program, as provided, a notice of penalty application. Existing law requires each eligible employer that, without good cause, fails to allow its employees to participate in the program, as specified, after the board serves a final notice of penalty application, to be subject to a penalty of $250 per eligible employee and an additional penalty of $500 per eligible employee if noncompliance continues, as described. Existing law requires the Franchise Tax Board to issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the board informs the Franchise Tax Board of the eligible employers noncompliance. Existing law requires amounts collected by the Franchise Tax Board for these purposes to be transmitted to the board for deposit in the trust.
This bill would additionally subject each eligible employer that fails to allow its eligible employees to participate in the program after the above-described penalties have been assessed to a penalty of $500 per eligible employee. The bill would prohibit the penalties assessed from being imposed more than once every 180 days since the last violation. By depositing additional penalties into the trust, a continuously appropriated fund, the bill would make an appropriation.
Existing law, the CalSavers Retirement Savings Trust Act, administered by the CalSavers Retirement Savings Board (board), establishes the CalSavers Retirement Savings Program (program) and the CalSavers Retirement Savings Trust (trust). Under existing law, the trust consists of a program fund and an administrative fund with trust moneys that are continuously appropriated and administered by the CalSavers Retirement Savings Board for the purpose of promoting greater retirement savings for California private employees. Existing law requires eligible employers to offer a payroll deposit retirement savings arrangement so that eligible employees may contribute a portion of their salary or wages to a retirement savings program account in the program, as specified.
Existing law defines eligible employer as a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding, among others, specified federal, state, and local governmental entities, with at least one eligible employee and that satisfies certain requirements to establish or participate in a payroll deposit retirement savings arrangement.
This bill would expand that definition of eligible employer to include household employers, defined as those who have hired or contracted someone to work in or around their home for the benefit of their personal household and who provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level. By expanding eligibility under these provisions, the bill would remove a restriction limiting expenditure of funds and authorize the expenditure of continuously appropriated moneys for a new purpose, thereby making an appropriation.
Existing law requires the board, subject to its authority and fiduciary duty, to design and implement the program. Existing law authorizes the board to provide for investment in myRAs. Existing law requires the program to include, as determined by the board, one or more payroll deduction IRA arrangements. Existing law provides the board with the power and authority to, among other things, make and enter into contracts necessary for the administration of the trust and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program and the federal Retirement Savings Contribution Credit (Savers Credit).
This bill would eliminate the authority of the board to invest in myRAs and would make related conforming changes. The bill would require the program, with board approval, to establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, as specified, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments, and notify participants at least 30 days prior to the creation of the accounts.
This bill would additionally authorize the board to assess the feasibility of multi-state or regional agreements to administer the program and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the successor to the Savers Credit, known as the Savers Match.
Existing law requires the board, prior to opening the program for enrollment, to establish a retirement investments clearinghouse on its internet website and a vendor registration process, if there is sufficient interest by vendors to participate and provide the necessary funding. Existing law requires vendors that would like to participate in the boards retirement investments clearinghouse and be listed on the boards internet website as a registered vendor to provide specified information to the board.
This bill would eliminate the above-described requirement for the board to establish a retirement investments clearinghouse on its internet website and a vendor registration process, and would instead require vendors that would like to contract with the board to provide specified information to the board. The bill would make related conforming changes.
Existing law authorizes an employer to choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board. Existing law requires, by December 31, 2025, eligible employers with one or more eligible employees and do not offer a retirement savings program, as provided, to have a payroll deposit retirement savings arrangement to allow employee participation in the program. Existing law provides the board the powers and duties necessary to administer the enforcement of employer compliance, as provided.
This bill would instead, beginning December 31, 2027 and by December 31 of each calendar year, require eligible employers with one or more eligible employees who do not offer a retirement savings program, as specified, to have a payroll deposit retirement savings arrangement to allow employee participation in the program.
Existing law requires the board to issue to each employer who fails to allow its eligible employees to participate in the program, as provided, a notice of penalty application. Existing law requires each eligible employer that, without good cause, fails to allow its employees to participate in the program, as specified, after the board serves a final notice of penalty application, to be subject to a penalty of $250 per eligible employee and an additional penalty of $500 per eligible employee if noncompliance continues, as described. Existing law requires the Franchise Tax Board to issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the board informs the Franchise Tax Board of the eligible employers noncompliance. Existing law requires amounts collected by the Franchise Tax Board for these purposes to be transmitted to the board for deposit in the trust.
This bill would additionally subject each eligible employer that fails to allow its eligible employees to participate in the program after the above-described penalties have been assessed to a penalty of $500 per eligible employee. The bill would prohibit the penalties assessed from being imposed more than once every 180 days since the last violation. By depositing additional penalties into the trust, a continuously appropriated fund, the bill would make an appropriation.
This act shall be known, and may be cited, as the Savings Access and Vested Empowerment (SAVE) for All Workers Act.
SEC. 2.Section 100000 of the Government Code is amended to read:100000.For purposes of this title, the following definitions apply:
(a)Board means the CalSavers Retirement Savings Board.
(b)CalSavers Retirement Savings Program or program means a retirement savings program offered pursuant to the CalSavers Retirement Savings Trust Act.
(c)(1)Eligible employee means a person who is employed by an eligible employer.
(2)Eligible employee does not include:
(A)Any employee covered under the federal Railway Labor Act (45 U.S.C. Sec. 151), or any employee engaged in interstate commerce so as not to be subject to the legislative powers of the state, except insofar as application of this title is authorized under the United States Constitution or laws of the United States.
(B)Any employee on whose behalf an employer makes contributions to a Taft-Hartley pension trust fund.
(d)(1)(A)Eligible employer means a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business, the federal government, the state, any county, any municipal corporation, or any of the states units or instrumentalities, that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.
(B)(i)Eligible employer also includes household employers.
(ii)Household employers includes those who have hired or contracted someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level. form.
(2)Upon a positive determination pursuant to subdivision (a) of Section 100046, eligible employer means an employer of a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code.
(3)Eligible employer does not include an employer that provides a retirement savings arrangement as described in Section 100032.
(e)IRA means an individual retirement account or individual retirement annuity under Section 408(a), 408(b), or 408A of Title 26 of the United States Code.
(f)Participating employer means an eligible employer that provides a payroll deposit retirement savings arrangement provided for by this title for eligible employees.
(g)Payroll deposit retirement savings arrangement means an arrangement by which an employer allows employees to remit payroll deduction contributions to a retirement savings program, which may include an IRA, and in the case of a payroll deduction IRA arrangement, to remit specifically to an IRA.
(h)Trust means the CalSavers Retirement Savings Trust established by this title.
(i)Vendor means a registered investment company or admitted life insurance company qualified to do business in California that provides retirement investment products. Vendor also includes a company that is registered to do business in California that provides payroll services or recordkeeping services and offers retirement plans or payroll deduction IRA arrangements using products of regulated investment companies and insurance companies qualified to do business in California. Vendor does not include individual registered representatives, brokers, financial planners, or agents.
SEC. 3.Section 100002 of the Government Code is amended to read:100002.(a)(1)There is hereby created within state government the CalSavers Retirement Savings Board, which shall consist of nine members, with the Treasurer serving as chair, as follows:
(A)The Treasurer.
(B)The Director of Finance, or the directors designee.
(C)The Controller.
(D)An individual with retirement savings and investment expertise appointed by the Senate Committee on Rules.
(E)An employee representative appointed by the Speaker of the Assembly.
(F)A small business representative appointed by the Governor.
(G)A public member appointed by the Governor.
(H)Two additional members appointed by the Governor.
(2)Members of the board appointed by the Governor, the Senate Committee on Rules, and the Speaker of the Assembly shall serve at the pleasure of the appointing authority.
(b)All members of the board shall serve without compensation. Members of the board shall be reimbursed for necessary travel expenses incurred in connection with their board duties.
(c)A board member, program administrator, and other staff of the board shall not do any of the following:
(1)Directly or indirectly have any interest in the making of any investment made for the program, or in the gains or profits accruing from any investment made for the program.
(2)Borrow any funds or deposits of the trust, or use those funds or deposits in any manner, for themselves or as an agent or partner of others.
(3)Become an endorser, surety, or obligor on investments by the board.
(d)The board and the program administrator and staff, including contracted administrators and consultants, shall discharge their duties as fiduciaries with respect to the trust solely in the interest of the program participants as follows:
(1)For the exclusive purposes of providing benefits to program participants and defraying reasonable expenses of administering the program.
(2)By investing with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with those matters would use in the conduct of an enterprise of a like character and with like aims.
(e)The board, subject to its authority and fiduciary duty, shall design and implement the CalSavers Retirement Savings Program.
(1)The board shall maintain an investment policy statement that defines the programs investment objectives and articulates policies and procedures enabling investment objectives to be met in a prudent manner. The board shall seek to minimize participant fees and strive to implement program features that provide maximum possible income replacement balanced with appropriate risk in an IRA-based environment. The investment policy statement shall describe the investment options available to holders of individual savings accounts established as part of the program. The investment policy statement shall include a risk management and oversight program. Investment options may encompass a range of risk and return opportunities and allow for a rate of return commensurate with an appropriate level of risk to meet the investment objectives stated in the policy.
(2)The board shall annually review the investment policy statement. The board shall review the investment policy statement and any changes in the investment policy statement at a public hearing.
(3)The risk management and oversight program shall include an effective risk management system to monitor the risk levels of the CalSavers Retirement Savings Program investment portfolio and ensure that the risks taken are prudent and properly managed. The program shall be managed to provide an integrated process for overall risk management on both a consolidated and disaggregated basis, and to monitor investment returns as well as risk to determine if the risks taken are adequately compensated compared to applicable performance benchmarks and standards.
(f)The board shall approve an investment management entity or entities, the costs of which shall be paid out of funds held in the trust and shall not be attributed to the administrative costs of the board in operating the trust. Not later than 30 days after the close of each month, the board shall place on file for public inspection during business hours a report with respect to investments made pursuant to this section and a report of deposits in financial institutions.
SEC. 4.Section 100004 of the Government Code is amended to read:100004.(a)There is hereby established a retirement savings trust known as the CalSavers Retirement Savings Trust to be administered by the board for the purpose of promoting greater retirement savings for California private employees in a convenient, voluntary, low-cost, and portable manner. After sufficient funds are made available for this title to be operative, the trust, as a self-sustaining trust, shall pay all costs of administration only out of moneys on deposit therein.
(b)The board shall segregate moneys received by the trust into two funds, which shall be identified as the program fund and the administrative fund. Notwithstanding Section 13340, moneys in the trust are hereby continuously appropriated, without regard to fiscal years, to the board for the purposes of this title.
(c)Moneys in the program fund may be invested or reinvested by the Treasurer or may be invested in whole or in part under contract with the board of a California public retirement system, with private money managers, or a combination thereof, as determined by the board.
(d)Transfers may be made from the program fund to the administrative fund for the purpose of paying operating costs associated with administering the trust and as required by this title, including, but not limited to, board operations, program administrator and investment expenses, and enforcement and compliance costs. On and after six years from the date the program is implemented, on an annual basis, expenditures from the administrative fund shall not exceed more than 1 percent of the total program fund. All costs of administration of the trust shall be paid out of the administrative fund.
(e)Any contributions paid by employees and employers into the trust shall be used exclusively for the purpose of paying benefits to the participants of the CalSavers Retirement Savings Program, for the cost of administration of the program, and for investments made for the benefit of the program.
(f)The trust is an instrumentality of the state. Any security issued, managed, or invested by the board within the trust on behalf of an individual participating within the CalSavers Retirement Savings Program shall be exempt from Sections 25110, 25120, and 25130 of the Corporations Code.
SEC. 5.Section 100008 of the Government Code is amended to read:100008.(a)The CalSavers Retirement Savings Program shall include, as determined by the board, one or more payroll deduction IRA arrangements.
(b)(1)The program shall, with board approval, establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, such as tax credits or deposits from any unit of federal or state government, that require monetary deposits into specified IRA accounts.
(2)(A)The program shall notify participants at least 30 days prior to the creation of the accounts described in paragraph (1).
(B)The notification shall include, at a minimum, all of the following:
(i)The benefits and risks associated with the existence and operation of the IRA.
(ii)How to opt out of the IRA.
(iii)The mechanics for how to operate the IRA alongside other CalSavers accounts.
(iv)The process for withdrawal of retirement savings and any penalties or tax implications for early withdrawal.
(v)How to obtain additional information on the account.
SEC. 6.Section 100010 of the Government Code is amended to read:100010.(a)The board shall have the power and authority to do all of the following:
(1)Make and enter into contracts necessary for the administration of the trust.
(2)Adopt a seal and change and amend it from time to time.
(3)Cause moneys in the program fund to be held and invested and reinvested.
(4)Accept any grants, gifts, legislative appropriation, and other moneys from the state, any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the administrative fund or the program fund.
(5)Contract with a program administrator and determine the duties of the program administrator. The Treasurer shall, on behalf of the board, appoint an executive director, who shall not be a member of the board and who shall serve at the pleasure of the board. The Treasurer shall determine the duties of the executive director and other staff as appropriate and set their compensation. The board may authorize the executive director to enter into contracts on behalf of the board or conduct any business necessary for the efficient operation of the board.
(6)Make provisions for the payment of costs of administration and operation of the trust.
(7)Employ staff.
(8)Retain and contract with the board of a California public retirement system, private financial institutions, other financial and service providers, consultants, actuaries, counsel, auditors, third-party administrators, and other professionals as necessary.
(9)Procure insurance against any loss in connection with the property, assets, or activities of the trust.
(10)Procure insurance indemnifying each member of the board from personal loss or liability resulting from a members action or inaction as a member of the board.
(11)Set minimum and maximum investment levels in accordance with contribution limits set for IRAs by the Internal Revenue Code.
(12)Collaborate and cooperate with the board of a California public retirement system, private financial institutions, service providers, and business, financial, trade, membership, and other organizations to the extent necessary or desirable for the effective and efficient design, implementation, and administration of the program and to maximize outreach to eligible employers and eligible employees.
(13)Collaborate with, and evaluate the role of, licensed insurance agents and financial advisers in assisting and providing guidance for eligible employees.
(14)Cause expenses incurred to initiate, implement, maintain, and administer the program to be paid from contributions to, or investment returns or assets of, the program or arrangements established under the program, to the extent permitted under state and federal law.
(15)Facilitate compliance by the retirement savings program or arrangements established under the program with all applicable requirements for the program under the Internal Revenue Code of 1986, including tax qualification requirements or any other applicable law and accounting requirements, including providing or arranging for assistance to program sponsors and individuals in complying with applicable law and tax qualification requirements in a cost-effective manner.
(16)Carry out the duties and obligations of the trust pursuant to this title and exercise any and all other powers as appropriate for the effectuation of the purposes, objectives, and provisions of this title pertaining to the trust.
(17)Assess the feasibility of multistate or regional agreements to administer the program through shared administrative resources and enter into those agreements if determined beneficial.
(b)The board shall adopt regulations it deems necessary to implement this title consistent with the Internal Revenue Code and regulations issued pursuant to that code to ensure that the program meets all criteria for federal tax-deferral or tax-exempt benefits, or both. The board may delegate this rulemaking authority to the executive director by resolution.
SEC. 7.Section 100012 of the Government Code is amended to read:100012.In addition to the powers and authority granted to the board pursuant to Section 100010, the board shall have the power and authority to do the following:
(a)Cause the retirement savings program or arrangements established under the program to be designed, established, and operated, in a manner consistent with all of the following:
(1)In accordance with best practices for retirement savings vehicles.
(2)To encourage participation, saving, and sound investment practices, and appropriate selection of default investments.
(3)With simplicity, ease of administration for participating employers, and portability of benefits.
(b)Arrange for collective, common, and pooled investment of assets of the retirement savings program or arrangements, including investments in conjunction with other funds with which those assets are permitted to be collectively invested, with a view to saving costs through efficiencies and economies of scale.
(c)Disseminate educational information designed to educate participants about the benefits of planning and saving for retirement and information to help them decide the level of CalSavers Retirement Savings Program participation and savings strategies that may be appropriate for them.
(d)Disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program, and the federal Retirement Savings Contribution Credit (Savers Credit) and its successor the federal retirement savings incentive, known as the Savers Match, available to lower and moderate-income households for qualified savings contributions.
(e)Submit progress and status reports to participating employers and eligible employees.
(f)If necessary, determine the eligibility of an employer, employee, or other individual to participate in the program.
(g)Evaluate and establish the process by which an eligible employee of an eligible employer is able to contribute a portion of their salary or wages to the program for automatic deposit of those contributions and the participating employer provides a payroll deposit retirement savings arrangement to forward the employee contribution and related information to the program or its agents. This may include, but is not limited to, financial services companies and third-party administrators with the capability to receive and process employee information and contributions for payroll deposit retirement savings arrangements or other arrangements authorized by this title.
(h)Design and establish the process for the enrollment of program participants.
(i)Allow participating employers to use the program to remit employees contributions to their IRAs on their employees behalf.
(j)Allow participating employers to make their own contributions to their employees IRAs, provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.
(k)Evaluate and establish the process by which an individual or an employee of a nonparticipating employer may enroll in and make contributions to the program.
SEC. 8.Section 100016 of the Government Code is amended to read:100016.(a)Vendors that would like to contract with the board shall provide to the board, at a minimum, all of the following information:
(1)A statement of experience in California and in other states in providing employer-sponsored retirement plans, and payroll deduction IRAs.
(2)A description by the vendor of the types of retirement investment products offered.
(3)A disclosure of all expenses paid directly or indirectly by retirement plan participants, including, but not limited to, penalties for early withdrawals, declining or fixed withdrawal charges, surrender or deposit charges, management fees, and annual fees, supported by documentation as required for prospectus disclosure by the National Association of Securities Dealers and the Securities and Exchange Commission. Vendors shall be required to provide information regarding the impact of product fees upon a hypothetical investment, as described in Section 100022.
(4)The types of products, product features, services offered to participants, and information about how to access product prospectuses or other relevant product information.
(5)A discussion of the ability, experience, and commitment of the vendor to provide retirement counseling and education services, including, but not limited to, access to group meetings and individual counseling by various means, including telephone and telecommunications devices for the deaf (TDD), internet, language access services, and face-to-face consultations by registered representatives.
(6)A statement of the financial strength of the vendor by identifying its ratings assigned by nationally recognized rating services that evaluate the financial strength of similar companies.
(7)The location of offices and counselors, individual registered representatives, brokers, financial planners, agents, or other methods of distribution, of the vendor that would serve employers and their employees in California.
(8)A description of the ability of the vendor to comply with all applicable provisions of federal and state law governing retirement plans, including minimum distribution requirements and contribution limits.
(9)To the extent applicable, the demonstrated ability of the vendor to offer an appropriate array of accumulation funding options, including, but not limited to, investment options that offer guaranteed returns on contributions and the conversion of retirement savings account balances to secure retirement income, a diversified mix of value, growth, growth and income, hybrid, and index funds or accounts across large, medium, and small capitalization asset classes, both domestic and international.
(10)A discussion of the range of administrative and customer services provided, including asset allocation, accounting and administration of benefits for individual participants, recordkeeping for individual participants, asset purchase, control, and safekeeping, execution of a participants instructions as to asset and contribution allocation, calculation of daily net asset values, direct access for participants to their account information, periodic reporting that is not less than quarterly to active participants on their account balances and transactions, and compliance with the standard of care consistent with federal law and applicable to the provision of investment services.
(11)Certification by the vendor that the information provided to the board accurately reflects the provisions of the retirement investment products it registers.
(b)Vendors shall supply information and data in the format prescribed by the board.
SEC. 9.Section 100018 of the Government Code is repealed.SEC. 10.Section 100020 of the Government Code is repealed.SEC. 11.Section 100022 of the Government Code is amended to read:100022.(a)The board shall maintain on its internet website the information required in Section 100016 about the retirement investment products offered by each contracted vendor and objective comparisons between the types of products.
(b)The board shall include on its internet website information on investment performance based upon the investments average annual total return as measured by a nationally recognized rating service selected by the board for standard periods of time of not less than one year.
(c)The boards internet website shall include a table showing, for each registered fund, the total fee cost in dollars incurred by a shareholder who initially invested five thousand dollars ($5,000), earned a 5 percent rate of return for 1-, 5-, 10-, 15-, and 20-year time periods. This table shall be accompanied by a disclaimer that the rate of return is for purposes of illustrating the respective impacts of different fee amounts on each investment, and is not to predict future investment returns.
SEC. 12.Section 100024 of the Government Code is repealed.SEC. 13.Section 100026 of the Government Code is amended to read:100026.A contracted vendor may not charge a fee associated with a registered product that is not disclosed.
SEC. 14.Section 100028 of the Government Code is repealed.SEC. 15.Section 100030 of the Government Code is amended to read:100030.(a)The board and the program, and its officers and employees, are not responsible for, and shall not be held liable for, the adequacy of the information provided by contracted vendors and contained in the programs internet website.
(b)The board and the program shall not be held liable for the actions of contracted vendors.
SEC. 16.Section 100032 of the Government Code is amended to read:100032.(a)Any employer may choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board.
(b)Within 12 months after the board opens the program for enrollment, eligible employers with more than 100 eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(c)Within 24 months after the board opens the program for enrollment, eligible employers with more than 50 eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(d)Within 36 months after the board opens the program for enrollment, eligible employers with five or more employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(e)By December 31, 2025, eligible employers with one or more eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(b)(f)(1)Beginning December 31, 2027, and by December 31 of each calendar year thereafter, eligible employers with one or more eligible employees that who became subject to the requirements of the CalSavers Retirement Savings Trust Act on or after January 1, 2027 and do not offer a retirement savings program pursuant to paragraph (1) of subdivision (d) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(2)(g)The board, in its discretion, may extend the dates in paragraph (1). subdivisions (b) to (f), inclusive.
(c)(h)(1)Each eligible employee shall be enrolled in the program unless the employee elects not to participate in the program. An eligible employee may elect to opt out of the program by making a notation on the opt-out form or by contacting the program by telephone.
(2)Following initial implementation of the program pursuant to this section, at least once every two years, the board may designate an open enrollment period during which eligible employees that previously opted out of the program shall be given the employee information packet with the disclosure and opt-out forms, for the employee to enroll in the program or opt out of the program by making a notation on the opt-out form.
(3)An employee who elects to opt out of the program who subsequently wants to participate through the employers payroll deposit retirement savings arrangement may enroll during the boards designated open enrollment period or at any other time.
(d)(i)(1)An employer that provides an employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or that offers an automatic enrollment payroll deduction IRA, shall be exempt from the requirements of the CalSavers Retirement Savings Program, if the plan or IRA qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.
(2)An employer shall retain the option at all times to set up and offer a tax-qualified retirement plan, as described in paragraph (1), instead of having a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers Retirement Savings Program.
(e)(j)An eligible employee may also terminate their participation in the program at any time in a manner prescribed by the board and thereafter by making a notation on the opt-out form or by telephone.
(f)(k)Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employees annual salary or wages to the program.
(g)(l)By regulation, the board may adjust the contribution amount set in subdivision (f) (k) to no less than 2 percent and no more than 5 percent and may vary that amount within that 2 percent to 5 percent range.
(h)(m)The board may implement annual automatic escalation of employee contributions.
(1) (A)Employee contributions subject to automatic escalation shall not exceed 10 percent of salary.
(B)The board shall notify participating employees about the increase in salary subject to automatic escalation from 8 percent to 10 percent made by the measure adding this subparagraph.
(2)Automatic escalation shall result in no more than a 1-percent-of-salary increase in employee contributions per calendar year.
(3)A participating employee may elect to opt out of automatic escalation and may set their contribution percentage rate at a level determined by the participating employee.
SEC. 17.Section 100033 of the Government Code is amended to read:100033.(a)The CalSavers Retirement Savings Board shall have the power and duties necessary to administer the enforcement of employer compliance with this title.
(b)(1)The CalSavers Retirement Savings Board shall issue to each employer who fails to allow its eligible employees to participate in the CalSavers Retirement Program pursuant to this title a notice of penalty application.
(2)Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the CalSavers Retirement Savings Program pursuant to Sections 100014 and 100032, after the CalSavers Retirement Savings Board serves a final notice of penalty application, shall be subject to a penalty of two hundred fifty dollars ($250) per eligible employee and an additional penalty of five hundred dollars ($500) per eligible employee if noncompliance continues as described in Section 19287 of the Revenue and Taxation Code.
(3)(A)Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the program after the penalties described in paragraph (2) have been assessed imposed shall be subject to a subsequent penalty of five hundred dollars ($500) per eligible employee.
(B)Penalties assessed under this subdivision shall not The penalty imposed may be imposed more than repeatedly but not to exceed once every 180 days since the last violation. notice of the imposition of a penalty for the specific noncompliance.
(c)The CalSavers Retirement Savings Board shall issue a final notice of penalty application to an eligible employer that fails to comply with this title. Pursuant to Section 19287 of the Revenue and Taxation Code, the Franchise Tax Board shall issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the CalSavers Retirement Savings Board informs the Franchise Tax Board of the eligible employers noncompliance.
(d)(1)An eligible employer may appeal any penalty imposed under this section in writing to the Franchise Tax Board pursuant to Section 19288 of the Revenue and Taxation Code.
(2)The CalSavers Retirement Savings Board shall reimburse the Franchise Tax Board for the costs incurred by the Franchise Tax Board in administering the program authorized by this article.
SEC. 18.Section 100046 of the Government Code is amended to read:100046.The CalSavers Retirement Savings Program is approved by the Legislature and implemented as of January 1, 2017. The board shall consider and utilize the following parameters in designing the program:
(a)The board shall include a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code in the program if the board determines, and the Director of the State Department of Social Services and the Director of the Department of Finance certify, in writing, all of the following:
(1)The inclusion meets all state and federal legal requirements.
(2)The appropriate employer of record has been identified for the purpose of satisfying all the programs employer requirements.
(3)The payroll deduction, described in Section 12302.2 of the Welfare and Institutions Code, can be implemented at reasonable costs.
(4)The inclusion does not create a financial liability for the state or employer of record.
(b)The board shall structure the program so as to ensure the state is prohibited from incurring liabilities associated with administering the program and that the state has no liability for the program or its investments.
(c)The board shall determine necessary costs associated with outreach, customer service, enforcement, staffing and consultant costs, and all other costs necessary to administer the program.
(d)The board shall consult with employer representatives to create an administrative structure that facilitates employee participation while addressing employer needs, including, but not limited to, clearly defining employers duties and liability exemption pursuant to Section 100034.
(e)The board shall include comprehensive worker education and outreach in the program, and the board may collaborate with state and local government agencies, community-based and nonprofit organizations, foundations, vendors, and other entities deemed appropriate to develop and secure ongoing resources for education and outreach that reflect the cultures and languages of the states diverse workforce population.
(f)The board shall include comprehensive employer education and outreach in the program, with an emphasis on employers with fewer than 100 employees, developed in consultation with employer representatives, with the integration of the following components:
(1)A program internet website to assist the employers of participating employees.
(2)A toll-free help line for employers with live and automated assistance.
(3)Online internet web training.
(4)Presentations to business associations.
(5)Targeted outreach to small businesses with 10 or less employees.
SEC. 19.Section 19287 of the Revenue and Taxation Code is amended to read:19287.(a)The Franchise Tax Board shall issue a first notice of the imposition of a penalty for noncompliance with Title 21 (commencing with Section 100000) of the Government Code to an eligible employer after the CalSavers Retirement Savings Board informs the Franchise Tax Board of the eligible employers noncompliance noncompliance.
(b)Unless an appeal is filed pursuant to Section 19288, within 90 days after the issuance of the first notice, as provided in subdivision (a), the Franchise Tax Board shall issue a second notice of the imposition of a penalty for noncompliance under Title 21 (commencing with Section 100000) of the Government Code to an eligible employer.
(c)If an appeal is filed pursuant to Section 19288, within 90 days after a determination by the Franchise Tax Board sustaining the penalty, the Franchise Tax Board shall issue a second notice of the imposition of a penalty for noncompliance under Title 21 (commencing with Section 100000) of the Government Code to an eligible employer.
(d)The Franchise Tax Board shall issue subsequent penalty notices of the imposition of penalties for noncompliance with Title 21 (commencing with Section 100000) of the Government Code to an eligible employer if noncompliance continues as described in paragraph (3) of subdivision (b) of Section 100033 of the Government Code after the CalSavers Retirement Savings Board informs the Franchise Tax Board of the eligible employers noncompliance.
SEC. 20.Section 19288 of the Revenue and Taxation Code is amended to read:19288.(a)Within 90 days after the issuance of the notice described in subdivision (a) subdivisions (a) and (d) of Section 19287, an eligible employer may appeal the imposition of a penalty for noncompliance under Title 21 (commencing with Section 100000) of the Government Code.
(b)The Franchise Tax Board shall hear and determine an eligible employers appeal of the CalSavers Retirement Savings Boards imposition of a penalty as provided in Government Code Section 100033.
(c)The Franchise Tax Board, upon the conclusion of the appeal shall notify the eligible employer and the CalSavers Retirement Savings Board of its determination in writing.
This act shall be known, and may be cited, as the Savings Access and Vested Empowerment (SAVE) for All Workers Act.
SEC. 2.Section 100000 of the Government Code is amended to read:100000.For purposes of this title, the following definitions apply:
(a)Board means the CalSavers Retirement Savings Board.
(b)CalSavers Retirement Savings Program or program means a retirement savings program offered pursuant to the CalSavers Retirement Savings Trust Act.
(c)(1)Eligible employee means a person who is employed by an eligible employer.
(2)Eligible employee does not include:
(A)Any employee covered under the federal Railway Labor Act (45 U.S.C. Sec. 151), or any employee engaged in interstate commerce so as not to be subject to the legislative powers of the state, except insofar as application of this title is authorized under the United States Constitution or laws of the United States.
(B)Any employee on whose behalf an employer makes contributions to a Taft-Hartley pension trust fund.
(d)(1)(A)Eligible employer means a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business, the federal government, the state, any county, any municipal corporation, or any of the states units or instrumentalities, that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.
(B)(i)Eligible employer also includes household employers.
(ii)Household employers includes those who have hired or contracted someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level.
(2)Upon a positive determination pursuant to subdivision (a) of Section 100046, eligible employer means an employer of a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code.
(3)Eligible employer does not include an employer that provides a retirement savings arrangement as described in Section 100032.
(e)IRA means an individual retirement account or individual retirement annuity under Section 408(a), 408(b), or 408A of Title 26 of the United States Code.
(f)Participating employer means an eligible employer that provides a payroll deposit retirement savings arrangement provided for by this title for eligible employees.
(g)Payroll deposit retirement savings arrangement means an arrangement by which an employer allows employees to remit payroll deduction contributions to a retirement savings program, which may include an IRA, and in the case of a payroll deduction IRA arrangement, to remit specifically to an IRA.
(h)Trust means the CalSavers Retirement Savings Trust established by this title.
(i)Vendor means a registered investment company or admitted life insurance company qualified to do business in California that provides retirement investment products. Vendor also includes a company that is registered to do business in California that provides payroll services or recordkeeping services and offers retirement plans or payroll deduction IRA arrangements using products of regulated investment companies and insurance companies qualified to do business in California. Vendor does not include individual registered representatives, brokers, financial planners, or agents.
SEC. 3.Section 100002 of the Government Code is amended to read:100002.(a)(1)There is hereby created within state government the CalSavers Retirement Savings Board, which shall consist of nine members, with the Treasurer serving as chair, as follows:
(A)The Treasurer.
(B)The Director of Finance, or the directors designee.
(C)The Controller.
(D)An individual with retirement savings and investment expertise appointed by the Senate Committee on Rules.
(E)An employee representative appointed by the Speaker of the Assembly.
(F)A small business representative appointed by the Governor.
(G)A public member appointed by the Governor.
(H)Two additional members appointed by the Governor.
(2)Members of the board appointed by the Governor, the Senate Committee on Rules, and the Speaker of the Assembly shall serve at the pleasure of the appointing authority.
(b)All members of the board shall serve without compensation. Members of the board shall be reimbursed for necessary travel expenses incurred in connection with their board duties.
(c)A board member, program administrator, and other staff of the board shall not do any of the following:
(1)Directly or indirectly have any interest in the making of any investment made for the program, or in the gains or profits accruing from any investment made for the program.
(2)Borrow any funds or deposits of the trust, or use those funds or deposits in any manner, for themselves or as an agent or partner of others.
(3)Become an endorser, surety, or obligor on investments by the board.
(d)The board and the program administrator and staff, including contracted administrators and consultants, shall discharge their duties as fiduciaries with respect to the trust solely in the interest of the program participants as follows:
(1)For the exclusive purposes of providing benefits to program participants and defraying reasonable expenses of administering the program.
(2)By investing with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with those matters would use in the conduct of an enterprise of a like character and with like aims.
(e)The board, subject to its authority and fiduciary duty, shall design and implement the CalSavers Retirement Savings Program.
(1)The board shall maintain an investment policy statement that defines the programs investment objectives and articulates policies and procedures enabling investment objectives to be met in a prudent manner. The board shall seek to minimize participant fees and strive to implement program features that provide maximum possible income replacement balanced with appropriate risk in an IRA-based environment. The investment policy statement shall describe the investment options available to holders of individual savings accounts established as part of the program. The investment policy statement shall include a risk management and oversight program. Investment options may encompass a range of risk and return opportunities and allow for a rate of return commensurate with an appropriate level of risk to meet the investment objectives stated in the policy.
(2)The board shall annually review the investment policy statement. The board shall review the investment policy statement and any changes in the investment policy statement at a public hearing.
(3)The risk management and oversight program shall include an effective risk management system to monitor the risk levels of the CalSavers Retirement Savings Program investment portfolio and ensure that the risks taken are prudent and properly managed. The program shall be managed to provide an integrated process for overall risk management on both a consolidated and disaggregated basis, and to monitor investment returns as well as risk to determine if the risks taken are adequately compensated compared to applicable performance benchmarks and standards.
(f)The board shall approve an investment management entity or entities, the costs of which shall be paid out of funds held in the trust and shall not be attributed to the administrative costs of the board in operating the trust. Not later than 30 days after the close of each month, the board shall place on file for public inspection during business hours a report with respect to investments made pursuant to this section and a report of deposits in financial institutions.
SEC. 4.Section 100004 of the Government Code is amended to read:100004.(a)There is hereby established a retirement savings trust known as the CalSavers Retirement Savings Trust to be administered by the board for the purpose of promoting greater retirement savings for California private employees in a convenient, voluntary, low-cost, and portable manner. After sufficient funds are made available for this title to be operative, the trust, as a self-sustaining trust, shall pay all costs of administration only out of moneys on deposit therein.
(b)The board shall segregate moneys received by the trust into two funds, which shall be identified as the program fund and the administrative fund. Notwithstanding Section 13340, moneys in the trust are hereby continuously appropriated, without regard to fiscal years, to the board for the purposes of this title.
(c)Moneys in the program fund may be invested or reinvested by the Treasurer or may be invested in whole or in part under contract with the board of a California public retirement system, with private money managers, or a combination thereof, as determined by the board.
(d)Transfers may be made from the program fund to the administrative fund for the purpose of paying operating costs associated with administering the trust and as required by this title, including, but not limited to, board operations, program administrator and investment expenses, and enforcement and compliance costs. On and after six years from the date the program is implemented, on an annual basis, expenditures from the administrative fund shall not exceed more than 1 percent of the total program fund. All costs of administration of the trust shall be paid out of the administrative fund.
(e)Any contributions paid by employees and employers into the trust shall be used exclusively for the purpose of paying benefits to the participants of the CalSavers Retirement Savings Program, for the cost of administration of the program, and for investments made for the benefit of the program.
(f)The trust is an instrumentality of the state. Any security issued, managed, or invested by the board within the trust on behalf of an individual participating within the CalSavers Retirement Savings Program shall be exempt from Sections 25110, 25120, and 25130 of the Corporations Code.
SEC. 5.Section 100008 of the Government Code is amended to read:100008.(a)The CalSavers Retirement Savings Program shall include, as determined by the board, one or more payroll deduction IRA arrangements.
(b)(1)The program shall, with board approval, establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, such as tax credits or deposits from any unit of federal or state government, that require monetary deposits into specified IRA accounts.
(2)(A)The program shall notify participants at least 30 days prior to the creation of the accounts described in paragraph (1).
(B)The notification shall include, at a minimum, all of the following:
(i)The benefits and risks associated with the existence and operation of the IRA.
(ii)How to opt out of the IRA.
(iii)The mechanics for how to operate the IRA alongside other CalSavers accounts.
(iv)The process for withdrawal of retirement savings and any penalties or tax implications for early withdrawal.
(v)How to obtain additional information on the account.
(c)(1)(A)The program shall, with board approval, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments.(B)The accounts shall not have minimum balance requirements.(2)By regulation, the board may limit the total amount of contributions that may be deposited into the payroll deposit emergency savings account described in this subdivision. (3)(A)Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employees annual salary or wages to the payroll deposit emergency savings account described in this subdivision.(B)By regulation, the board may adjust the contribution amount to no less than 0.5 percent and no more than 3 percent and may vary that amount within that 0.5 percent to 3 percent range.(4)Participating employers may make contributions to their participating employees emergency savings accounts provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.(5)(A)The program shall notify participants at least 30 days prior to the creation of the payroll deposit emergency savings accounts described in this subdivision.(B)The notification shall include, at a minimum, all of the following:(i)The benefits and risks associated with the existence and operation of the account.(ii)How to opt out of the account.(iii)The mechanics for how to operate the account alongside other CalSavers accounts.(iv)The process for withdrawal of savings from the account.(v)The purpose of the account.(vi)How to obtain additional information on the account, including the current annual percentage yield.SEC. 6.Section 100010 of the Government Code is amended to read:100010.(a)The board shall have the power and authority to do all of the following:
(1)Make and enter into contracts necessary for the administration of the trust.
(2)Adopt a seal and change and amend it from time to time.
(3)Cause moneys in the program fund to be held and invested and reinvested.
(4)Accept any grants, gifts, legislative appropriation, and other moneys from the state, any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the administrative fund or the program fund.
(5)Contract with a program administrator and determine the duties of the program administrator. The Treasurer shall, on behalf of the board, appoint an executive director, who shall not be a member of the board and who shall serve at the pleasure of the board. The Treasurer shall determine the duties of the executive director and other staff as appropriate and set their compensation. The board may authorize the executive director to enter into contracts on behalf of the board or conduct any business necessary for the efficient operation of the board.
(6)Make provisions for the payment of costs of administration and operation of the trust.
(7)Employ staff.
(8)Retain and contract with the board of a California public retirement system, private financial institutions, other financial and service providers, consultants, actuaries, counsel, auditors, third-party administrators, and other professionals as necessary.
(9)Procure insurance against any loss in connection with the property, assets, or activities of the trust.
(10)Procure insurance indemnifying each member of the board from personal loss or liability resulting from a members action or inaction as a member of the board.
(11)Set minimum and maximum investment levels in accordance with contribution limits set for IRAs by the Internal Revenue Code.
(12)Collaborate and cooperate with the board of a California public retirement system, private financial institutions, service providers, and business, financial, trade, membership, and other organizations to the extent necessary or desirable for the effective and efficient design, implementation, and administration of the program and to maximize outreach to eligible employers and eligible employees.
(13)Collaborate with, and evaluate the role of, licensed insurance agents and financial advisers in assisting and providing guidance for eligible employees.
(14)Cause expenses incurred to initiate, implement, maintain, and administer the program to be paid from contributions to, or investment returns or assets of, the program or arrangements established under the program, to the extent permitted under state and federal law.
(15)Facilitate compliance by the retirement savings program or arrangements established under the program with all applicable requirements for the program under the Internal Revenue Code of 1986, including tax qualification requirements or any other applicable law and accounting requirements, including providing or arranging for assistance to program sponsors and individuals in complying with applicable law and tax qualification requirements in a cost-effective manner.
(16)Carry out the duties and obligations of the trust pursuant to this title and exercise any and all other powers as appropriate for the effectuation of the purposes, objectives, and provisions of this title pertaining to the trust.
(17)Assess the feasibility of multistate or regional agreements to administer the program through shared administrative resources and enter into those agreements if determined beneficial.
(b)The board shall adopt regulations it deems necessary to implement this title consistent with the Internal Revenue Code and regulations issued pursuant to that code to ensure that the program meets all criteria for federal tax-deferral or tax-exempt benefits, or both. The board may delegate this rulemaking authority to the executive director by resolution.
SEC. 7.Section 100012 of the Government Code is amended to read:100012.In addition to the powers and authority granted to the board pursuant to Section 100010, the board shall have the power and authority to do the following:
(a)Cause the retirement savings program or arrangements established under the program to be designed, established, and operated, in a manner consistent with all of the following:
(1)In accordance with best practices for retirement savings vehicles.
(2)To encourage participation, saving, and sound investment practices, and appropriate selection of default investments.
(3)With simplicity, ease of administration for participating employers, and portability of benefits.
(b)Arrange for collective, common, and pooled investment of assets of the retirement savings program or arrangements, including investments in conjunction with other funds with which those assets are permitted to be collectively invested, with a view to saving costs through efficiencies and economies of scale.
(c)Disseminate educational information designed to educate participants about the benefits of planning and saving for retirement and information to help them decide the level of CalSavers Retirement Savings Program participation and savings strategies that may be appropriate for them.
(d)Disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program, and the federal Retirement Savings Contribution Credit (Savers Credit) and its successor the federal retirement savings incentive, known as the Savers Match, available to lower and moderate-income households for qualified savings contributions.
(e)Submit progress and status reports to participating employers and eligible employees.
(f)If necessary, determine the eligibility of an employer, employee, or other individual to participate in the program.
(g)Evaluate and establish the process by which an eligible employee of an eligible employer is able to contribute a portion of their salary or wages to the program for automatic deposit of those contributions and the participating employer provides a payroll deposit retirement savings arrangement to forward the employee contribution and related information to the program or its agents. This may include, but is not limited to, financial services companies and third-party administrators with the capability to receive and process employee information and contributions for payroll deposit retirement savings arrangements or other arrangements authorized by this title.
(h)Design and establish the process for the enrollment of program participants.
(i)Allow participating employers to use the program to remit employees contributions to their IRAs on their employees behalf.
(j)Allow participating employers to make their own contributions to their employees IRAs, provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.
(k)Evaluate and establish the process by which an individual or an employee of a nonparticipating employer may enroll in and make contributions to the program.
SEC. 8.Section 100016 of the Government Code is amended to read:100016.(a)Vendors that would like to contract with the board shall provide to the board, at a minimum, all of the following information:
(1)A statement of experience in California and in other states in providing employer-sponsored retirement plans, and payroll deduction IRAs.
(2)A description by the vendor of the types of retirement investment products offered.
(3)A disclosure of all expenses paid directly or indirectly by retirement plan participants, including, but not limited to, penalties for early withdrawals, declining or fixed withdrawal charges, surrender or deposit charges, management fees, and annual fees, supported by documentation as required for prospectus disclosure by the National Association of Securities Dealers and the Securities and Exchange Commission. Vendors shall be required to provide information regarding the impact of product fees upon a hypothetical investment, as described in Section 100022.
(4)The types of products, product features, services offered to participants, and information about how to access product prospectuses or other relevant product information.
(5)A discussion of the ability, experience, and commitment of the vendor to provide retirement counseling and education services, including, but not limited to, access to group meetings and individual counseling by various means, including telephone and telecommunications devices for the deaf (TDD), internet, language access services, and face-to-face consultations by registered representatives.
(6)A statement of the financial strength of the vendor by identifying its ratings assigned by nationally recognized rating services that evaluate the financial strength of similar companies.
(7)The location of offices and counselors, individual registered representatives, brokers, financial planners, agents, or other methods of distribution, of the vendor that would serve employers and their employees in California.
(8)A description of the ability of the vendor to comply with all applicable provisions of federal and state law governing retirement plans, including minimum distribution requirements and contribution limits.
(9)To the extent applicable, the demonstrated ability of the vendor to offer an appropriate array of accumulation funding options, including, but not limited to, investment options that offer guaranteed returns on contributions and the conversion of retirement savings account balances to secure retirement income, a diversified mix of value, growth, growth and income, hybrid, and index funds or accounts across large, medium, and small capitalization asset classes, both domestic and international.
(10)A discussion of the range of administrative and customer services provided, including asset allocation, accounting and administration of benefits for individual participants, recordkeeping for individual participants, asset purchase, control, and safekeeping, execution of a participants instructions as to asset and contribution allocation, calculation of daily net asset values, direct access for participants to their account information, periodic reporting that is not less than quarterly to active participants on their account balances and transactions, and compliance with the standard of care consistent with federal law and applicable to the provision of investment services.
(11)Certification by the vendor that the information provided to the board accurately reflects the provisions of the retirement investment products it registers.
(b)Vendors shall supply information and data in the format prescribed by the board.
SEC. 9.Section 100018 of the Government Code is repealed.SEC. 10.Section 100020 of the Government Code is repealed.SEC. 11.Section 100022 of the Government Code is amended to read:100022.(a)The board shall maintain on its internet website the information required in Section 100016 about the retirement investment products offered by each contracted vendor and objective comparisons between the types of products.
(b)The board shall include on its internet website information on investment performance based upon the investments average annual total return as measured by a nationally recognized rating service selected by the board for standard periods of time of not less than one year.
(c)The boards internet website shall include a table showing, for each registered fund, the total fee cost in dollars incurred by a shareholder who initially invested five thousand dollars ($5,000), earned a 5 percent rate of return for 1-, 5-, 10-, 15-, and 20-year time periods. This table shall be accompanied by a disclaimer that the rate of return is for purposes of illustrating the respective impacts of different fee amounts on each investment, and is not to predict future investment returns.
SEC. 12.Section 100024 of the Government Code is repealed.SEC. 13.Section 100026 of the Government Code is amended to read:100026.A contracted vendor may not charge a fee associated with a registered product that is not disclosed.
SEC. 14.Section 100028 of the Government Code is repealed.SEC. 15.Section 100030 of the Government Code is amended to read:100030.(a)The board and the program, and its officers and employees, are not responsible for, and shall not be held liable for, the adequacy of the information provided by contracted vendors and contained in the programs internet website.
(b)The board and the program shall not be held liable for the actions of contracted vendors.
SEC. 16.Section 100032 of the Government Code is amended to read:100032.(a)Any employer may choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board.
(b)(1)Beginning December 31, 2027, and by December 31 of each calendar year thereafter, eligible employers with one or more eligible employees that do not offer a retirement savings program pursuant to paragraph (1) of subdivision (d) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(2)The board, in its discretion, may extend the dates in paragraph (1).
(c)(1)Each eligible employee shall be enrolled in the program unless the employee elects not to participate in the program. An eligible employee may elect to opt out of the program by making a notation on the opt-out form or by contacting the program by telephone.
(2)Following initial implementation of the program pursuant to this section, at least once every two years, the board may designate an open enrollment period during which eligible employees that previously opted out of the program shall be given the employee information packet with the disclosure and opt-out forms, for the employee to enroll in the program or opt out of the program by making a notation on the opt-out form.
(3)An employee who elects to opt out of the program who subsequently wants to participate through the employers payroll deposit retirement savings arrangement may enroll during the boards designated open enrollment period or at any other time.
(d)(1)An employer that provides an employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or that offers an automatic enrollment payroll deduction IRA, shall be exempt from the requirements of the CalSavers Retirement Savings Program, if the plan or IRA qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.
(2)An employer shall retain the option at all times to set up and offer a tax-qualified retirement plan, as described in paragraph (1), instead of having a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers Retirement Savings Program.
(e)An eligible employee may also terminate their participation in the program at any time in a manner prescribed by the board and thereafter by making a notation on the opt-out form or by telephone.
(f)Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employees annual salary or wages to the program.
(g)By regulation, the board may adjust the contribution amount set in subdivision (f) to no less than 2 percent and no more than 5 percent and may vary that amount within that 2 percent to 5 percent range.
(h)The board may implement annual automatic escalation of employee contributions.
(1) (A)Employee contributions subject to automatic escalation shall not exceed 10 percent of salary.(B)The board shall notify participating employees about the increase in salary subject to automatic escalation from 8 percent to 10 percent made by the measure adding this subparagraph.
(2)Automatic escalation shall result in no more than a 1-percent-of-salary increase in employee contributions per calendar year.
(3)A participating employee may elect to opt out of automatic escalation and may set their contribution percentage rate at a level determined by the participating employee.
SEC. 17.Section 100033 of the Government Code is amended to read:100033.(a)The CalSavers Retirement Savings Board shall have the power and duties necessary to administer the enforcement of employer compliance with this title.
(b)(1)The CalSavers Retirement Savings Board shall issue to each employer who fails to allow its eligible employees to participate in the CalSavers Retirement Program pursuant to this title a notice of penalty application.
(2)Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the CalSavers Retirement Savings Program pursuant to Sections 100014 and 100032, after the CalSavers Retirement Savings Board serves a final notice of penalty application, shall be subject to a penalty of two hundred fifty dollars ($250) per eligible employee and an additional penalty of five hundred dollars ($500) per eligible employee if noncompliance continues as described in Section 19287 of the Revenue and Taxation Code.
(3)(A)Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the program after the penalties described in paragraph (2) have been assessed shall be subject to a penalty of five hundred dollars ($500) per eligible employee.
(B)Penalties assessed under this subdivision shall not be imposed more than once every 180 days since the last violation.
(c)The CalSavers Retirement Savings Board shall issue a final notice of penalty application to an eligible employer that fails to comply with this title. Pursuant to Section 19287 of the Revenue and Taxation Code, the Franchise Tax Board shall issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the CalSavers Retirement Savings Board informs the Franchise Tax Board of the eligible employers noncompliance.
(d)(1)An eligible employer may appeal any penalty imposed under this section in writing to the Franchise Tax Board pursuant to Section 19288 of the Revenue and Taxation Code.
(2)The CalSavers Retirement Savings Board shall reimburse the Franchise Tax Board for the costs incurred by the Franchise Tax Board in administering the program authorized by this article.
SEC. 18.Section 100046 of the Government Code is amended to read:100046.The CalSavers Retirement Savings Program is approved by the Legislature and implemented as of January 1, 2017. The board shall consider and utilize the following parameters in designing the program:
(a)The board shall include a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code in the program if the board determines, and the Director of the State Department of Social Services and the Director of the Department of Finance certify, in writing, all of the following:
(1)The inclusion meets all state and federal legal requirements.
(2)The appropriate employer of record has been identified for the purpose of satisfying all the programs employer requirements.
(3)The payroll deduction, described in Section 12302.2 of the Welfare and Institutions Code, can be implemented at reasonable costs.
(4)The inclusion does not create a financial liability for the state or employer of record.
(b)The board shall structure the program so as to ensure the state is prohibited from incurring liabilities associated with administering the program and that the state has no liability for the program or its investments.
(c)The board shall determine necessary costs associated with outreach, customer service, enforcement, staffing and consultant costs, and all other costs necessary to administer the program.
(d)The board shall consult with employer representatives to create an administrative structure that facilitates employee participation while addressing employer needs, including, but not limited to, clearly defining employers duties and liability exemption pursuant to Section 100034.
(e)The board shall include comprehensive worker education and outreach in the program, and the board may collaborate with state and local government agencies, community-based and nonprofit organizations, foundations, vendors, and other entities deemed appropriate to develop and secure ongoing resources for education and outreach that reflect the cultures and languages of the states diverse workforce population.
(f)The board shall include comprehensive employer education and outreach in the program, with an emphasis on employers with fewer than 100 employees, developed in consultation with employer representatives, with the integration of the following components:
(1)A program internet website to assist the employers of participating employees.
(2)A toll-free help line for employers with live and automated assistance.
(3)Online internet web training.
(4)Presentations to business associations.
(5)Targeted outreach to small businesses with 10 or less employees.
This act shall be known, and may be cited, as the Savings Access and Vested Empowerment (SAVE) for All Workers Act.
SECTION 1.SEC. 2.Section 100000 of the Government Code is amended to read:100000.For purposes of this title, the following definitions apply:
(a)Board means the CalSavers Retirement Savings Board.
(b)CalSavers Retirement Savings Program or program means a retirement savings program offered pursuant to the CalSavers Retirement Savings Trust Act.
(c)(1)Eligible employee means a person who is employed by an eligible employer.
(2)Eligible employee does not include:
(A)Any employee covered under the federal Railway Labor Act (45 U.S.C. Sec. 151), or any employee engaged in interstate commerce so as not to be subject to the legislative powers of the state, except insofar as application of this title is authorized under the United States Constitution or laws of the United States.
(B)Any employee on whose behalf an employer makes contributions to a Taft-Hartley pension trust fund.
(d)(1)(A)Eligible employer means a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business, the federal government, the state, any county, any municipal corporation, or any of the states units or instrumentalities, that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.
(B)(i)Eligible employer also includes household employers.
(ii)Household employers includes those who have hired or contracted someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level.
(2)Upon a positive determination pursuant to subdivision (a) of Section 100046, eligible employer means an employer of a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code.
(3)Eligible employer does not include an employer that provides a retirement savings arrangement as described in Section 100032.
(e)IRA means an individual retirement account or individual retirement annuity under Section 408(a), 408(b), or 408A of Title 26 of the United States Code.
(f)Participating employer means an eligible employer that provides a payroll deposit retirement savings arrangement provided for by this title for eligible employees.
(g)Payroll deposit retirement savings arrangement means an arrangement by which an employer allows employees to remit payroll deduction contributions to a retirement savings program, which may include an IRA, and in the case of a payroll deduction IRA arrangement, to remit specifically to an IRA.
(h)Trust means the CalSavers Retirement Savings Trust established by this title.
(i)Vendor means a registered investment company or admitted life insurance company qualified to do business in California that provides retirement investment products. Vendor also includes a company that is registered to do business in California that provides payroll services or recordkeeping services and offers retirement plans or payroll deduction IRA arrangements using products of regulated investment companies and insurance companies qualified to do business in California. Vendor does not include individual registered representatives, brokers, financial planners, or agents.
SEC. 2.SEC. 3.Section 100002 of the Government Code is amended to read:100002.(a)(1)There is hereby created within state government the CalSavers Retirement Savings Board, which shall consist of nine members, with the Treasurer serving as chair, as follows:
(A)The Treasurer.
(B)The Director of Finance, or the directors designee.
(C)The Controller.
(D)An individual with retirement savings and investment expertise appointed by the Senate Committee on Rules.
(E)An employee representative appointed by the Speaker of the Assembly.
(F)A small business representative appointed by the Governor.
(G)A public member appointed by the Governor.
(H)Two additional members appointed by the Governor.
(2)Members of the board appointed by the Governor, the Senate Committee on Rules, and the Speaker of the Assembly shall serve at the pleasure of the appointing authority.
(b)All members of the board shall serve without compensation. Members of the board shall be reimbursed for necessary travel expenses incurred in connection with their board duties.
(c)A board member, program administrator, and other staff of the board shall not do any of the following:
(1)Directly or indirectly have any interest in the making of any investment made for the program, or in the gains or profits accruing from any investment made for the program.
(2)Borrow any funds or deposits of the trust, or use those funds or deposits in any manner, for themselves or as an agent or partner of others.
(3)Become an endorser, surety, or obligor on investments by the board.
(d)The board and the program administrator and staff, including contracted administrators and consultants, shall discharge their duties as fiduciaries with respect to the trust solely in the interest of the program participants as follows:
(1)For the exclusive purposes of providing benefits to program participants and defraying reasonable expenses of administering the program.
(2)By investing with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with those matters would use in the conduct of an enterprise of a like character and with like aims.
(e)The board, subject to its authority and fiduciary duty, shall design and implement the CalSavers Retirement Savings Program.
(1)The board shall maintain an investment policy statement that defines the programs investment objectives and articulates policies and procedures enabling investment objectives to be met in a prudent manner. The board shall seek to minimize participant fees and strive to implement program features that provide maximum possible income replacement balanced with appropriate risk in an IRA-based environment. The investment policy statement shall describe the investment options available to holders of individual savings accounts established as part of the program. The investment policy statement shall include a risk management and oversight program. Investment options may encompass a range of risk and return opportunities and allow for a rate of return commensurate with an appropriate level of risk to meet the investment objectives stated in the policy.
(2)The board shall annually review the investment policy statement. The board shall review the investment policy statement and any changes in the investment policy statement at a public hearing.
(3)The risk management and oversight program shall include an effective risk management system to monitor the risk levels of the CalSavers Retirement Savings Program investment portfolio and ensure that the risks taken are prudent and properly managed. The program shall be managed to provide an integrated process for overall risk management on both a consolidated and disaggregated basis, and to monitor investment returns as well as risk to determine if the risks taken are adequately compensated compared to applicable performance benchmarks and standards.
(f)The board shall approve an investment management entity or entities, the costs of which shall be paid out of funds held in the trust and shall not be attributed to the administrative costs of the board in operating the trust. Not later than 30 days after the close of each month, the board shall place on file for public inspection during business hours a report with respect to investments made pursuant to this section and a report of deposits in financial institutions.
SEC. 3.SEC. 4.Section 100004 of the Government Code is amended to read:100004.(a)There is hereby established a retirement savings trust known as the CalSavers Retirement Savings Trust to be administered by the board for the purpose of promoting greater retirement savings for California private employees in a convenient, voluntary, low-cost, and portable manner. After sufficient funds are made available for this title to be operative, the trust, as a self-sustaining trust, shall pay all costs of administration only out of moneys on deposit therein.
(b)The board shall segregate moneys received by the trust into two funds, which shall be identified as the program fund and the administrative fund. Notwithstanding Section 13340, moneys in the trust are hereby continuously appropriated, without regard to fiscal years, to the board for the purposes of this title.
(c)Moneys in the program fund may be invested or reinvested by the Treasurer or may be invested in whole or in part under contract with the board of a California public retirement system, with private money managers, or a combination thereof, as determined by the board.
(d)Transfers may be made from the program fund to the administrative fund for the purpose of paying operating costs associated with administering the trust and as required by this title, including, but not limited to, board operations, program administrator and investment expenses, and enforcement and compliance costs. On and after six years from the date the program is implemented, on an annual basis, expenditures from the administrative fund shall not exceed more than 1 percent of the total program fund. All costs of administration of the trust shall be paid out of the administrative fund.
(e)Any contributions paid by employees and employers into the trust shall be used exclusively for the purpose of paying benefits to the participants of the CalSavers Retirement Savings Program, for the cost of administration of the program, and for investments made for the benefit of the program.
(f)The trust is an instrumentality of the state. Any security issued, managed, or invested by the board within the trust on behalf of an individual participating within the CalSavers Retirement Savings Program shall be exempt from Sections 25110, 25120, and 25130 of the Corporations Code.
SEC. 4.SEC. 5.Section 100008 of the Government Code is amended to read:100008.(a)The CalSavers Retirement Savings Program shall include, as determined by the board, one or more payroll deduction IRA arrangements.
(b)(1)The program shall, with board approval, establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, such as tax credits or deposits from any unit of federal or state government, that require monetary deposits into specified IRA accounts.
(2)(A)The program shall notify participants at least 30 days prior to the creation of the accounts described in paragraph (1).
(B)The notification shall include, at a minimum, all of the following:
(i)The benefits and risks associated with the existence and operation of the IRA.
(ii)How to opt out of the IRA.
(iii)The mechanics for how to operate the IRA alongside other CalSavers accounts.
(iv)The process for withdrawal of retirement savings and any penalties or tax implications for early withdrawal.
(v)How to obtain additional information on the account.
(c)(1)(A)The program shall, with board approval, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments.
(B)The accounts shall not exceed a contribution of one thousand dollars ($1,000) at any given time or a lesser amount as determined by the board, and shall not have minimum balance requirements.(B)The accounts shall not have minimum balance requirements.
(2)By regulation, the board may limit the total amount of contributions that may be deposited into the payroll deposit emergency savings account described in this subdivision.
(2)(3)(A)Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employees annual salary or wages to the payroll deposit emergency savings account described in this subdivision.
(B)By regulation, the board may adjust the contribution amount to no less than 0.5 percent and no more than 3 percent and may vary that amount within that 0.5 percent to 3 percent range.
(3)(4)Participating employers may make contributions to their participating employees emergency savings accounts provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.
(4)(5)(A)The program shall notify participants at least 30 days prior to the creation of the payroll deposit emergency savings accounts described in this subdivision.
(B)The notification shall include, at a minimum, all of the following:
(i)The benefits and risks associated with the existence and operation of the account.
(ii)How to opt out of the account.
(iii)The mechanics for how to operate the account alongside other CalSavers accounts.
(iv)The process for withdrawal of savings from the account.
(v)The purpose of the account.
(vi)How to obtain additional information on the account, including the current annual percentage yield.
SEC. 5.SEC. 6.Section 100010 of the Government Code is amended to read:100010.(a)The board shall have the power and authority to do all of the following:
(1)Make and enter into contracts necessary for the administration of the trust.
(2)Adopt a seal and change and amend it from time to time.
(3)Cause moneys in the program fund to be held and invested and reinvested.
(4)Accept any grants, gifts, legislative appropriation, and other moneys from the state, any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the administrative fund or the program fund.
(5)Contract with a program administrator and determine the duties of the program administrator. The Treasurer shall, on behalf of the board, appoint an executive director, who shall not be a member of the board and who shall serve at the pleasure of the board. The Treasurer shall determine the duties of the executive director and other staff as appropriate and set their compensation. The board may authorize the executive director to enter into contracts on behalf of the board or conduct any business necessary for the efficient operation of the board.
(6)Make provisions for the payment of costs of administration and operation of the trust.
(7)Employ staff.
(8)Retain and contract with the board of a California public retirement system, private financial institutions, other financial and service providers, consultants, actuaries, counsel, auditors, third-party administrators, and other professionals as necessary.
(9)Procure insurance against any loss in connection with the property, assets, or activities of the trust.
(10)Procure insurance indemnifying each member of the board from personal loss or liability resulting from a members action or inaction as a member of the board.
(11)Set minimum and maximum investment levels in accordance with contribution limits set for IRAs by the Internal Revenue Code.
(12)Collaborate and cooperate with the board of a California public retirement system, private financial institutions, service providers, and business, financial, trade, membership, and other organizations to the extent necessary or desirable for the effective and efficient design, implementation, and administration of the program and to maximize outreach to eligible employers and eligible employees.
(13)Collaborate with, and evaluate the role of, licensed insurance agents and financial advisors advisers in assisting and providing guidance for eligible employees.
(14)Cause expenses incurred to initiate, implement, maintain, and administer the program to be paid from contributions to, or investment returns or assets of, the program or arrangements established under the program, to the extent permitted under state and federal law.
(15)Facilitate compliance by the retirement savings program or arrangements established under the program with all applicable requirements for the program under the Internal Revenue Code of 1986, including tax qualification requirements or any other applicable law and accounting requirements, including providing or arranging for assistance to program sponsors and individuals in complying with applicable law and tax qualification requirements in a cost-effective manner.
(16)Carry out the duties and obligations of the trust pursuant to this title and exercise any and all other powers as appropriate for the effectuation of the purposes, objectives, and provisions of this title pertaining to the trust.
(17)Assess the feasibility of multistate or regional agreements to administer the program through shared administrative resources and enter into those agreements if determined beneficial.
(b)The board shall adopt regulations it deems necessary to implement this title consistent with the Internal Revenue Code and regulations issued pursuant to that code to ensure that the program meets all criteria for federal tax-deferral or tax-exempt benefits, or both. The board may delegate this rulemaking authority to the executive director by resolution.
SEC. 6.SEC. 7.Section 100012 of the Government Code is amended to read:100012.In addition to the powers and authority granted to the board pursuant to Section 100010, the board shall have the power and authority to do the following:
(a)Cause the retirement savings program or arrangements established under the program to be designed, established, and operated, in a manner consistent with all of the following:
(1)In accordance with best practices for retirement savings vehicles.
(2)To encourage participation, saving, and sound investment practices, and appropriate selection of default investments.
(3)With simplicity, ease of administration for participating employers, and portability of benefits.
(b)Arrange for collective, common, and pooled investment of assets of the retirement savings program or arrangements, including investments in conjunction with other funds with which those assets are permitted to be collectively invested, with a view to saving costs through efficiencies and economies of scale.
(c)Disseminate educational information designed to educate participants about the benefits of planning and saving for retirement and information to help them decide the level of CalSavers Retirement Savings Program participation and savings strategies that may be appropriate for them.
(d)Disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program, and the federal Retirement Savings Contribution Credit (Savers Credit) and its successor the federal retirement savings incentive, known as the Savers Match, available to lower and moderate-income households for qualified savings contributions.
(e)Submit progress and status reports to participating employers and eligible employees.
(f)If necessary, determine the eligibility of an employer, employee, or other individual to participate in the program.
(g)Evaluate and establish the process by which an eligible employee of an eligible employer is able to contribute a portion of their salary or wages to the program for automatic deposit of those contributions and the participating employer provides a payroll deposit retirement savings arrangement to forward the employee contribution and related information to the program or its agents. This may include, but is not limited to, financial services companies and third-party administrators with the capability to receive and process employee information and contributions for payroll deposit retirement savings arrangements or other arrangements authorized by this title.
(h)Design and establish the process for the enrollment of program participants.
(i)Allow participating employers to use the program to remit employees contributions to their IRAs on their employees behalf.
(j)Allow participating employers to make their own contributions to their employees IRAs, provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.
(k)Evaluate and establish the process by which an individual or an employee of a nonparticipating employer may enroll in and make contributions to the program.
SEC. 7.SEC. 8.Section 100016 of the Government Code is amended to read:100016.(a)Vendors that would like to contract with the board shall provide to the board, at a minimum, all of the following information:
(1)A statement of experience in California and in other states in providing employer-sponsored retirement plans, and payroll deduction IRAs.
(2)A description by the vendor of the types of retirement investment products offered.
(3)A disclosure of all expenses paid directly or indirectly by retirement plan participants, including, but not limited to, penalties for early withdrawals, declining or fixed withdrawal charges, surrender or deposit charges, management fees, and annual fees, supported by documentation as required for prospectus disclosure by the National Association of Securities Dealers and the Securities and Exchange Commission. Vendors shall be required to provide information regarding the impact of product fees upon a hypothetical investment, as described in Section 100022.
(4)The types of products, product features, services offered to participants, and information about how to access product prospectuses or other relevant product information.
(5)A discussion of the ability, experience, and commitment of the vendor to provide retirement counseling and education services, including, but not limited to, access to group meetings and individual counseling by various means, including telephone and telecommunications devices for the deaf (TDD), Internet, internet, language access services, and face-to-face consultations by registered representatives.
(6)A statement of the financial strength of the vendor by identifying its ratings assigned by nationally recognized rating services that evaluate the financial strength of similar companies.
(7)The location of offices and counselors, individual registered representatives, brokers, financial planners, agents, or other methods of distribution, of the vendor that would serve employers and their employees in California.
(8)A description of the ability of the vendor to comply with all applicable provisions of federal and state law governing retirement plans, including minimum distribution requirements and contribution limits.
(9)To the extent applicable, the demonstrated ability of the vendor to offer an appropriate array of accumulation funding options, including, but not limited to, investment options that offer guaranteed returns on contributions and the conversion of retirement savings account balances to secure retirement income, a diversified mix of value, growth, growth and income, hybrid, and index funds or accounts across large, medium, and small capitalization asset classes, both domestic and international.
(10)A discussion of the range of administrative and customer services provided, including asset allocation, accounting and administration of benefits for individual participants, recordkeeping for individual participants, asset purchase, control, and safekeeping, execution of a participants instructions as to asset and contribution allocation, calculation of daily net asset values, direct access for participants to their account information, periodic reporting that is not less than quarterly to active participants on their account balances and transactions, and compliance with the standard of care consistent with federal law and applicable to the provision of investment services.
(11)Certification by the vendor that the information provided to the board accurately reflects the provisions of the retirement investment products it registers.
(b)Vendors shall supply information and data in the format prescribed by the board.
SEC. 8.SEC. 9.Section 100018 of the Government Code is repealed.SEC. 9.SEC. 10.Section 100020 of the Government Code is repealed.SEC. 10.SEC. 11.Section 100022 of the Government Code is amended to read:100022.(a)The board shall maintain on its internet website the information required in Section 100016 about the retirement investment products offered by each contracted vendor and objective comparisons between the types of products.
(b)The board shall include on its internet website information on investment performance based upon the investments average annual total return as measured by a nationally recognized rating service selected by the board for standard periods of time of not less than one year.
(c)The boards internet website shall include a table showing, for each registered fund, the total fee cost in dollars incurred by a shareholder who initially invested five thousand dollars ($5,000), earned a 5 percent rate of return for one-, five-, 1-, 5-, 10-, 15-, and 20-year time periods. This table shall be accompanied by a disclaimer that the rate of return is for purposes of illustrating the respective impacts of different fee amounts on each investment, and is not to predict future investment returns.
SEC. 11.SEC. 12.Section 100024 of the Government Code is repealed.SEC. 12.SEC. 13.Section 100026 of the Government Code is amended to read:100026.A contracted vendor may not charge a fee associated with a registered product that is not disclosed.
SEC. 13.SEC. 14.Section 100028 of the Government Code is repealed.SEC. 14.SEC. 15.Section 100030 of the Government Code is amended to read:100030.(a)The board and the program, and its officers and employees, are not responsible for, and shall not be held liable for, the adequacy of the information provided by contracted vendors and contained in the programs internet website.
(b)The board and the program shall not be held liable for the actions of contracted vendors.
SEC. 15.SEC. 16.Section 100032 of the Government Code is amended to read:100032.(a)Any employer may choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board.
(b)(1)Beginning December 31, 2027, and by December 31 of each calendar year thereafter, eligible employers with one or more eligible employees that do not offer a retirement savings program pursuant to paragraph (1) of subdivision (d) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(2)The board, in its discretion, may extend the dates in paragraph (1).
(c)(1)Each eligible employee shall be enrolled in the program unless the employee elects not to participate in the program. An eligible employee may elect to opt out of the program by making a notation on the opt-out form or by contacting the program by telephone.
(2)Following initial implementation of the program pursuant to this section, at least once every two years, the board may designate an open enrollment period during which eligible employees that previously opted out of the program shall be given the employee information packet with the disclosure and opt-out forms, for the employee to enroll in the program or opt out of the program by making a notation on the opt-out form.
(3)An employee who elects to opt out of the program who subsequently wants to participate through the employers payroll deposit retirement savings arrangement may enroll during the boards designated open enrollment period or at any other time.
(d)(1)An employer that provides an employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or that offers an automatic enrollment payroll deduction IRA, shall be exempt from the requirements of the CalSavers Retirement Savings Program, if the plan or IRA qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.
(2)An employer shall retain the option at all times to set up and offer a tax-qualified retirement plan, as described in paragraph (1), instead of having a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers Retirement Savings Program.
(e)An eligible employee may also terminate their participation in the program at any time in a manner prescribed by the board and thereafter by making a notation on the opt-out form or by telephone.
(f)Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employees annual salary or wages to the program.
(g)By regulation, the board may adjust the contribution amount set in subdivision (f) to no less than 2 percent and no more than 5 percent and may vary that amount within that 2 percent to 5 percent range.
(h)The board may implement annual automatic escalation of employee contributions.
(1)Employee contributions subject to automatic escalation shall not exceed 8 10 percent of salary.
(2)Automatic escalation shall result in no more than a 1-percent-of-salary increase in employee contributions per calendar year.
(3)A participating employee may elect to opt out of automatic escalation and may set their contribution percentage rate at a level determined by the participating employee.
SEC. 16.SEC. 17.Section 100033 of the Government Code is amended to read:100033.(a)The CalSavers Retirement Savings Board shall have the power and duties necessary to administer the enforcement of employer compliance with this title.
(b)(1)The CalSavers Retirement Savings Board shall issue to each employer who fails to allow its eligible employees to participate in the CalSavers Retirement Program pursuant to this title a notice of penalty application.
(2)Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the CalSavers Retirement Savings Program pursuant to Sections 100014 and 100032, after the CalSavers Retirement Savings Board serves a final notice of penalty application, shall be subject to a penalty of two hundred fifty dollars ($250) per eligible employee and an additional penalty of five hundred dollars ($500) per eligible employee if noncompliance continues as described in Section 19287 of the Revenue and Taxation Code.
(3)(A)Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the program after the penalties described in paragraph (2) have been assessed shall be subject to a penalty of five hundred dollars ($500) per eligible employee.
(B)Penalties assessed under this subdivision shall not be imposed more than once every 180 days since the last violation.
(c)The CalSavers Retirement Savings Board shall issue a final notice of penalty application to an eligible employer that fails to comply with this title. Pursuant to Section 19287 of the Revenue and Taxation Code, the Franchise Tax Board shall issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the CalSavers Retirement Savings Board informs the Franchise Tax Board of the eligible employers noncompliance.
(d)(1)An eligible employer may appeal any penalty imposed under this section in writing to the Franchise Tax Board pursuant to Section 19288 of the Revenue and Taxation Code.
(2)The CalSavers Retirement Savings Board shall reimburse the Franchise Tax Board for the costs incurred by the Franchise Tax Board in administering the program authorized by this article.
SEC. 17.SEC. 18.Section 100046 of the Government Code is amended to read:100046.The CalSavers Retirement Savings Program is approved by the Legislature and implemented as of January 1, 2017. The board shall consider and utilize the following parameters in designing the program:
(a)The board shall include a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code in the program if the board determines, and the Director of the State Department of Social Services and the Director of the Department of Finance certify, in writing, all of the following:
(1)The inclusion meets all state and federal legal requirements.
(2)The appropriate employer of record has been identified for the purpose of satisfying all the programs employer requirements.
(3)The payroll deduction, described in Section 12302.2 of the Welfare and Institutions Code, can be implemented at reasonable costs.
(4)The inclusion does not create a financial liability for the state or employer of record.
(b)The board shall structure the program so as to ensure the state is prohibited from incurring liabilities associated with administering the program and that the state has no liability for the program or its investments.
(c)The board shall determine necessary costs associated with outreach, customer service, enforcement, staffing and consultant costs, and all other costs necessary to administer the program.
(d)The board shall consult with employer representatives to create an administrative structure that facilitates employee participation while addressing employer needs, including, but not limited to, clearly defining employers duties and liability exemption pursuant to Section 100034.
(e)The board shall include comprehensive worker education and outreach in the program, and the board may collaborate with state and local government agencies, community-based and nonprofit organizations, foundations, vendors, and other entities deemed appropriate to develop and secure ongoing resources for education and outreach that reflect the cultures and languages of the states diverse workforce population.
(f)The board shall include comprehensive employer education and outreach in the program, with an emphasis on employers with fewer than 100 employees, developed in consultation with employer representatives, with the integration of the following components:
(1)A program internet website to assist the employers of participating employees.
(2)A toll-free help line for employers with live and automated assistance.
(3)Online internet web training.
(4)Presentations to business associations.
(5)Targeted outreach to small businesses with 10 or less employees.
For purposes of this title, the following definitions apply:
(a)Board means the CalSavers Retirement Savings Board.
(b)CalSavers Retirement Savings Program or program means a retirement savings program offered pursuant to the CalSavers Retirement Savings Trust Act.
(c)(1)Eligible employee means a person who is employed by an eligible employer.
(2)Eligible employee does not include:
(A)Any employee covered under the federal Railway Labor Act (45 U.S.C. Sec. 151), or any employee engaged in interstate commerce so as not to be subject to the legislative powers of the state, except insofar as application of this title is authorized under the United States Constitution or laws of the United States.
(B)Any employee on whose behalf an employer makes contributions to a Taft-Hartley pension trust fund.
(d)(1)(A)Eligible employer means a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business, the federal government, the state, any county, any municipal corporation, or any of the states units or instrumentalities, that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.
(B)(i)Eligible employer also includes household employers.
(ii)Household employers includes those who have hired or contracted someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level.
(2)Upon a positive determination pursuant to subdivision (a) of Section 100046, eligible employer means an employer of a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code.
(3)Eligible employer does not include an employer that provides a retirement savings program arrangement as described in subdivision (g) of Section 100032.
(e)IRA means an individual retirement account or individual retirement annuity under Section 408(a), 408(b), or 408A of Title 26 of the United States Code.
(f)myRA means the federal myRA retirement savings program, including any successor program, offered by the United States Department of the Treasury or an IRA offered under that program. (g)(f)Participating employer means an eligible employer that provides a payroll deposit retirement savings arrangement provided for by this title for eligible employees.
(h)(g)Payroll deposit retirement savings arrangement means an arrangement by which an employer allows employees to remit payroll deduction contributions to a retirement savings program, which may include an IRA, and in the case of a payroll deduction IRA arrangement, to remit specifically to an IRA.
(i)(h)Trust means the CalSavers Retirement Savings Trust established by this title.
(j)(i)Vendor means a registered investment company or admitted life insurance company qualified to do business in California that provides retirement investment products. Vendor also includes a company that is registered to do business in California that provides payroll services or recordkeeping services and offers retirement plans or payroll deduction IRA arrangements using products of regulated investment companies and insurance companies qualified to do business in California. Vendor does not include individual registered representatives, brokers, financial planners, or agents.
SEC. 2.Section 100002 of the Government Code is amended to read:100002.(a)(1)There is hereby created within state government the CalSavers Retirement Savings Board, which shall consist of nine members, with the Treasurer serving as chair, as follows:
(A)The Treasurer.
(B)The Director of Finance, or the directors designee.
(C)The Controller.
(D)An individual with retirement savings and investment expertise appointed by the Senate Committee on Rules.
(E)An employee representative appointed by the Speaker of the Assembly.
(F)A small business representative appointed by the Governor.
(G)A public member appointed by the Governor.
(H)Two additional members appointed by the Governor.
(2)Members of the board appointed by the Governor, the Senate Committee on Rules, and the Speaker of the Assembly shall serve at the pleasure of the appointing authority.
(b)All members of the board shall serve without compensation. Members of the board shall be reimbursed for necessary travel expenses incurred in connection with their board duties.
(c)A board member, program administrator, and other staff of the board shall not do any of the following:
(1)Directly or indirectly have any interest in the making of any investment made for the program, or in the gains or profits accruing from any investment made for the program.
(2)Borrow any funds or deposits of the trust, or use those funds or deposits in any manner, for themselves or as an agent or partner of others.
(3)Become an endorser, surety, or obligor on investments by the board.
(d)The board and the program administrator and staff, including contracted administrators and consultants, shall discharge their duties as fiduciaries with respect to the trust solely in the interest of the program participants as follows:
(1)For the exclusive purposes of providing benefits to program participants and defraying reasonable expenses of administering the program.
(2)By investing with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with those matters would use in the conduct of an enterprise of a like character and with like aims.
(e)The board, subject to its authority and fiduciary duty, shall design and implement the CalSavers Retirement Savings Program.
(1)The board shall have the authority to provide for investment in myRAs, provided that, in accordance with the myRA provisions, myRA contributions and investment returns shall only be used for myRA investments and to make distributions to, or for the benefit of, participants and shall not be used to pay any costs of administration.(2)(1)The board shall maintain an investment policy statement that defines the programs investment objectives and articulates policies and procedures enabling investment objectives to be met in a prudent manner. The board shall seek to minimize participant fees and strive to implement program features that provide maximum possible income replacement balanced with appropriate risk in an IRA-based environment. The investment policy statement shall describe the investment options available to holders of individual savings accounts established as part of the program. The investment policy statement shall include a risk management and oversight program. Investment options may encompass a range of risk and return opportunities and allow for a rate of return commensurate with an appropriate level of risk to meet the investment objectives stated in the policy.
(3)(2)The board shall annually review the investment policy statement. The board shall review the investment policy statement and any changes in the investment policy statement at a public hearing.
(4)(3)The risk management and oversight program shall include an effective risk management system to monitor the risk levels of the CalSavers Retirement Savings Program investment portfolio and ensure that the risks taken are prudent and properly managed. The program shall be managed to provide an integrated process for overall risk management on both a consolidated and disaggregated basis, and to monitor investment returns as well as risk to determine if the risks taken are adequately compensated compared to applicable performance benchmarks and standards.
(f)The board shall approve an investment management entity or entities, the costs of which shall be paid out of funds held in the trust and shall not be attributed to the administrative costs of the board in operating the trust. Not later than 30 days after the close of each month, the board shall place on file for public inspection during business hours a report with respect to investments made pursuant to this section and a report of deposits in financial institutions.
SEC. 3.Section 100004 of the Government Code is amended to read:100004.(a)There is hereby established a retirement savings trust known as the CalSavers Retirement Savings Trust to be administered by the board for the purpose of promoting greater retirement savings for California private employees in a convenient, voluntary, low-cost, and portable manner. After sufficient funds are made available for this title to be operative, the trust, as a self-sustaining trust, shall pay all costs of administration only out of moneys on deposit therein.
(b)The board shall segregate moneys received by the trust into two funds, which shall be identified as the program fund and the administrative fund. Notwithstanding Section 13340, moneys in the trust are hereby continuously appropriated, without regard to fiscal years, to the board for the purposes of this title.
(c)Moneys in the program fund may be invested or reinvested by the Treasurer or may be invested in whole or in part under contract with the board of a California public retirement system, with private money managers, or in myRAs, or a combination thereof, as determined by the board.
(d)Transfers may be made from the program fund to the administrative fund for the purpose of paying operating costs associated with administering the trust and as required by this title, including, but not limited to, board operations, program administrator and investment expenses, and enforcement and compliance costs. On and after six years from the date the program is implemented, on an annual basis, expenditures from the administrative fund shall not exceed more than 1 percent of the total program fund. All costs of administration of the trust shall be paid out of the administrative fund.
(e)Any contributions paid by employees and employers into the trust shall be used exclusively for the purpose of paying benefits to the participants of the CalSavers Retirement Savings Program, for the cost of administration of the program, and for investments made for the benefit of the program.
(f)The trust is an instrumentality of the state. Any security issued, managed, or invested by the board within the trust on behalf of an individual participating within the CalSavers Retirement Savings Program shall be exempt from Sections 25110, 25120, and 25130 of the Corporations Code.
SEC. 4.Section 100008 of the Government Code is amended to read:100008.(a)The CalSavers Retirement Savings Program shall include, as determined by the board, one or more payroll deduction IRA arrangements.
(b)(1)The program shall, with board approval, establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, such as tax credits or deposits from any unit of federal or state government, that require monetary deposits into specified IRA accounts.
(2)(A)The program shall notify participants at least 30 days prior to the creation of the accounts described in paragraph (1).
(B)The notification shall include, at a minimum, all of the following:
(i)The benefits and risks associated with the existence and operation of the IRA.
(ii)How to opt out of the IRA.
(iii)The mechanics for how to operate the IRA alongside other CalSavers accounts.
(iv)The process for withdrawal of retirement savings and any penalties or tax implications for early withdrawal.
(v)How to obtain additional information on the account.
(c)(1)(A)The program shall, with board approval, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments.
(B)The accounts shall not exceed a contribution of one thousand dollars ($1,000) at any given time or a lesser amount as determined by the board, and shall not have minimum balance requirements.
(2)(A)Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employees annual salary or wages to the payroll deposit emergency savings account described in this subdivision.
(B)By regulation, the board may adjust the contribution amount to no less than 0.5 percent and no more than 3 percent and may vary that amount within that 0.5 percent to 3 percent range.
(3)Participating employers may make contributions to their participating employees emergency savings accounts provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.
(4)(A)The program shall notify participants at least 30 days prior to the creation of the payroll deposit emergency savings accounts described in this subdivision.
(B)The notification shall include, at a minimum, all of the following:
(i)The benefits and risks associated with the existence and operation of the account.
(ii)How to opt out of the account.
(iii)The mechanics for how to operate the account alongside other CalSavers accounts.
(iv)The process for withdrawal of savings from the account.
(v)The purpose of the account.
(vi)How to obtain additional information on the account, including the current annual percentage yield.
SEC. 5.Section 100010 of the Government Code is amended to read:100010.(a)The board shall have the power and authority to do all of the following:
(1)Make and enter into contracts necessary for the administration of the trust.
(2)Adopt a seal and change and amend it from time to time.
(3)Cause moneys in the program fund to be held and invested and reinvested.
(4)Accept any grants, gifts, legislative appropriation, and other moneys from the state, any unit of federal, state, or local government or any other person, firm, partnership, or corporation for deposit to the administrative fund or the program fund.
(5)Contract with a program administrator and determine the duties of the program administrator. The Treasurer shall, on behalf of the board, appoint an executive director, who shall not be a member of the board and who shall serve at the pleasure of the board. The Treasurer shall determine the duties of the executive director and other staff as appropriate and set their compensation. The board may authorize the executive director to enter into contracts on behalf of the board or conduct any business necessary for the efficient operation of the board.
(6)Make provisions for the payment of costs of administration and operation of the trust.
(7)Employ staff.
(8)Retain and contract with the board of a California public retirement system, private financial institutions, other financial and service providers, consultants, actuaries, counsel, auditors, third-party administrators, and other professionals as necessary.
(9)Procure insurance against any loss in connection with the property, assets, or activities of the trust.
(10)Procure insurance indemnifying each member of the board from personal loss or liability resulting from a members action or inaction as a member of the board.
(11)Set minimum and maximum investment levels in accordance with contribution limits set for IRAs by the Internal Revenue Code.
(12)Collaborate and cooperate with the board of a California public retirement system, private financial institutions, service providers, and business, financial, trade, membership, and other organizations to the extent necessary or desirable for the effective and efficient design, implementation, and administration of the program and to maximize outreach to eligible employers and eligible employees.
(13)Collaborate with, and evaluate the role of, licensed insurance agents and financial advisors in assisting and providing guidance for eligible employees.
(14)Cause expenses incurred to initiate, implement, maintain, and administer the program to be paid from contributions to, or investment returns or assets of, the program or arrangements established under the program, to the extent permitted under state and federal law.
(15)Facilitate compliance by the retirement savings program or arrangements established under the program with all applicable requirements for the program under the Internal Revenue Code of 1986, including tax qualification requirements or any other applicable law and accounting requirements, including providing or arranging for assistance to program sponsors and individuals in complying with applicable law and tax qualification requirements in a cost-effective manner.
(16)Carry out the duties and obligations of the trust pursuant to this title and exercise any and all other powers as appropriate for the effectuation of the purposes, objectives, and provisions of this title pertaining to the trust.
(17)Assess the feasibility of multistate or regional agreements to administer the program through shared administrative resources and enter into those agreements if determined beneficial.
(b)The board shall adopt regulations it deems necessary to implement this title consistent with the Internal Revenue Code and regulations issued pursuant to that code to ensure that the program meets all criteria for federal tax-deferral or tax-exempt benefits, or both. The board may delegate this rulemaking authority to the executive director by resolution.
SEC. 6.Section 100012 of the Government Code is amended to read:100012.In addition to the powers and authority granted to the board pursuant to Section 100010, the board shall have the power and authority to do the following:
(a)Cause the retirement savings program or arrangements established under the program to be designed, established, and operated, in a manner consistent with all of the following:
(1)In accordance with best practices for retirement savings vehicles.
(2)To encourage participation, saving, and sound investment practices, and appropriate selection of default investments.
(3)With simplicity, ease of administration for participating employers, and portability of benefits.
(b)Arrange for collective, common, and pooled investment of assets of the retirement savings program or arrangements, including investments in conjunction with other funds with which those assets are permitted to be collectively invested, with a view to saving costs through efficiencies and economies of scale.
(c)Disseminate educational information designed to educate participants about the benefits of planning and saving for retirement and information to help them decide the level of CalSavers Retirement Savings Program participation and savings strategies that may be appropriate for them.
(d)Disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program, and the federal Retirement Savings Contribution Credit (Savers Credit) and its successor the federal retirement savings incentive, known as the Savers Match, available to lower and moderate-income households for qualified savings contributions.
(e)Submit progress and status reports to participating employers and eligible employees.
(f)If necessary, determine the eligibility of an employer, employee, or other individual to participate in the program.
(g)Evaluate and establish the process by which an eligible employee of an eligible employer is able to contribute a portion of his or her their salary or wages to the program for automatic deposit of those contributions and the participating employer provides a payroll deposit retirement savings arrangement to forward the employee contribution and related information to the program or its agents. This may include, but is not limited to, financial services companies and third-party administrators with the capability to receive and process employee information and contributions for payroll deposit retirement savings arrangements or other arrangements authorized by this title.
(h)Design and establish the process for the enrollment of program participants.
(i)Allow participating employers to use the program to remit employees contributions to their IRAs on their employees behalf.
(j)Allow participating employers to make their own contributions to their employees IRAs, provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the federal Employee Retirement Income Security Act.
(k)Evaluate and establish the process by which an individual or an employee of a nonparticipating employer may enroll in and make contributions to the program.
SEC. 7.Section 100016 of the Government Code is amended to read:100016.(a)Prior to opening the CalSavers Retirement Savings Program for enrollment, if there is sufficient interest by vendors to participate and provide the necessary funding, the board shall establish both of the following:(1)A Retirement Investments Clearinghouse on its Internet Web site.(2)A vendor registration process through which information about employer-sponsored retirement plans, and payroll deduction IRAs offered by private sector providers is made available for consideration by eligible employers.(b)(a)Vendors that would like to participate in the boards Retirement Investments Clearinghouse and be listed on the boards Internet Web site as a registered vendor contract with the board shall provide to the board, at a minimum, all of the following information:
(1)A statement of experience in California and in other states in providing employer-sponsored retirement plans, and payroll deduction IRAs.
(2)A description by the vendor of the types of retirement investment products offered.
(3)A disclosure of all expenses paid directly or indirectly by retirement plan participants, including, but not limited to, penalties for early withdrawals, declining or fixed withdrawal charges, surrender or deposit charges, management fees, and annual fees, supported by documentation as required for prospectus disclosure by the National Association of Securities Dealers and the Securities and Exchange Commission. Vendors shall be required to provide information regarding the impact of product fees upon a hypothetical investment, as described in Section 100022.
(4)The types of products, product features, services offered to participants, and information about how to access product prospectuses or other relevant product information.
(5)A discussion of the ability, experience, and commitment of the vendor to provide retirement counseling and education services, including, but not limited to, access to group meetings and individual counseling by various means, including telephone and telecommunications devices for the deaf (TDD), Internet, language access services, and face-to-face consultations by registered representatives.
(6)A statement of the financial strength of the vendor by identifying its ratings assigned by nationally recognized rating services that evaluate the financial strength of similar companies.
(7)The location of offices and counselors, individual registered representatives, brokers, financial planners, agents, or other methods of distribution, of the vendor that would serve employers and their employees in California.
(8)A description of the ability of the vendor to comply with all applicable provisions of federal and state law governing retirement plans, including minimum distribution requirements and contribution limits.
(9)To the extent applicable, the demonstrated ability of the vendor to offer an appropriate array of accumulation funding options, including, but not limited to, investment options that offer guaranteed returns on contributions and the conversion of retirement savings account balances to secure retirement income, a diversified mix of value, growth, growth and income, hybrid, and index funds or accounts across large, medium, and small capitalization asset classes, both domestic and international.
(10)A discussion of the range of administrative and customer services provided, including asset allocation, accounting and administration of benefits for individual participants, recordkeeping for individual participants, asset purchase, control, and safekeeping, execution of a participants instructions as to asset and contribution allocation, calculation of daily net asset values, direct access for participants to their account information, periodic reporting that is not less than quarterly to active participants on their account balances and transactions, and compliance with the standard of care consistent with federal law and applicable to the provision of investment services.
(11)Certification by the vendor that the information provided to the board accurately reflects the provisions of the retirement investment products it registers.
(c)(b)Vendors shall supply information and data in the format prescribed by the board.
SEC. 8.Section 100018 of the Government Code is repealed.100018.Registration shall be offered to vendors once annually, and renewal of registration shall be required at least once every five years thereafter for vendors that wish to continue to participate in the Retirement Investments Clearinghouse. The board shall provide public notice prior to the initial registration, annual registration, and registration renewal periods.SEC. 9.Section 100020 of the Government Code is repealed.100020.(a)The board may remove a vendor from the registry if the vendor submits materially inaccurate information to the board, does not remit assessed fees within 60 days, or fails to submit notice of material changes to its registered investment products. Vendors found to have submitted materially inaccurate information to the board shall be allowed 60 days to correct the information.(b)The board shall remove a vendor from the registry if investments offered by the vendor are products of a regulated investment company or insurance company that is not licensed or has had its license revoked by the Financial Industry Regulatory Authority or the Department of Insurance for engaging in conduct prohibited by those entities.(c)The board shall establish an appeals process for vendors that are denied registration or removed from the registry.SEC. 10.Section 100022 of the Government Code is amended to read:100022.(a)The board shall maintain the Retirement Investments Clearinghouse containing on its internet website the information required in Section 100016 about the retirement investment products offered by each registered contracted vendor and objective comparisons of vendors and between the types of products.
(b)The clearinghouse board shall include on its internet website information on investment performance based upon the investments average annual total return as measured by a nationally recognized rating service selected by the board for standard periods of time of not less than one year.
(c)The boards Internet Web site internet website shall include a table showing, for each registered fund, the total fee cost in dollars incurred by a shareholder who initially invested five thousand dollars ($5,000), earned a 5 percent rate of return for one-, five-, 10-, 15-, and 20-year time periods. This table shall be accompanied by a disclaimer that the rate of return is for purposes of illustrating the respective impacts of different fee amounts on each investment, and is not to predict future investment returns.
SEC. 11.Section 100024 of the Government Code is repealed.100024.The board shall include a notice of the existence of, and the internet website address for, the Retirement Investments Clearinghouse in a notice disseminated to eligible employers.SEC. 12.Section 100026 of the Government Code is amended to read:100026.A contracted vendor may not charge a fee associated with a registered product that is not disclosed.
SEC. 13.Section 100028 of the Government Code is repealed.100028.(a)The actual cost of establishing the vendor registration system and the Retirement Investments Clearinghouse shall be borne equally by registered vendors, based on the total number of registered vendors. Each registered vendor shall pay a one-time establishment fee equal to a pro rata share of the establishment costs charged to vendors that register with the board prior to the close of the initial registration period, as determined by the board. The one-time establishment fee charged to vendors that register with the board after the completion of the initial registration period shall be distributed equally among registered vendors that have paid the establishment fee and credited toward subsequent maintenance and administrative fees charged to each vendor.(b)The actual cost of maintaining the vendor registration system and the Retirement Investments Clearinghouse, and the costs associated with publicizing the availability of the clearinghouse to eligible employers, shall be borne equally by registered vendors, based on the total number of registered vendors. Each registered vendor shall pay a renewal fee equal to a pro rata share of the maintenance costs, as determined by the board.(c)Each registered vendor shall pay an administrative fee for each retirement investment product it offers to employers, which shall represent the actual costs associated with processing the information related to the investment option and presenting it on the Retirement Investments Clearinghouse, as determined by the board.(d)The board shall not divert trust funds to establish or maintain the vendor registration system or the Retirement Investments Clearinghouse.SEC. 14.Section 100030 of the Government Code is amended to read:100030.(a)The board and the program, and its officers and employees, are not responsible for, and shall not be held liable for, the adequacy of the information provided by the participating contracted vendors and contained in the clearinghouse. The clearinghouse maintained by the board serves only to provide information supplied by the participating vendors for the consideration of the selection of retirement investment products. programs internet website.
(b)Participating vendors shall not utilize the programs logo, or claim or infer endorsement or recommendation by the board or the program with respect to products and services identified by the vendors in the clearinghouse. At the discretion of the board, a violation of this section may lead to removal from the registry.(c)(b)The board and the program shall not be held liable for the actions of registered contracted vendors.
SEC. 15.Section 100032 of the Government Code is amended to read:100032.(a)Any employer may choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board.
(b)Within 12 months after the board opens the program for enrollment, eligible employers with more than 100 eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.(c)Within 24 months after the board opens the program for enrollment, eligible employers with more than 50 eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.(d)Within 36 months after the board opens the program for enrollment, eligible employers with five or more employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.(e)By December 31, 2025, eligible employers with one or more eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.(f)The board, in its discretion, may extend the time limits defined in subdivisions (b) to (e), inclusive.(b)(1)Beginning December 31, 2027, and by December 31 of each calendar year thereafter, eligible employers with one or more eligible employees that do not offer a retirement savings program pursuant to paragraph (1) of subdivision (d) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(2)The board, in its discretion, may extend the dates in paragraph (1).
(g)(c)(1)Each eligible employee shall be enrolled in the program unless the employee elects not to participate in the program. An eligible employee may elect to opt out of the program by making a notation on the opt-out form or by contacting the program by telephone.
(2)Following initial implementation of the program pursuant to this section, at least once every two years, the board may designate an open enrollment period during which eligible employees that previously opted out of the program shall be given the employee information packet with the disclosure and opt-out forms, for the employee to enroll in the program or opt out of the program by making a notation on the opt-out form.
(3)An employee who elects to opt out of the program who subsequently wants to participate through the employers payroll deposit retirement savings arrangement may enroll during the boards designated open enrollment period or at any other time.
(h)(d)(1)An employer that provides an employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or that offers an automatic enrollment payroll deduction IRA, shall be exempt from the requirements of the CalSavers Retirement Savings Program, if the plan or IRA qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.
(2)An employer shall retain the option at all times to set up and offer a tax-qualified retirement plan, as described in paragraph (1), instead of having a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers Retirement Savings Program.
(i)(e)An eligible employee may also terminate their participation in the program at any time in a manner prescribed by the board and thereafter by making a notation on the opt-out form or by telephone.
(j)(f)Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employees annual salary or wages to the program.
(k)(g)By regulation, the board may adjust the contribution amount set in subdivision (j) (f) to no less than 2 percent and no more than 5 percent and may vary that amount within that 2 percent to 5 percent range.
(l)(h)The board may implement annual automatic escalation of employee contributions.
(1)Employee contributions subject to automatic escalation shall not exceed 8 percent of salary.
(2)Automatic escalation shall result in no more than a 1-percent-of-salary increase in employee contributions per calendar year.
(3)A participating employee may elect to opt out of automatic escalation and may set their contribution percentage rate at a level determined by the participating employee.
SEC. 16.Section 100033 of the Government Code is amended to read:100033.(a)The CalSavers Retirement Savings Board shall have the power and duties necessary to administer the enforcement of employer compliance with this title.
(b)(1)The CalSavers Retirement Savings Board shall issue to each employer who fails to allow its eligible employees to participate in the CalSavers Retirement Program pursuant to this title a notice of penalty application.
(2)Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the CalSavers Retirement Savings Program pursuant to Sections 100014 and 100032, after the CalSavers Retirement Savings Board serves a final notice of penalty application, shall be subject to a penalty of two hundred fifty dollars ($250) per eligible employee and an additional penalty of five hundred dollars ($500) per eligible employee if noncompliance continues as described in Section 19287 of the Revenue and Taxation Code.
(3)(A)Each eligible employer that, without good cause, fails to allow its eligible employees to participate in the program after the penalties described in paragraph (2) have been assessed shall be subject to a penalty of five hundred dollars ($500) per eligible employee.
(B)Penalties assessed under this subdivision shall not be imposed more than once every 180 days since the last violation.
(c)The CalSavers Retirement Savings Board shall issue a final notice of penalty application to an eligible employer that fails to comply with this title. Pursuant to Section 19287 of the Revenue and Taxation Code, the Franchise Tax Board shall issue a first notice of the imposition of a penalty to an eligible employer for failure to comply after the CalSavers Retirement Savings Board informs the Franchise Tax Board of the eligible employers noncompliance.
(d)(1)An eligible employer may appeal any penalty imposed under this section in writing to the Franchise Tax Board pursuant to Section 19288 of the Revenue and Taxation Code.
(2)The CalSavers Retirement Savings Board shall reimburse the Franchise Tax Board for the costs incurred by the Franchise Tax Board in administering the program authorized by this article.
SEC. 17.Section 100046 of the Government Code is amended to read:100046.The CalSavers Retirement Savings Program is approved by the Legislature and implemented as of January 1, 2017. The board shall consider and utilize the following parameters in designing the program:
(a)The board shall include a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code in the program if the board determines, and the Director of the State Department of Social Services and the Director of the Department of Finance certify, in writing, all of the following:
(1)The inclusion meets all state and federal legal requirements.
(2)The appropriate employer of record has been identified for the purpose of satisfying all the programs employer requirements.
(3)The payroll deduction, described in Section 12302.2 of the Welfare and Institutions Code, can be implemented at reasonable costs.
(4)The inclusion does not create a financial liability for the state or employer of record.
(b)The board shall structure the program so as to ensure the state is prohibited from incurring liabilities associated with administering the program and that the state has no liability for the program or its investments.
(c)The board shall determine necessary costs associated with outreach, customer service, enforcement, staffing and consultant costs, and all other costs necessary to administer the program.
(d)The board shall consult with employer representatives to create an administrative structure that facilitates employee participation while addressing employer needs, including, but not limited to, clearly defining employers duties and liability exemption pursuant to Section 100034.
(e)The board shall include comprehensive worker education and outreach in the program, and the board may collaborate with state and local government agencies, community-based and nonprofit organizations, foundations, vendors, and other entities deemed appropriate to develop and secure ongoing resources for education and outreach that reflect the cultures and languages of the states diverse workforce population.
(f)The board shall include comprehensive employer education and outreach in the program, with an emphasis on employers with fewer than 100 employees, developed in consultation with employer representatives, with the integration of the following components:
(1)A program internet website to assist the employers of participating employees.
(2)A toll-free help line for employers with live and automated assistance.
(3)Online internet web training.
(4)Live presentations Presentations to business associations.
(5)Targeted outreach to small businesses with 10 or less employees.
|
Date
|
Status
|
|---|---|
| Aug 13, 2026 | In committee: Held under submission. |
| Aug 3, 2026 | In committee: Referred to APPR. suspense file. |
| Jun 24, 2026 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 0.) (June 24). Re-referred to Com. on APPR. |
| Jun 17, 2026 | From committee: Do pass and re-refer to Com. on REV. & TAX. (Ayes 4. Noes 1.) (June 17). Re-referred to Com. on REV. & TAX. |
| Jun 10, 2026 | Referred to Coms. on L., P.E. & R. and REV. & TAX. |
| May 27, 2026 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 26, 2026 | Read third time. Passed. Ordered to the Senate. (Ayes 60. Noes 14.) |
| May 26, 2026 | Read third time. Passed. Ordered to the Senate. (Ayes 60. Noes 14. Page 5391.) |
| May 26, 2026 | Read third time. Passed. Ordered to the Senate. |
| May 22, 2026 | Read third time and amended. Ordered to third reading. |
| May 22, 2026 | Read third time and amended. Ordered to third reading. (Page 5275.) |
| May 19, 2026 | Read second time. Ordered to third reading. |
| May 18, 2026 | Read second time and amended. Ordered returned to second reading. |
| May 14, 2026 | From committee: Amend, and do pass as amended. (Ayes 11. Noes 3.) (May 14). |
| May 6, 2026 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 23, 2026 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 6. Noes 0.) (April 22). Re-referred to Com. on APPR. |
| Mar 25, 2026 | Re-referred to Com. on L. & E. |
| Mar 24, 2026 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. & E. Read second time and amended. |
| Mar 16, 2026 | Referred to Com. on L. & E. |
| Feb 21, 2026 | From printer. May be heard in committee March 23. |
| Feb 20, 2026 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 3, 2026 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jun 24, 2026 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Revenue and Taxation |
Passed |
|
| Jun 17, 2026 | Do pass, but first be re-referred to the Committee on [Revenue and Taxation] | Senate Standing Committee on Labor, Public Employment and Retirement |
Passed |
|
| May 26, 2026 | AB 2650 Pellerin Assembly Third Reading | Assembly Floor |
Passed |
|
| May 14, 2026 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 22, 2026 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Labor and Employment |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| American Association of Retired Persons | ** Support | |
| Asian Community Center Senior Services | ** Support | |
| Asian Resources, Inc. | ** Support | |
| California Association for Micro Enterprise Opportunity Network | ** Support | |
| California State Treasurer | ** Support | |
| California State Treasurer Fiona Ma (Sponsor) | ** Support | |
| State Treasurer | ** Support | |
| State Treasurer Fiona Ma | ** Support | |
| The Filipino Community of Sacramento and Vicinity | ** Support |
SENATE COMMITTEE ON
Senator Sabrina Cervantes, Chair
2025 - 2026 Regular Session
AB 2650 (Pellerin) - CalSavers: retirement savings
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
AB 2650 would (1) enact the Savings Access and Vested Empowerment (SAVE) for All Workers Act, and (2) make several programmatic changes to the CalSavers Program and FTB collection notices.
Fiscal Impact:
- The State Treasurer’s Office (STO), which administers the CalSavers program, estimates minor and absorbable costs to implement this bill. However, the Budget Act of 2025 continues existing authority for the Department of Finance to provide up to $2 million in General Fund loans to support the Program’s implementation and administrative costs. The bill would increase the Board’s workload by expanding CalSavers to household employers and making other specified changes. The program is not yet fully self-sustaining. While expanding enrollment would ultimately increase program assets and fee revenue to help offset administrative costs, these expansions could increase General Fund cost pressures in the near term until the program becomes self-supporting.
- FTB indicates that the bill would not have an impact to state revenues. FTB’s administrative costs would be reimbursed by CalSavers.
- The bill could result in increased penalty revenue to the State. The magnitude is unknown, but probably minor.
Background:
SB 1234 (De León, Chapter 734, Statutes of 2012) established the California Secure Choice Retirement Savings Program (now CalSavers), a state-administered retirement savings program for private-sector employees who lack access to an employer-sponsored retirement plan. The program requires covered employers to facilitate employee enrollment, unless an employee opts out, and authorizes employer contributions where permitted under federal law. Employers that fail to comply are subject to penalties of $250 per eligible employee after 90 days of noncompliance, and an additional $500 per eligible employee for willful noncompliance after 180 days.
As part of the 2020 Budget Act, AB 102 (Committee on Budget) renamed the program to CalSavers and transferred enforcement responsibilities from the Employment Development Department to the CalSavers Retirement Savings Board and the Franchise Tax Board (FTB). Under current law, FTB issues penalty notices, collects employer penalties, and administers the appeals process based on information provided by the CalSavers Board. Penalty revenues are deposited into the CalSavers Retirement Savings Trust, and the CalSavers Board reimburses FTB for its administrative costs. Employers may be subject to penalties for failing to register, timely submit eligible employee information, or remit employee contributions.
Proposed Law:
This bill, among other things, would enact the SAVE for All Workers Act and make several programmatic changes to the CalSavers Program and FTB collection notices. Specifically, the bill, among other things, would do the following:
- Provide that “eligible employer” also includes household employers who have hired someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form.
- Require CalSavers to establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits that require deposits into IRA accounts.
- Require CalSavers to notify participants at least 30 days prior to the creation of the IRA accounts created on their behalf.
- Require CalSavers disseminate information concerning federal retirement savings incentive, known as the Saver’s Match.
- Raise the maximum automatic escalation of employees’ contributions to 10 percent of salary.
- Impose subsequent penalties of $500 per eligible employee on each eligible employer that, without good cause, fails to allow its eligible employees to participate in the program.
- Authorize CalSavers to impose the subsequent penalty repeatedly but not to exceed once every 180 days since the last notice of the imposition of a penalty for the specific noncompliance.
- Require FTB, after notification from CalSavers, to issue to eligible employers, subsequent penalty notices of the imposition of penalties for noncompliance with CalSavers program requirements.
- Allow an eligible employer to appeal the penalty imposition within 90 days after FTB issues the notice, as specified.
Related Legislation:
- SB 1126 (Cortese, Chapter 192, Statutes of 2022) expanded CalSavers coverage to employers that have one or more employees and mandates that all eligible employers participate in CalSavers by December 31, 2025, unless the CalSavers’ board extends that date.
- AB 102 (Committee on Budget, Chapter 21, Statutes of 2020) transferred authority from EDD to the CalSavers board to enforce, via FTB, employer compliance with the CalSavers program; allowed cannabis-regulating agencies to share data with CalSavers for its licensed cannabis businesses; and made other technical updates to the CalSavers program.
- AB 1817 (Committee on Budget, Chapter 37, Statutes of 2018), as part of a budget trailer bill for state government renamed the program from the California Secure Choice Retirement Savings Program to the CalSavers Retirement Savings Program.
- SB 1042 (Pan, 2020) would have required state regulatory licensing authorities of marijuana related businesses to furnish the CalSavers board specified employer contact information with respect to licenses issued. The bill died in the Senate Labor, Public Employment and Retirement Committee.
- SB 1234 (De León, Chapter 804, Statutes of 2016) provided legislative approval for the California Secure Choice Retirement Savings Program (SCRSP) and sets forth recommendations and requirements for the design and implementation of that program.
- SB 1234 (De León), Chapter 734, Statutes of 2012, created the initial statutory framework for the California Secure Choice Retirement Savings Program (SCRSP) and required the board to perform a market analysis and feasibility study to determine if SCRSP could be implemented and to publish its findings and bring a recommendation to the Legislature for approval.
-- END --
SENATE COMMITTEE ON REVENUE AND TAXATION
Senator Jerry McNerney, Chair
2025 - 2026 Regular
Bill No: | AB 2650 | Hearing Date: | 6/24/26 |
Author: | Pellerin | Tax Levy: | No |
Version: | 5/22/26 Amended | Fiscal: | Yes |
Consultant: | Summers | ||
CalSavers: retirement savings
Enacts the Savings Access and Vested Empowerment (SAVE) for All Workers Act and makes several programmatic changes to the CalSavers Program and FTB collection notices.
Background
In 2012, the Legislature enacted SB 1234 (De León, 2013), establishing the California Secure Choice Retirement Savings Program to operate as a state-administered retirement savings plan for private sector workers who do not participate in any other type of employer-sponsored retirement savings plan. SB 1234 requires the Program, among other things, to:
- Include one or more individual retirement account (IRA) arrangements for private sector employees.
- Allow participating employers to contribute to their employees’ IRA on their employees’ behalf or match their employees’ contributions, provided that the contributions would be permitted under the Internal Revenue Code and would not cause the program to be treated as an employee benefit plan under the Employee Retirement Income Security Act.
- Impose a penalty of $250 per employee on employers who, without good cause, fail to allow their employees to participate in the program within 90 days after being notified of failure to comply by the Employment Development Department (EDD).
- If the employer is found to be in willful noncompliance 180 days after the notice, an additional penalty of $500 per eligible employee is imposed.
- Requires each eligible employee to be enrolled in the Program unless the employee opts out.
- Establish guiding principles and restrictions for the investment policy of trust assets, and limit the types of investments permitted for the investment of funds.
As a part of the 2020 Budget Act, the Legislature enacted AB 102 (Committee on Budget), which renamed the program in statute from California Secure Choice to CalSavers and transferred enforcement responsibilities for the CalSavers program from EDD to the CalSavers Retirement Board and Franchise Tax Board (FTB). Specifically, AB 102:
- Allows cannabis-regulating agencies to share data with CalSavers for its licensed cannabis businesses at no cost to the businesses, state agencies, or California taxpayers.
- Allows an eligible employee to opt out of the program by phone.
- Allows the CalSavers Retirement Board the discretion to determine whether employees who opted out of the program are to be re-enrolled.
- Allows employers to appeal any penalty imposed in writing to the FTB.
- Requires CalSavers Retirement Board to reimburse the FTB for any costs for administering the program.
- Authorizes the FTB to disclose information to the CalSavers Board to facilitate the collection of amounts due and the appeals of the determination of the board, as specified.
FTB CalSavers penalty collections. FTB collects tax owed through self-assessment, audit, settlement, and filing enforcement. Automated systems collect revenue from taxpayers who voluntarily comply, while manual collections make efforts to collect from taxpayers who do not comply. In collaboration with information provided by CalSavers, FTB distributes penalty notices, collects payments, and administers an appeals process for employers. Upon notification from CalSavers, FTB would issue a penalty notice, perform collection activities, and administer employer appeals. If an employer receives an FTB notice for the penalty imposed by CalSavers, it either has not registered or has not yet complied with other CalSavers program requirements, such as:
- Providing eligible employee information on time.
- Providing new eligible employee information on time.
- Remitting employee contributions.
If an employer disagrees with the notice, they must contact CalSavers to discuss the penalty balance due. FTB does not have detailed information about employer accounts or penalty status. Amounts collected would continue to be transmitted to the CalSavers Retirement Savings Trust, and the CalSavers Board would reimburse FTB for the administrative costs associated with these functions.
California State Treasurer, Fiona Ma wants to improve the implementation, benefits, and enrollment processes to address employer and employee confusion on how to comply with the CalSavers program.
Proposed Law
Assembly Bill 2650 enacts the Savings Access and Vested Empowerment (SAVE) for All Workers Act and makes several programmatic changes to the CalSavers Program and FTB collection notices. Specifically, the bill:
- Provides that “Eligible employer” also includes household employers who have hired someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form.
- Requires CalSavers to establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits that require deposits into IRA accounts.
- Requires CalSavers to notify participants at least 30 days prior to the creation of the IRA accounts created on their behalf.
- Requires CalSavers disseminate information concerning federal retirement savings incentive, known as the Saver’s Match.
- Raises the maximum automatic escalation of employees’ contributions from 8 percent to 10 percent of salary.
- Imposes subsequent penalties of $500 per eligible employee on each eligible employer that, without good cause, fails to allow its eligible employees to participate in the program.
- Authorizes CalSavers to impose the subsequent penalty repeatedly but not to exceed once every 180 days since the last notice of the imposition of a penalty for the specific noncompliance.
- Requires the Franchise Tax Board (FTB), after notification from CalSavers, to issue to eligible employers, subsequent penalty notices of the imposition of penalties for noncompliance with CalSavers program requirements.
- Allows an eligible employer to appeal the penalty imposition within 90 days after FTB issues the notice, as specified.
- Makes other technical and conforming changes.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill. According to the author, “Retirement is something everyone should plan for, and plan for early. As of 2020, over one-fourth of non-retired adults and two-thirds of Millennials do not have any form of retirement savings. Recognizing that access to a retirement program can be especially daunting for individuals in low-to-mid wage sectors, in 2019, the state launched the CalSavers Retirement Savings Program. However, since then, the State Treasurer, who manages the program, has received complaints from both employers and employees about shortcomings with the program. AB 2650, the Savings Access & Vested Empowerment (SAVE) for All Workers Act, makes a number of key changes to improve implementation, benefits, and enrollment. This includes, fixing vague legal terminology around which professions are eligible for enrollment, letting all workers who receive a W2 form be automatically enrolled for a CalSavers account, and increasing the max contribution limits to promote program sustainability. These changes create positive impacts for the participants and makes the program sustainable and truly accessible for all workers.”
2. Equity. Existing FTB services would not provide a senior or other vulnerable household employer with direct assistance in enrolling an employee in CalSavers. FTB’s role is limited to issuing penalty notices, collecting penalties, routing program questions to CalSavers, and handling appeals of unresolved penalty disputes. As a result, a household employer or small business owner with limited support for understanding their obligation under AB 2650 may not receive practical assistance available to them to comply with the requirements of this bill. To avoid shifting the administrative burden onto individuals least equipped to comply, the Committee may wish to consider whether requiring CalSavers, in coordination with FTB, to provide direct, plain-language enrollment assistance and a meaningful cure period before penalties are imposed would further improve the program benefits.
3. Double-referred. The Senate Rules Committee ordered a double referral for AB 2650: first to the Committee on Labor and Public Employment, which passed on a 4-1 vote; and second to the Committee on Revenue and Taxation.
Assembly Actions
Assembly Labor and Employment: 6-1
Assembly Appropriations Committee: 11-3
Assembly Floor: 60-14
Support and Opposition
(6/18/2026)
Support: California State Treasurer Fiona Ma (Sponsor)
American Association of Retired Persons
Asian Community Center Senior Services
Asian Resources, Inc.
California Association for Micro Enterprise Opportunity Network
The Filipino Community of Sacramento and Vicinity
Opposition: None received.
-- END --
SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT
Senator Lola Smallwood-Cuevas, Chair
2025 - 2026 Regular
Bill No: AB 2650 Hearing Date: June 17, 2026
Author: | Pellerin | ||
Version: | May 22, 2026 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Glenn Miles | ||
SUBJECT: CalSavers: retirement savings
KEY ISSUE
This bill makes several changes to the CalSavers program to facilitate California workers’ eligibility for Savers Match, a federal benefit for eligible IRA account holders; clarify that household employers are covered by CalSavers and must comply with the requirements to cover or enroll their employee or employees; increase penalties for employer non-compliance; increase the automatic employee contribution escalation limit from 8% to 10% of the employee’s salary; and eliminate obsolete statutory provisions.
ANALYSIS
Existing law:
- Creates the CalSavers Retirement Savings Board (consisting of nine members with the State Treasurer serving as chair) and requires the board to design and implement the CalSavers Retirement Savings Program, subject to its authority and fiduciary duty. (Government Code § 100002)
- Establishes a retirement savings trust known as the CalSavers Retirement Savings Trust, administered by the CalSavers board, to promote greater retirement savings for California private employees in a convenient, voluntary, low-cost, and portable manner. (Government Code § 100004)
- Requires employers that do not offer a retirement savings program, as specified, to have a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers program but gives the board discretion to extend the time by which employers must participate in CalSavers. (Government Code § 100032)
- Requires the board to use any contributions paid by employees and employers into the trust exclusively for paying benefits to the participants of the CalSavers Retirement Savings Program, for the cost of administration of the program, and for investments made for the benefit of the program. (Government Code § 100004 (e))
- Defines “Eligible employer” as a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business, the federal government, the state, any county, any municipal corporation, or any of the state’s units or instrumentalities, that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement, including an employer of a provider of in-home supportive services, as specified; but excludes an employer that provides a retirement savings program, as specified. (Government Code § 100000 (d) and § 100032 (h))
- Defines “Eligible employee”, for purposes of participating in the program, to mean a person employed by an eligible employer except employees in a federally regulated railroad retirement plan, Taft-Hartley plan, or any employee engaged in interstate commerce so as not to be subject to the legislative powers of the state, except insofar as application of this title is authorized under the United States Constitution or laws of the United States. (Government Code § 100000 (c))
- Defines “myRA” to mean the federal myRA retirement savings program, including any successor program, offered by the United States Department of the Treasury or an IRA offered under that program. ((Government Code § 100000 (f))
- Requires the Cal Savers Retirement Savings Program to include, as determined by the board, one or more payroll deduction IRA arrangements. (Government Code § 100008
This bill:
- Names the act establishing the CalSavers program, the Savings Access and Vested Empowerment (SAVE) for All Workers Act.
- Provides that “Eligible employer” also includes household employers.
- Clarifies that “Household employers” includes those who have hired someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form.
- Deletes obsolete references to the federal myRA retirement savings program.
- Requires the CalSavers to establish an IRA on behalf of participants who are eligible to receive federal or state retirement benefits, such as tax credits or deposits from any unit of federal or state government, that require monetary deposits into specified IRA accounts.
- Requires CalSavers to notify participants at least 30 days prior to the creation of the IRA accounts created on their behalf and requires the notification include at a minimum the following:
- The benefits and risks associated with the existence and operation of the IRA.
- How to opt out of the IRA.
- The mechanics for how to operate the IRA alongside other CalSavers accounts.
- The process for withdrawal of retirement savings and any penalties or tax implications for early withdrawal.
- How to obtain additional information on the account.
- Requires CalSavers to assess the feasibility of multistate or regional agreements to administer the program through shared administrative resources and enter into those agreements if determined beneficial.
- Requires CalSavers disseminate information concerning federal retirement savings incentive, known as the Saver’s Match.
- Deletes the requirement that CalSavers establish a Retirement Investments Clearinghouse on its website and a vendor registration process for private sector providers to provide information on their retirement products to eligible employers and makes conforming changes deleting references to the clearinghouse and the related clearinghouse registry.
- Adds explanation of their “language access services” capacity to the list of information that vendors must provide to contract with CalSavers.
- Requires CalSavers to maintain on its website specified investment performance information regarding contracted vendors’ products and provides that CalSavers is not liable for the adequacy of that information.
- Requires eligible employers with one or more eligible employees who become subject to the requirements of the CalSavers Retirement Savings Trust Act on or after January 1, 2027, and who do not offer a retirement savings program to have a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers program.
- Raises the maximum automatic escalation of employees contributions from 8 percent to 10 percent of salary.
- Imposes subsequent penalties of $500 per eligible employee on each eligible employer that, without good cause, fails to allow its eligible employees to participate in the program. This amount is above the employer’s first violation penalties ($250 per eligible employee and $500 per eligible employee if noncompliance continues per Section 19287 of the Revenue and Taxation Code). CalSavers may impose the subsequent penalty repeatedly but not to exceed once every 180 days since the last notice of the imposition of a penalty for the specific noncompliance.
- Deletes the requirement CalSavers education and outreach programs to business associations be live, thereby, authorizing video and internet based presentations.
- Requires the Franchise Tax Board (FTB), after notification from CalSavers, to issue to eligible employers, subsequent penalty notices of the imposition of penalties for noncompliance with CalSavers program requirements.
- Allows an eligible employer to appeal the penalty imposition within 90 days after FTB issues the notice, as specified.
COMMENTS
1. Background:
Program History
The CalSavers program originated from efforts after the 2008 financial crisis to encourage retirement savings and make retirement accounts more accessible to California workers who do not have a pension fund or an employer-sponsored 401k plan. The crisis severely affected pension and investment funds. As policymakers grappled with how to restructure those systems to recover from the crisis, they also considered policies to address the savings shortfall among vulnerable, low-wage workers. Studies at the time focused on the increasing rate of retirement insecurity caused by the societal decline of traditional defined pension plans and the shifting of investment risk to individual workers. Once thought to be part of a “three-legged stool” consisting of a pension, personal savings, and Social Security, the latter became the last leg left for millions of Americans already pressed by economic instability. [1]
The program’s creators designed CalSavers to eventually require nearly all California employers to either offer a retirement savings account to their employees or to provide an automatic enrollment mechanism for those employees to make automatic contributions into a CalSavers IRA. The automatic contributions begin at 3% and increase yearly, under this bill’s changes, up to 10% of the employees’ salary.
Concerns
Existing law requires CalSavers to cover In-house Supportive Services (IHSS) providers if, among other conditions, CalSavers can identify the appropriate employer of record for the purpose of satisfying all the program’s employer requirements and CalSavers can implement the payroll deduction at reasonable costs. [2]
This bill appears to attempt to implement or expand coverage for IHSS workers by redefining the definition of employer to unmistakably cover household employers, including household employers who have only one employee. The bill also further increases penalties for employer non-compliance. This bill could result in elderly recipients of IHSS services facing ongoing penalties for failing to adopt a payroll deduction arrangement to provide their IHSS service provider access to CalSavers. Complicating matters is the confusion whether an IHSS provider is a contractor or an employee. However, this bill specifies that “Household employers” are those who have hired someone to work in or around their home for the benefit of their personal household and provide the employee a W-2 federal tax form.
While extending coverage to vulnerable low-wage IHSS workers most at-risk of retirement insecurity is critical, the committee may wish to contemplate the unintended burden that could befall equally vulnerable small employers and household seniors requiring IHSS services.
The committee recommends that the author consider addressing this concern going forward. One alternative could be to limit penalties based on age, health, or other relevant factors and ensure that accumulated penalties don’t result in punitive tax liens. Another approach could be to require CalSavers or FTB to provide such employers direct assistance in or responsibility for enrolling the senior’s employee.
3. Need for this bill?
According to the State Treasurer this bill aims to address five issues that limit its flexibility and reduce its ability to provide benefits to account holders by doing the following: facilitating California workers’ eligibility for Savers Match, a federal benefit for eligible IRA account holders; clarifying that household employers are covered by CalSavers and must comply with the requirements to cover or enroll their employee or employees; increasing penalties for employer non-compliance; increasing the automatic employee contribution escalation limit from 8% to 10% of the employee’s salary; and eliminating obsolete statutory provisions.
4. Proponent Arguments:
According to the American Association of Retired Persons:
“AB 2650 improves upon CalSavers by allowing participants to take advantage of a new federal benefit called the Saver’s Match. This benefit would apply to many CalSavers participants who would receive a direct federal matching contribution deposited into their account, thereby giving their retirement savings a much-needed financial boost.”
AB 2650 also strengthens participant’s ability to build financial security and stability at their place of work by creating emergency savings accounts for participants, allowing workers to manage unexpected expenses without tapping into their retirement savings.
According to the Filipino Community of Sacramento and Vicinity:
“By strengthening CalSavers and expanding retirement infrastructure, AB 2650 will help more Californians prepare for retirement, expand the benefits available to them at work, and improve long-term financial stability.”
5. Opponent Arguments:
None received.
6. Dual Referral: The Senate Rules Committee referred this bill to the Senate Labor, Public Employment Committee and to the Senate Revenue and Taxation Committee.
7. Prior Legislation:
SB 1126 (Cortese), Chapter 192, Statutes of 2022, expanded CalSavers coverage to employers that have one or more employees and mandates that all eligible employers participate in CalSavers by December 31, 2025, unless the CalSavers’ board extends that date.
AB 102 (Committee on Budget, Chapter 21), Statutes of 2020, transferred authority from EDD to the CalSavers board to enforce, via FTB, employer compliance with the CalSavers program; allowed cannabis-regulating agencies to share data with CalSavers for its licensed cannabis businesses; and made other technical updates to the CalSavers program.
AB 1817 (Committee on Budget), Chapter 37, Statutes of 2018, (Sec. 29-39), as part of a budget trailer bill for state government renamed the program from the California Secure Choice Retirement Savings Program to the CalSavers Retirement Savings Program.
SB 1042 (Pan, 2020) would have required state regulatory licensing authorities of marijuana related businesses to furnish the CalSavers board specified employer contact information with respect to licenses issued. The bill died in the Senate Labor, Public Employment and Retirement Committee.
SB 1207 (De León, 2018) would have changed the name of the California Secure Choice Retirement Savings Program to the CalSavers Retirement Savings Program. The bill died in the Assembly Labor and Employment Committee.
SB 1234 (De León), Chapter 804, Statutes of 2016, provided legislative approval for the California Secure Choice Retirement Savings Program (SCRSP) and sets forth recommendations and requirements for the design and implementation of that program.
SB 1234 (De León), Chapter 734, Statutes of 2012, created the initial statutory framework for the California Secure Choice Retirement Savings Program (SCRSP) and required the board to perform a market analysis and feasibility study to determine if SCRSP could be implemented and to publish its findings and bring a recommendation to the Legislature for approval.
AB 2940 (De León, 2008) would have created the California Employee Savings Program (CalESP), under the administration of the California Public Employees Retirement System (CalPERS) to provide retirement savings opportunities to California's private sector employees and would have authorized CalPERS to offer deferred compensation programs to state employees. The bill died in the Senate Appropriations Committee.
SUPPORT
California State Treasurer (Sponsor)
American Association of Retired Persons
Asian Community Center Senior Services
Asian Resources, INC.
California Association for Micro Enterprise Opportunity Network
The Filipino Community of Sacramento and Vicinity
OPPOSITION
None received
-- END --
A review of some of the relevant studies from the time can be found here: https://laborcenter.berkeley.edu/meeting-californias-retirement-security-challenge/ ↑
See Government Code § 100000 (d)(1)(B) and (d)(2) and § 100046. ↑
ASSEMBLY THIRD READING
ATR Bill Id:AB 2650
Author:(Pellerin)
As Amended Ver:May 22, 2026
2/3 vote
SUMMARY
Enacts the Savings Access and Vested Empowerment (SAVE) for All Workers Act to make changes to the CalSavers Retirement Savings Trust Act (CalSavers Act), including expanding the definition of “eligible employer” to include household employers, as specified.
Major Provisions
- Enacts the SAVE for All Workers Act to make changes to the CalSavers Act.
- Expands the definition of "eligible employer" under those provisions to include household employers, defined as those who have hired someone to work in or around their home for the benefit of their personal household and who provide the employee a W-2 federal tax form.
- Eliminates the authority of the CalSavers Retirement Savings Board (CalSavers board) to invest in the federal myRA retirement savings program (myRA) and would make related conforming changes.
- Requires the CalSavers Retirement Savings Program (CalSavers program), with CalSavers board approval, to establish an Individual Retirement Account (IRA) on behalf of participants who are eligible to receive federal or state retirement benefits, as specified, and notify participants at least 30 days prior to the creation of the account.
- Expands the CalSavers board's power and authority to additionally authorize the board to assess the feasibility of multi-state or regional agreements to administer the CalSavers program and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the successor to the federal Retirement Savings Contribution Credit (Saver’s Credit), known as the Saver's Match.
- Eliminates the requirement for the CalSavers board to establish a retirement investments clearinghouse on its website and a vendor registration process, and instead requires vendors that would like to contract with the CalSavers board to provide specified information to the CalSavers board and the CalSavers board to post that information on its website; makes related conforming changes.
- Requires eligible employers with one or more eligible employees that became subject to the requirements of the CalSavers Act on or after January 1, 2027 and do not offer a retirement savings program, as specified, to, by December 31, 2027 and by December 31 of each calendar year thereafter, have a payroll deposit retirement savings arrangement to allow employee participation in the program.
- Authorizes the CalSavers board to implement annual automatic escalation of employee contributions, as specified, up to 10% of salary, rather than up to 8% of salary under current law, and requires the CalSavers board to notify participating employees about this change.
- Subjects each eligible employer that fails to allow its eligible employees to participate in the CalSavers program after the penalties under current law have been imposed to a subsequent penalty of $500 per eligible employee; authorizes the penalty to be imposed repeatedly but not to exceed once every 180 days since the last notice of the imposition of a penalty for the specific noncompliance.
- Changes the requirement that the CalSavers board include live presentations to business associations as part of the CalSavers program’s comprehensive employer education and outreach, to instead just require presentations (removing “live”) to business associations.
- Requires the Franchise Tax Board to issue subsequent notices of imposition of penalties for noncompliance, as specified.
- Makes other minor, technical and conforming changes.
COMMENTS
Established by legislation in 2016 and officially launched for all eligible employers in July 2019, the CalSavers program was created to address the retirement savings crisis by ensuring all Californians have access to a workplace retirement savings account. The state-run retirement program requires employers that do not sponsor a retirement plan to facilitate IRA payroll deductions for their employees. Employees of eligible employers are automatically enrolled and able to opt-out, change contributions, or keep the account if they switch jobs, with no employer fees or fiduciary liability. Individuals can also participate in the program on their own outside of employment.
This measure is sponsored by the State Treasurer and aims to make several reforms to the CalSavers program:
- Authorizes the CalSavers board to open IRA investment accounts for participants that qualify for federal or state benefits that must be deposited into a specified IRA account. This allows the CalSavers board to automate a key hurdle to participants claiming federal benefits such as the Savers Match, which provides a 50% matching contribution (up to $1,000 annually).This federal benefit is distributed to the retirement accounts of individuals who earn less than $20,500 per year and/or joint filers earning less than $41,000, who contributed to an IRA account that year.
- Clarifies that household employers must offer the CalSavers program to their employees. The current definition of "eligible employer" has caused some household employers to assert that they are not a “business, industry, profession, trade, or other enterprise in the state” and thus do not have to offer the program to their employees. The perceived ambiguity in the law has limited household employees' access to the program and the State Treasurer's Office has advised CalSavers that this issue must be addressed in statute.
- Adds ongoing penalties for repeat violators of the CalSavers law. Current law authorizes the Franchise Tax Board to levy two penalties on employers that fail to give their employees access to the CalSavers program. However, there is no express penalty for employers that repeatedly fail to give their employees access. This measure specifies that the ongoing penalty cannot be assessed more than once every six months. According to the author, roughly 20% of non-compliant employers who receive a penalty are repeat violators. The author adds that the CalSavers board has attempted to address this issue in administrative law and has implemented an ongoing penalty for repeat offenders on an annual basis, which has improved compliance among repeat offenders.
- Changes the contribution automatic escalation cap from 8 percent of employee pay to 10 percent of employee pay. The author argues that this increase is in line with the majority of programs similar to the CalSavers program and the savings rates typically recommended by financial institutions. Furthermore, the author argues that raising the cap to 10 percent brings the CalSavers program closer to revenue solvency and ultimately no longer relying on taxpayer funding, as it currently receives start-up loans from the General Fund to sustain program operations.
- Modernizes the CalSavers Act by removing outdated language that is no longer applicable, and conforming the law with industry best practices. This measure achieves this by 1) eliminating references to the defunct federal myRA program; 2) conforming the legislative language to how the program is actually being implemented by eliminating references to a clearinghouse model and replacing outdated participation deadlines with a continual annual participation deadline for newly eligible employers; and 3) changing the prescriptive live presentation requirement to a performance based standard of presenting to business administrations.
According to the Author
"Retirement is something everyone should plan for, and plan for early. As of 2020, over one-fourth of non-retired adults and two-thirds of Millennials do not have any form of retirement savings. Recognizing that access to a retirement program can be especially daunting for individuals in low-to-mid wage sectors, in 2019, the state launched the CalSavers Retirement Savings Program. However, since then, the State Treasurer, who manages the program, has received complaints from both employers and employees about shortcomings with the program.
AB 2620, the Savings Access & Vested Empowerment (SAVE) for All Workers Act, makes a number of key changes to improve implementation, benefits, and enrollment. This includes fixing vague legal terminology around which professions are eligible for enrollment, letting all workers who receive a W-2 form be automatically enrolled for a CalSavers account, and increasing the max contribution limits to promote program sustainability. These changes create positive impacts for the participants and makes the program sustainable and truly accessible for all workers."
The author adds that the measure promotes equity, per HR 39 (Gipson) [of] 2021 in that "The vast majority of participants in CalSavers are low- to middle-income wage earners working in industries that have long been overlooked by the retirement services industry due to low revenue potential. By strengthening and enhancing the CalSavers program as the bill proposes to do, the proposed legislation provides benefit to this cohort of participants.
These enhancements, notably improving the uptake of federal benefits targeted toward underserved populations and providing access to savings vehicles to which the 401K industry has access, help level the playing field for Californians who lack access to these resources. The bill would require Board staff to work in the best interests of CalSavers participants who qualify for federal Savers Match benefits which are targeted towards low-income earners by streamlining the administrative process to claim these benefits."
Arguments in Support
Note: arguments may not fully reflect the bill’s provisions as amended.
The State Treasurer, sponsor of this measure, writes that "This bill updates outdated parts of the CalSavers law, clarifies employer participation requirements, and makes it easier for participants to access federal tax benefits, address financial insecurity and participant retirement savings fund leakage through automatic (opt-out) IRA accounts alongside sidecar emergency savings accounts. Overall, this bill expands economic opportunity and financial security for working Californians, especially underbanked and low- to moderate-income workers—by improving access to retirement savings and helping close the wealth and retirement preparedness gap."
Arguments in Opposition
None on file.
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- The State Treasurer's Office, which administers the CalSavers program, cites minor and absorbable costs to implement this bill's provisions. However, the Budget Act of 2025 continues existing authority for the Department of Finance to transfer up to $2 million as a loan from the General Fund (GF) to support the full-scale implementation and administrative costs of the Program. The Board will likely incur staff workload costs associated with expanding the Program to include household employers and establishing the new type of account. CalSavers accounts are professionally managed through a program administrator, which receives payment only through a percentage fee on account assets through a "zero-dollar" contract with the Board. Generally, opening new CalSavers accounts will help grow assets and revenue to cover the Board’s and program administrator's costs, but until the Program is fully self-sustaining, Program expansions, such as those proposed by this bill, will continue to increase GF cost pressures to support the Program.
- Likely absorbable costs to the Franchise Tax Board (FTB) to impose additional penalties on repeat non-compliant employers pursuant to existing collection procedures. Such costs to FTB would be reimbursed by the Board.
The Legislative Analyst's Office recently warned of GF structural deficits of around $35 billion per year in the 2027-28 fiscal year and ongoing.
VOTES
ASM LABOR AND EMPLOYMENT: 6-0-1
YES: Ortega, Alanis, Elhawary, Kalra, Lee, Ward
ABS, ABST OR NV: Chen
ASM APPROPRIATIONS: 11-3-1
YES: Wicks, Aguiar-Curry, Calderon, Caloza, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache
NO: Hoover, Dixon, Tangipa
ABS, ABST OR NV: Ta
UPDATED
VERSION: May 22, 2026
CONSULTANT: Erin Hickey / L. & E. / (916) 319-2091 FN: 0003122
ASSEMBLY THIRD READING
ATR Bill Id:AB 2650
Author:(Pellerin)
As Amended Ver:May 18, 2026
2/3 vote
SUMMARY
Enacts the Savings Access and Vested Empowerment (SAVE) for All Workers Act to make changes to the CalSavers Retirement Savings Trust Act (CalSavers Act), including expanding the definition of “eligible employer” to include household employers, as specified.
Major Provisions
- Enacts the SAVE for All Workers Act to make changes to the CalSavers Act.
- Expands the definition of "eligible employer" under those provisions to include household employers, defined as those who have hired or contracted someone to work in or around their home for the benefit of their personal household and who provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level.
- Eliminates the authority of the CalSavers Retirement Savings Board (CalSavers board) to invest in the federal myRA retirement savings program (myRA) and would make related conforming changes.
- Requires the CalSavers Retirement Savings Program (CalSavers program), with CalSavers board approval, to establish an Individual Retirement Account (IRA) on behalf of participants who are eligible to receive federal or state retirement benefits, as specified, and notify participants at least 30 days prior to the creation of the account.
- Expands the CalSavers board's power and authority to additionally authorize the board to assess the feasibility of multi-state or regional agreements to administer the CalSavers program and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the successor to the federal Retirement Savings Contribution Credit (Saver’s Credit), known as the Saver's Match.
- Eliminates the requirement for the CalSavers board to establish a retirement investments clearinghouse on its website and a vendor registration process, and instead requires vendors that would like to contract with the CalSavers board to provide specified information to the CalSavers board and the CalSavers board to post that information on its website; makes related conforming changes.
- Extends until December 31, 2027, and by December 31 of each calendar year thereafter, the deadline for eligible employers with one or more eligible employees that do not offer a retirement savings program, as specified, to have a payroll deposit retirement savings arrangement to allow employee participation in the program.
- Authorizes the CalSavers board to implement annual automatic escalation of employee contributions, as specified, up to 10% of salary, rather than up to 8% of salary under current law, and requires the CalSavers board to notify participating employees about this change.
- Subjects each eligible employer that fails to allow its eligible employees to participate in the CalSavers program after the penalties under current law have been assessed to a penalty of $500 per eligible employee; prohibits the penalties assessed from being imposed more than once every 180 days since the last violation.
- Changes the requirement that the CalSavers board include live presentations to business associations as part of the CalSavers program’s comprehensive employer education and outreach, to instead just require presentations (removing “live”) to business associations.
- Makes other minor, technical and conforming changes.
COMMENTS
Established by legislation in 2016 and officially launched for all eligible employers in July 2019, the CalSavers program was created to address the retirement savings crisis by ensuring all Californians have access to a workplace retirement savings account. The state-run retirement program requires employers that do not sponsor a retirement plan to facilitate IRA payroll deductions for their employees. Employees of eligible employers are automatically enrolled and able to opt-out, change contributions, or keep the account if they switch jobs, with no employer fees or fiduciary liability. Individuals can also participate in the program on their own outside of employment.
This measure is sponsored by the State Treasurer and aims to make several reforms to the CalSavers program:
- Authorizes the CalSavers board to open IRA investment accounts for participants that qualify for federal or state benefits that must be deposited into a specified IRA account. This allows the CalSavers board to automate a key hurdle to participants claiming federal benefits such as the Savers Match, which provides a 50% matching contribution (up to $1,000 annually).This federal benefit is distributed to the retirement accounts of individuals who earn less than $20,500 per year and/or joint filers earning less than $41,000, who contributed to an IRA account that year.
- Clarifies that household employers must offer the CalSavers program to their employees. The current definition of "eligible employer" has caused some household employers to assert that they are not a “business, industry, profession, trade, or other enterprise in the state” and thus do not have to offer the program to their employees. The perceived ambiguity in the law has limited household employees' access to the program and the State Treasurer's Office has advised CalSavers that this issue must be addressed in statute.
- Adds ongoing penalties for repeat violators of the CalSavers law. Current law authorizes the Franchise Tax Board to levy two penalties on employers that fail to give their employees access to the CalSavers program. However, there is no express penalty for employers that repeatedly fail to give their employees access. This measure specifies that the ongoing penalty cannot be assessed more than once every six months. According to the author, roughly 20% of non-compliant employers who receive a penalty are repeat violators. The author adds that the CalSavers board has attempted to address this issue in administrative law and has implemented an ongoing penalty for repeat offenders on an annual basis, which has improved compliance among repeat offenders.
- Changes the contribution automatic escalation cap from 8 percent of employee pay to 10 percent of employee pay. The author argues that this increase is in line with the majority of programs similar to the CalSavers program and the savings rates typically recommended by financial institutions. Furthermore, the author argues that raising the cap to 10 percent brings the CalSavers program closer to revenue solvency and ultimately no longer relying on taxpayer funding, as it currently receives start-up loans from the General Fund to sustain program operations.
- Modernizes the CalSavers Act by removing outdated language that is no longer applicable, and conforming the law with industry best practices. This measure achieves this by 1) eliminating references to the defunct federal myRA program; 2) conforming the legislative language to how the program is actually being implemented by eliminating references to a clearinghouse model and replacing outdated participation deadlines with a continual annual participation deadline for newly eligible employers; and 3) changing the prescriptive live presentation requirement to a performance based standard of presenting to business administrations.
According to the Author
"Retirement is something everyone should plan for, and plan for early. As of 2020, over one-fourth of non-retired adults and two-thirds of Millennials do not have any form of retirement savings. Recognizing that access to a retirement program can be especially daunting for individuals in low-to-mid wage sectors, in 2019, the state launched the CalSavers Retirement Savings Program. However, since then, the State Treasurer, who manages the program, has received complaints from both employers and employees about shortcomings with the program.
AB 2620, the Savings Access & Vested Empowerment (SAVE) for All Workers Act, makes a number of key changes to improve implementation, benefits, and enrollment. This includes fixing vague legal terminology around which professions are eligible for enrollment, letting all workers who receive a W-2 form be automatically enrolled for a CalSavers account, and increasing the max contribution limits to promote program sustainability. These changes create positive impacts for the participants and makes the program sustainable and truly accessible for all workers."
The author adds that the measure promotes equity, per HR 39 (Gipson), 2021 in that "The vast majority of participants in CalSavers are low- to middle-income wage earners working in industries that have long been overlooked by the retirement services industry due to low revenue potential. By strengthening and enhancing the CalSavers program as the bill proposes to do, the proposed legislation provides benefit to this cohort of participants.
These enhancements, notably improving the uptake of federal benefits targeted toward underserved populations and providing access to savings vehicles to which the 401K industry has access, help level the playing field for Californians who lack access to these resources. The bill would require Board staff to work in the best interests of CalSavers participants who qualify for federal Savers Match benefits which are targeted towards low-income earners by streamlining the administrative process to claim these benefits."
Arguments in Support
The State Treasurer, sponsor of this measure, writes that "This bill updates outdated parts of the CalSavers law, clarifies employer participation requirements, and makes it easier for participants to access federal tax benefits, address financial insecurity and participant retirement savings fund leakage through automatic (opt-out) IRA accounts alongside sidecar emergency savings accounts. Overall, this bill expands economic opportunity and financial security for working Californians, especially underbanked and low- to moderate-income workers—by improving access to retirement savings and helping close the wealth and retirement preparedness gap."
Arguments in Opposition
None on file.
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- The State Treasurer's Office, which administers the CalSavers program, cites minor and absorbable costs to implement this bill's provisions. However, the Budget Act of 2025 continues existing authority for the Department of Finance to transfer up to $2 million as a loan from the General Fund (GF) to support the full-scale implementation and administrative costs of the Program. The Board will likely incur staff workload costs associated with expanding the Program to include household employers and establishing the new type of account. CalSavers accounts are professionally managed through a program administrator, which receives payment only through a percentage fee on account assets through a "zero-dollar" contract with the Board. Generally, opening new CalSavers accounts will help grow assets and revenue to cover the Board’s and program administrator's costs, but until the Program is fully self-sustaining, Program expansions, such as those proposed by this bill, will continue to increase GF cost pressures to support the Program.
- Likely absorbable costs to the Franchise Tax Board (FTB) to impose additional penalties on repeat non-compliant employers pursuant to existing collection procedures. Such costs to FTB would be reimbursed by the Board.
The Legislative Analyst's Office recently warned of GF structural deficits of around $35 billion per year in the 2027-28 fiscal year and ongoing.
VOTES
ASM LABOR AND EMPLOYMENT: 6-0-1
YES: Ortega, Alanis, Elhawary, Kalra, Lee, Ward
ABS, ABST OR NV: Chen
ASM APPROPRIATIONS: 11-3-1
YES: Wicks, Aguiar-Curry, Calderon, Caloza, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache
NO: Hoover, Dixon, Tangipa
ABS, ABST OR NV: Ta
UPDATED
VERSION: May 18, 2026
CONSULTANT: Erin Hickey / L. & E. / (916) 319-2091 FN: 0003007
Date of Hearing: May 6, 2026
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 2650
Author:(Pellerin) – As Amended Ver:March 24, 2026
Policy Committee: | Labor and Employment | Vote: | 6 - 0 |
|
| ||
|
|
Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill expands the scope of the CalSavers Retirement Savings Program (Program) and makes various Program updates.
Specifically, this bill:
- Expands the definition of an “eligible employer” under the Program to include a household employer, defined as an employer who has hired or contracted someone to work in or around their home for the benefit of their personal household and who provides the employee a W-2 federal tax form.
- Delays by two years, from December 31, 2025, to December 31, 2027, the deadline for an eligible employer with one or more eligible employees that does not offer a retirement savings program to have a CalSavers payroll deposit retirement savings arrangement.
- Imposes an additional penalty of $500 per eligible employee on an eligible employer that fails to allow eligible employees to participate in the Program and prohibits the additional penalty from being imposed more than once every 180 days since the last violation.
- Prohibits an employee contribution subject to automatic escalation from exceeding 10% of salary, instead of 8% of salary.
- Requires the Program, with CalSavers Retirement Savings Board (Board) approval, to establish an Individual Retirement Account (IRA) on behalf of participants eligible to receive federal or state retirement benefits.
- Requires the Program, with Board approval, to establish a payroll deposit emergency savings account (ESA) on behalf of participants for the purpose of preserving retirement investments and requires a participating employee to contribute 3% of the employee’s annual salary or wages to the account unless otherwise specified by the employee.
- Requires the Program, for both the IRA and ESA, to provide a notification to a participant at least 30 days prior to the creation of the account, which must include information about the benefits and risks associated with the account and how to opt out of the account, among other provisions.
- Eliminates the authority of the Board to invest in myRAs (a U.S. Treasury-sponsored retirement account designed for low-to-moderate-income workers), eliminates the requirement for the Board to establish a retirement investments clearinghouse on the Baord’s website, and eliminates the requirement for the Board to establish a vendor registration process, instead requiring a vendor that would like to contract with the Board to provide certain information to the Board.
- Authorizes the Board to assess the feasibility of multi-state or regional agreements to administer the Program.
FISCAL EFFECT:
- The State Treasurer’s Office, which administers the CalSavers program, cites minor and absorbable costs to implement this bill’s provisions. However, the Budget Act of 2025 continues existing authority for the Department of Finance to transfer up to $2 million as a loan from the General Fund (GF) to support the full-scale implementation and administrative costs of the Program. The Board will likely incur staff workload costs associated with expanding the Program to include household employers and establishing the two new types of accounts. CalSavers accounts are professionally managed through a program administrator, which receives payment only through a percentage fee on account assets through a “zero-dollar” contract with the Board. Generally, opening new CalSavers accounts will help grow assets and revenue to cover the Board’s and program administrator’s costs, but until the Program is fully self-sustaining, Program expansions, such as those proposed by this bill, will continue to increase GF cost pressures to support the Program.
- Likely absorbable costs to the Franchise Tax Board (FTB) to impose additional penalties on repeat non-compliant employers pursuant to existing collection procedures. Such costs to FTB would be reimbursed by the Board.
The Legislative Analyst’s Office recently warned of GF structural deficits of around $35 billion per year in the 2027-28 fiscal year and ongoing.
COMMENTS:
- Purpose. According to the author, since the launch of the Program in 2019, “the State Treasurer, who manages the program, has received complaints from both employers and employees about shortcomings with the program.” The author contends this bill:
makes a number of key changes to improve implementation, benefits, and enrollment. This includes fixing vague legal terminology around which professions are eligible for enrollment, letting all workers who receive a W-2 form be automatically enrolled for a CalSavers account, increasing the max contribution limits to promote program sustainability, and allowing participants to create an emergency savings account. These changes create positive impacts for the participants and makes the program sustainable and truly accessible for all workers.
This bill is sponsored by State Treasurer Fiona Ma and supported by community groups and AARP California.
- Background. CalSavers. SB 1234 (De León), Chapter 734, Statutes of 2012, created the initial statutory framework for CalSavers and SB 1234 (De León), Chapter 804, Statutes of 2016, provided final legislative approval to enact the program. CalSavers is a retirement savings program for private sector workers whose employers do not offer a retirement plan, giving employers an easy way to help employees save, with no employer fees or fiduciary liability and minimal employer responsibility.
During the Program’s early years, employers without a qualifying retirement plan, with at least five employees, had to facilitate CalSavers enrollment for their employees by specified deadlines or face penalties for noncompliance, as follows: (a) employers with over 100 employees had to comply by September 30, 2020; (b) employers with over 50 employees had to comply by June 30, 2021; and (c) employers with five or more employees had to comply by June 30, 2022. Participation is voluntary for employees, but enrollment is automatic and employees must choose to opt-out.
SB 1126 (Cortese), Chapter 192, Statutes of 2022, expanded Program eligibility to an employer with at least one eligible employee and required such an employer that does not offer its own qualifying retirement plan to facilitate Program enrollment for their employees by December 31, 2025. This bill delays the SB 1126 enrollment deadline to December 31, 2027; expands Program eligibility, and thus the requirement to offer a retirement plan, to a household employer who provides an employee a W-2 form; and imposes an additional penalty on non-compliant employers.
Payroll Deposit ESA and Automatic Escalation. Additionally, this bill requires the Program, with Board approval, to establish an IRA and a payroll deposit ESA on behalf of participants. Similar to the original CalSavers retirement account, this bill requires an employee to contribute 3% of the employee’s annual salary or wages to the ESA, unless otherwise specified by the employee, with the Board authorized to adjust the contribution up or down a certain amount via regulation. Although this bill requires the Program to provide a 30-day notice to participants prior to creation of the account inclusive of opt-out information, one notice may not provide sufficient warning to an employee that a portion of their salary will be automatically redirected. Similarly, this bill also increases the automatic escalation of an employee’s contribution to their CalSavers retirement account to a maximum of 10% of salary, up from 8% of salary, which may result in further automatic redirection of an employee’s salary without sufficient notice. According to the Assembly Labor and Employment Committee’s analysis of this bill:
The author argues that this increase is in line with the majority of programs similar to the CalSavers program and the savings rates typically recommended by financial institutions. Furthermore, the author argues that raising the cap to 10 percent brings the CalSavers program closer to revenue solvency and ultimately no longer relying on taxpayer funding, as it currently receives start-up loans from the General Fund to sustain program operations.
Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081
Date of Hearing: April 22, 2026
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Liz Ortega, Chair
ABPCA Bill Id:AB 2650 (
Author:Pellerin) – As Amended Ver:March 24, 2026
SUBJECT: CalSavers: retirement savings
SUMMARY: Enacts the Savings Access and Vested Empowerment (SAVE) for All Workers Act to make changes to the CalSavers Retirement Savings Trust Act (CalSavers Act), including expanding the definition of “eligible employer” to include household employers, as specified. Specifically, this bill:
- Enacts the SAVE for All Workers Act to make changes to the CalSavers Act.
- Expands the definition of “eligible employer” under those provisions to include household employers, defined as those who have hired or contracted someone to work in or around their home for the benefit of their personal household and who provide the employee a W-2 federal tax form to evidence tax deductions at the federal and state level.
- Eliminates the authority of the CalSavers Retirement Savings Board (CalSavers board) to invest in the federal myRA retirement savings program (myRA) and would make related conforming changes.
- Requires the CalSavers Retirement Savings Program (CalSavers program), with CalSavers board approval, to establish an Individual Retirement Account (IRA) on behalf of participants who are eligible to receive federal or state retirement benefits, as specified, establish a payroll deposit emergency savings account on behalf of participants for the purpose of preserving retirement investments, and notify participants at least 30 days prior to the creation of the accounts.
- Expands the CalSavers board’s power and authority to additionally authorize the board to assess the feasibility of multi-state or regional agreements to administer the CalSavers program and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the successor to the federal Retirement Savings Contribution Credit (Saver’s Credit), known as the Saver’s Match.
- Eliminates the requirement for the CalSavers board to establish a retirement investments clearinghouse on its website and a vendor registration process, and instead requires vendors that would like to contract with the CalSavers board to provide specified information to the CalSavers board and the CalSavers board to post that information on its website; makes related conforming changes.
- Extends until December 31, 2027, and by December 31 of each calendar year thereafter, the deadline for eligible employers with one or more eligible employees that do not offer a retirement savings program, as specified, to have a payroll deposit retirement savings arrangement to allow employee participation in the program.
- Authorizes the CalSavers board to implement annual automatic escalation of employee contributions, as specified, up to 10 percent of salary, rather than up to 8 percent of salary under current law.
- Subjects each eligible employer that fails to allow its eligible employees to participate in the CalSavers program after the penalties under current law have been assessed to a penalty of $500 per eligible employee; prohibits the penalties assessed from being imposed more than once every 180 days since the last violation.
- Changes the requirement that the CalSavers board include live presentations to business associations as part of the CalSavers program’s comprehensive employer education and outreach, to instead just require presentations (removing “live”) to business associations.
- Makes other minor, technical and conforming changes.
EXISTING LAW:
- Creates the CalSavers board consisting of nine members with the State Treasurer serving as chair, and requires the board to design and implement the CalSavers program, subject to its authority and fiduciary duty. Government Code § 100002.
- Establishes a retirement savings trust known as the CalSavers Retirement Savings Trust (CalSavers trust), administered by the CalSavers board, to promote greater retirement savings for California private employees in a convenient, voluntary, low-cost, and portable manner. Government Code § 100004.
- Requires the CalSavers board to use any contributions paid by employees and employers into the trust exclusively for paying benefits to the participants of the CalSavers program, for the cost of administration of the program, and for investments made for the benefit of the program. Government Code § 100004(e).
- Authorizes the CalSavers board to provide for investment in the myRA. Government Code § 100002(e)(1).
- Requires the CalSavers program to include, as determined by the board, one or more payroll deduction IRA arrangements. Government Code § 100008.
- Provides the CalSavers board with the power and authority to, among other things, make and enter into contracts necessary for the administration of the CalSavers trust and to disseminate information concerning tax credits available to small business owners for allowing their employees to participate in the program and the federal Saver’s Credit. Government Code §§ 100010 and 100012.
- Requires the CalSavers board, prior to opening the CalSavers program for enrollment, to establish a retirement investments clearinghouse on its website and a vendor registration process, if there is sufficient interest by vendors to participate and provide the necessary funding. Government Code § 100016.
- Requires vendors that would like to participate in the CalSavers board’s retirement investments clearinghouse and be listed on the CalSavers board’s website as a registered vendor to provide specified information to the board. Government Code § 100016(b).
- Authorizes an employer to choose to have a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers program under the terms and conditions prescribed by the CalSavers board. Government Code § 100032(a).
- Requires, by December 31, 2025, eligible employers with one or more employees that do not offer a retirement savings program to have a payroll deposit savings arrangement to allow employee participation in the program, and authorizes the CalSavers board, in its discretion, to extend the time limit. Government Code § 100032(e).
- Authorizes the CalSavers board to implement annual automatic escalation of employee contributions, as specified, and prohibits contributions subject to automatic escalation from exceeding 8% of salary. Government Code § 100032(l).
- Provides the CalSavers board the powers and duties necessary to administer the enforcement of employer compliance, as provided, and requires the CalSavers board to issue to each employer who fails to allow its eligible employees to participate in the program, as provided, a notice of penalty application. Government Code § 100033(a)-(b)(1).
- Requires each eligible employer that, without good cause, fails to allow its employees to participate in the program, as specified, after the CalSavers board serves a final notice of penalty application, to be subject to a penalty of $250 per eligible employee and an additional penalty of $500 per eligible employee if noncompliance continues, as described. Government Code § 100033(b)(2).
- Defines “eligible employee,” for purposes of participating in the program, to mean a person employed by an eligible employer except employees in a federally regulated railroad retirement plan, Taft-Hartley plan, or otherwise exempt from state legislative regulatory authority. Government Code § 100000(c).
- Defines “eligible employer” to mean a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, with at least one eligible employee and that satisfies certain requirements to establish or participate in a payroll deposit retirement savings arrangement.
- Excludes from the definition of “eligible employer,” sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business, the federal government, the state, any county, any municipal corporation, or any of the state’s units or instrumentalities. Government Code § 100000(d).
FISCAL EFFECT: Unknown
COMMENTS: Established by legislation in 2016 and officially launched for all eligible employers in July 2019, the CalSavers program was created to address the retirement savings crisis by ensuring all Californians have access to a workplace retirement savings account. The state-run retirement program requires employers that do not sponsor a retirement plan to facilitate IRA payroll deductions for their employees. Employees of eligible employers are automatically enrolled and able to opt-out, change contributions, or keep the account if they switch jobs, with no employer fees or fiduciary liability. Individuals can also participate in the program on their own outside of employment.
This measure is sponsored by the State Treasurer and aims to make several reforms to the CalSavers program:
- Creates emergency savings accounts within the CalSavers program and authorizes the CalSavers board to establish them for participants. By creating two separate funds, one for retirement and the other for emergency expenses, participants will be able to better understand which fund is for which expenses, and hopefully avoid retirement fund early withdrawals and hardship withdrawals.
- Authorizes the CalSavers board to open IRA investment accounts for participants that qualify for federal or state benefits that must be deposited into a specified IRA account. This allows the CalSavers board to automate a key hurdle to participants claiming federal benefits such as the Savers Match, which provides a 50 percent matching contribution (up to $1,000 annually).This federal benefit is distributed to the retirement accounts of individuals who earn less than $20,500 per year and/or joint filers earning less than $41,000, who contributed to an IRA account that year.
- Clarifies that household employers must offer the CalSavers program to their employees. The current definition of “eligible employer” has caused some household employers to assert that they are not a “business, industry, profession, trade, or other enterprise in the state” and thus do not have to offer the program to their employees. The perceived ambiguity in the law has limited household employees’ access to the program and the State Treasurer’s Office has advised CalSavers that this issue must be addressed in statute.
- Adds ongoing penalties for repeat violators of the CalSavers law. Current law authorizes the Franchise Tax Board to levy two penalties on employers that fail to give their employees access to the CalSavers program. However, there is no express penalty for employers that repeatedly fail to give their employees access. This measure specifies that the ongoing penalty cannot be assessed more than once every six months. According to the author, roughly 20 percent of non-compliant employers who receive a penalty are repeat violators. The author adds that the CalSavers board has attempted to address this issue in administrative law and has implemented an ongoing penalty for repeat offenders on an annual basis, which has improved compliance among repeat offenders.
- Changes the contribution automatic escalation cap from 8 percent of employee pay to 10 percent of employee pay. The author argues that this increase is in line with the majority of programs similar to the CalSavers program and the savings rates typically recommended by financial institutions. Furthermore, the author argues that raising the cap to 10 percent brings the CalSavers program closer to revenue solvency and ultimately no longer relying on taxpayer funding, as it currently receives start-up loans from the General Fund to sustain program operations.
- Modernizes the CalSavers Act by removing outdated language that is no longer applicable, and conforming the law with industry best practices. This measure achieves this by 1) eliminating references to the defunct federal myRA program; 2) conforming the legislative language to how the program is actually being implemented by eliminating references to a clearinghouse model and replacing outdated participation deadlines with a continual annual participation deadline for newly eligible employers; and 3) changing the prescriptive live presentation requirement to a performance based standard of presenting to business administrations.
According to the author, “Retirement is something everyone should plan for, and plan for early. As of 2020, over one-fourth of non-retired adults and two-thirds of Millennials do not have any form of retirement savings. Recognizing that access to a retirement program can be especially daunting for individuals in low-to-mid wage sectors, in 2019, the state launched the CalSavers Retirement Savings Program. However, since then, the State Treasurer, who manages the program, has received complaints from both employers and employees about shortcomings with the program.
AB 2620, the Savings Access & Vested Empowerment (SAVE) for All Workers Act, makes a number of key changes to improve implementation, benefits, and enrollment. This includes fixing vague legal terminology around which professions are eligible for enrollment, letting all workers who receive a W-2 form be automatically enrolled for a CalSavers account, increasing the max contribution limits to promote program sustainability, and allowing participants to create an emergency savings account. These changes create positive impacts for the participants and makes the program sustainable and truly accessible for all workers.”
The author adds that the measure promotes equity, per HR 39 (Gipson, 2021) in that “The vast majority of participants in CalSavers are low- to middle-income wage earners working in industries that have long been overlooked by the retirement services industry due to low revenue potential. By strengthening and enhancing the CalSavers program as the bill proposes to do, the proposed legislation provides benefit to this cohort of participants.
These enhancements, notably improving the uptake of federal benefits targeted toward underserved populations and providing access to savings vehicles to which the 401K industry has access, help level the playing field for Californians who lack access to these resources. The bill would require Board staff to work in the best interests of CalSavers participants who qualify for federal Savers Match benefits which are targeted towards low-income earners by streamlining the administrative process to claim these benefits.”
Arguments in Support
The State Treasurer, sponsor of this measure, writes that “This bill updates outdated parts of the CalSavers law, clarifies employer participation requirements, and makes it easier for participants to access federal tax benefits, address financial insecurity and participant retirement savings fund leakage through automatic (opt-out) IRA accounts alongside sidecar emergency savings accounts. Overall, this bill expands economic opportunity and financial security for working Californians, especially underbanked and low- to moderate-income workers—by improving access to retirement savings and helping close the wealth and retirement preparedness gap.”
Arguments in Opposition
None on file.
Prior and Related Legislation
SB 1126 (Cortese), Chapter 192, Statutes of 2022, required eligible employers with one or more eligible employees that do not offer a retirement savings program to have a payroll deposit retirement savings arrangement by December 31, 2025, to allow employee participation in the CalSavers program.
AB 102 (Committee on Budget), Chapter 21, Statues of 2020, transferred authority from EDD to the CalSavers board to enforce, via the Franchise Tax Board, employer compliance with the CalSavers program; allowed cannabis-regulating agencies to share data with CalSavers for its licensed cannabis businesses; changed other technical aspects and investment limitations of the program; and renamed the California Secure Choice Retirement Savings Trust Act as the CalSavers Retirement Savings Trust Act, and the body that administers the act as the CalSavers board.
SB 1042 (Pan) of 2020 would have required state regulatory licensing authorities of marijuana related businesses to furnish the CalSavers board specified employer contact information with respect to licenses issued. Died in the Senate Labor, Public Employment and Retirement Committee.
SB 83 (Committee on Budget and Fiscal Review), Chapter 24, Statutes of 2019, among other things, required the California Secure Choice Retirement Savings Investment Board to design and disseminate to employers an employee information packet, as specified.
AB 1817 (Committee on Budget), Chapter 37, Statutes of 2018, among other things, changed the name of the California Secure Choice Retirement Savings Program to the CalSavers Retirement Savings Program and made conforming changes.
SB 1207 (De León) of 2018 would have changed the name of the California Secure Choice Retirement Savings Program to the CalSavers Retirement Savings Program. Died in the Assembly Labor and Employment Committee.
SB 1234 (De León), Chapter 804, Statutes of 2016, provided legislative approval for the California Secure Choice Retirement Savings Program (SCRSP) and sets forth recommendations and requirements for the design and implementation of that program.
SB 1234 (De León), Chapter 734, Statutes of 2012, created the initial statutory framework for the SCRSP and required the board to perform a market analysis and feasibility study to determine if SCRSP could be implemented and to publish its findings and bring a recommendation to the Legislature for approval.
AB 2940 (De León) of 2008 would have created the California Employee Savings Program under the administration of the California Public Employees Retirement System (CalPERS) to provide retirement savings opportunities to California's private sector employees, and would have authorized CalPERS to offer deferred compensation programs to state employees. Died in the Senate Appropriations Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
California State Treasurer (Sponsor)
American Association of Retired Persons
Asian Community Center Senior Services
Asian Resources, INC.
The Filipino Community of Sacramento and Vicinity
Opposition
None on file.
Analysis Prepared by: Erin Hickey / L. & E. /
Discussed in Hearing
1MIN
Senate Standing Committee on Appropriations
4MIN
Senate Standing Committee on Revenue and Taxation
7MIN
Senate Standing Committee on Labor, Public Employment and Retirement
1MIN
Assembly Floor
6MIN
Assembly Standing Committee on Labor and Employment
Bill Author
Bill Co-Author(s):