CalSavers, the state-run retirement plan for private-sector employees whose employers do not offer a retirement plan, is set to launch a pilot on Nov. 19, Calpensions has announced.
The pilot is expected to start with about 20 diverse employers and grow to 50 or more. The first contributions to CalSavers are expected to start being made in January, according to an announcement on the Calpensions blog.
In October, the California Secure Choice Retirement Savings Investment Board proposed emergency regulations that would implement, interpret and make specific the rules, policies and procedures for the operation of CalSavers.
CalSavers, formerly known as California Secure Choice, will be available for voluntary registrations on July 1, 2019. It will become mandatory over the three following years for employer groups of varying sizes. At full implementation by Jan. 1, 2022, employers with five or more employees which do not offer a retirement plan will be required to offer them CalSavers.
Employees of employers that offer CalSavers may opt out of the program. For those who do not, the standard contribution will start at 5% of pay and increases 1% of pay each year until reaching 8%. Employees can change their contribution rates, pause contributions, and return later if they had opted out.
Contributions go into Roth IRAs, unless an employee chooses to have them go into a traditional IRA. Employees also will be able to choose between options regarding how their funds are invested. If an employee does not make a different choice, the first $1,000 of their contributions goes into a low-risk money market fund. After that, his or her contributions will go into a target date fund that shifts to more conservative and less risky investments as the employee nears retirement age. Employees also can choose among mutual funds.