Solutions for the Savings Gap: The California Experience

"Today, over 7 million workers in California have zero access to workplace retirement savings plans, and nearly 50 percent of middle-income workers are at risk of sliding into poverty when they can no longer work."

Retirement security is an issue of critical importance for California and the United States, particularly given the nation’s aging population. Unfortunately, for too many Americans, savings programs like those offered through employers are simply not an option. This is an area where the United States lags behind our industrialized counterparts.

Today, over 7 million workers in California have zero access to workplace retirement savings plans, and nearly 50 percent of middle-income workers are at risk of sliding into poverty when they can no longer work. If we fail to help these workers secure a supplement to Social Security, then they will need to rely on our state’s already strained safety-net programs.

Throughout my tenure in the legislature, I have actively sought solutions to this challenge. It’s an issue that is personal for me. I was inspired by my family, specifically my mother and my aunt Francesca. They worked all their lives, never dependent on government assistance, but they never had the option to save through their employers, and they never had the convenience of automatic payroll deductions. Unfortunately, my mother passed away before she could enjoy retirement. Aunt Francesca had to continue working well beyond the average retirement age, and her body simply gave out; she then had to rely on public assistance and her family to get by. In California, there are millions of people in this same predicament.

The California Secure Choice Retirement program is a first step to addressing this challenge. I first introduced legislation on this issue back in 2008, when I was still in the California State Assembly. And finally, in 2012, we succeeded in passing Senate Bill 1234, the California Secure Choice Retirement Savings Trust Act.

Over the past 5 years, I have made numerous trips to Washington, DC, to work with administration officials, including former Secretary of Labor Hilda Solis and current Secretary of Labor Tom Perez, to find a path forward for California and other states looking to adopt similar legislation. It’s been a long and sometimes frustrating process of trial and error, but, thanks to the Obama administration, we now have a legal framework to allow wide-scale adoption of similar policies across the nation.

Now, Illinois and Oregon have adopted similar legislation, and at least 15 other states are considering plans to follow in our footsteps and create their own retirement programs. This is a huge win, not only for Californians but also for low-wage workers in dozens of states around the country who will soon have a safe and reliable way to save for the future.

According to the US Government Accountability Office, nearly half of US households ages 55 or older have no retirement savings and few resources outside of Social Security to draw on. Comparatively, we lag far behind countries such as Australia, the United Kingdom, and the Netherlands when it comes to retirement plan participation. With policies like Secure Choice, we’re creating a retirement savings program for a population that is highly fragmented and hard to reach—and one that has been largely ignored by Wall Street.

This is a common-sense solution that will provide direct benefits for not only millions of Californians who will now enter retirement with a modicum of dignity and security, but also every California taxpayer and every recipient of public services whom we will be able to fund with the savings created by this program. I hope we can lead the nation by example and start to close the gap with the international community.

About the author

California State Senate President Pro Tempore Kevin de León (D-Los Angeles) is focused on building a prosperous and sustainable economy that benefits all Californians. His priorities include college accessibility, climate change, retirement security for low-income workers, and supporting California’s growing, diverse communities. He was elected to the Assembly in 2006 and the Senate in 2010.


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