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Universal Voluntary Retirement Accounts:Universal Voluntary Retirement Accounts:A Financially Secure Retirement A Financially Secure Retirement

Olivia CalderonNew America Foundation

California Asset Building Program

Sargent Shriver National Center on Poverty LawDecember 14, 2009

Retirement Savings Webinar

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New America Foundation

A national nonprofit, nonpartisan policy institute, based in Sacramento and in Washington DC.

The Asset Building Program develops and advances a range of policy proposals at the national, state, and local level that aim to broaden the middle class and help people permanently exit poverty.

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Discussion Topics

California Overview

Golden Dream Account

Assembly Bill 125

Challenges and Opportunities

Lessons Learned

Next Steps

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Why Promote Retirement Savings in California?

Six million Californians, roughly 43 percent of the state’s workforce, have jobs without a pension or a retirement savings plan to supplement Social Security

Forty percent of today’s baby boomers rely on Social Security benefits for more than 90 percent of their retirement income.

Social Security payments alone, which average to $1,081 per month in California, will not be enough to sustain Californians in their retirement.

Twenty-five percent of California households do not have enough savings to survive at the poverty level for 3 months if their income were interrupted.

California private sector workers need a seamless, lifelong retirement savings system to build their savings.

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What is the Golden Dream Account?

Create an easy way for workers to save for retirement through payroll deduction

Provide small businesses a low-cost,

easy retirement plan to offer their employees

Use California’s tax filling and public pension management program to expand retirement coverage

Financed through accountholder fees

A voluntary, portable retirement savings account for private sector workers not covered by a retirement savings plan on the job.

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Assembly Bill 125 (De Leon)The California Employees Savings Program (CalESP)

Authorize CA Public Employees Retirement System (CalPERS) to develop and administer the Program

Provide portable, individually owned, IRA accounts to CA workers without access to a workplace retirement plan

Allow workers to match employees contributions through SIMPLE IRAs

Voluntary accounts for both employees and businesses

Employers’ only obligation would be to transfer workers’ contributions to the account through the state payroll tax system

Financed through accountholder fees.

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California AB 125 Coalition

AARP Advanced Composite Products and

Technology American Federation of State, County and

Municipal Employees Asset Policy Initiative of California

Association of California School Administrators

CA ACORN CA Communities United Institute CA Council

of Land Trusts CA Faculty Association CA Small Business Association City of Los Angeles City of San Francisco Earned Assets Resource

Network Fraser Communications

Golden Gate Restaurant Association Greenlining Institute New Economics for Women Oakland Metropolitan Chamber of Commerce Plumbing-Heating-Cooling Contractors of CA Sacramento Asian Pacific Chamber of

Commerce San Francisco Council of District Merchant

Associations San Francisco Chamber of Commerce San Francisco Small Business Advocates San Francisco Works Small Business California Small Business Majority Small Business Network Small Manufacturers Association of CA

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Challenges

With challenges come opportunities:

CA Budget Deficit

Opposition: Securities Industry Policy Design

General Awareness

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Opportunities

On the way to building savings:

National Auto-IRA

Bipartisan Effort Support: Small Business Media Coverage

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Key Lessons Learned

Do your homework

Prepare cost-benefit analysis

Know what’s up in other states and share it

Provide political cover by generating broad based support from the small business community

Publish articles and do presentations

Show how the proposed policy is consistent with national and other state policy efforts

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Guiding Principles to Garner Business & Labor Support

Small Business

Offer a voluntary opportunity to help their employees secure their financial future.

Provide a low-cost, easy way to offer a retirement savings plan to workers.

Eliminate complexities to offer high-quality investment options to employees.

Make small businesses more competitive in recruiting and retaining employees.

Create a tax-neutral, affordable, and accessible option to promote expanded retirement security for workers.

Address the need for more small business employees to save for retirement.

Labor

Provide a supplemental retirement savings product that helps both public and private employees.

Target low- and middle-income workers who are currently not marketed to.

Educate and help workers become pro-active about saving for retirement

Require state to secure all necessary federal and regulatory approvals before program design and implementation.

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Know the Power of MediaGovernor: Open CalPERS Doors; He Touts Pension Bill Letting Private Sector Join the State System Sacramento Bee - April 9, 2008.

Bill Would Help Workers Save MoreInside Bay Area - April 10, 2008.

Intriguing Idea: CalPERS for Private SaversSacramento Bee - April 13, 2008.

An IRA for the Rest of us; CalPERS May Oversee Retirement Funds for Workers Without Pensions or 401(K)sLos Angeles Times, April 14, 2008.

A Promising AlternativeSan Jose Mercury News, April 20, 2008.

Plan to Open Up CalPERS Reflects Worry About Inadequate Saving for Retirement Sacramento Bee - April 25, 2008.

A Bigger Safety NetLos Angeles Times - May 13, 2008.

Magic of SavingsVentura County Star - May 28, 2008.

Bill Would Order CalPERS to Offer IRAsSan Francisco Chronicle - April 25,2008,

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What’s Next?

Next Steps:

Seek Federal Funding for AB 125 Educate Republican legislators

Grow state and national UVRA coalition Recruit financial institutions and chambers of

commerce to neutralize opposition.

Raise awareness through statewide regional policy briefings

Reach out to mainstream and ethnic media outlets

Deliver AB 125 to Governor’s desk in 2010

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New America Foundationwww.newamerica.net

The Retirement Security Projecthttp://www.retirementsecurityproject.org

Center for Economic and Policy Researchwww.cepr.net

Sargent Shriver National Center on Poverty Lawhttp://www.povertylaw.org

Economic Opportunity Institutehttp://www.eoionline.org

Women’s Professional Business Foundationwww.bpwusa.org

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Resources

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For more Information:

Olivia CalderonLegislative Director

California Asset Building Program, New America Foundationcalderon@newamerica.net

www.newamerica.net/california

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Thank you!