1 1 Universal Voluntary Retirement Accounts: A Financially Secure Retirement Olivia Calderon New America Foundation California Asset Building Program Sargent Shriver National Center on Poverty Law December 14, 2009 Retirement Savings Webinar.

2 2 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.

3 3 Discussion Topics California Overview Golden Dream Account Assembly Bill 125 Challenges and Opportunities Lessons Learned Next Steps

4 4 4 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.

5 5 5 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.

6 6 6 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.

7 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

8 8 8 Challenges With challenges come opportunities: CA Budget Deficit Opposition: Securities Industry Policy Design General Awareness

9 9 9 Opportunities On the way to building savings: National Auto-IRA Bipartisan Effort Support: Small Business Media Coverage

10 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

11 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.

12 Know the Power of Media Governor: Open CalPERS Doors; He Touts Pension Bill Letting Private Sector Join the State System Sacramento Bee - April 9, Bill Would Help Workers Save More Inside Bay Area - April 10, Intriguing Idea: CalPERS for Private Savers Sacramento Bee - April 13, An IRA for the Rest of us; CalPERS May Oversee Retirement Funds for Workers Without Pensions or 401(K)s Los Angeles Times, April 14, A Promising Alternative San Jose Mercury News, April 20, Plan to Open Up CalPERS Reflects Worry About Inadequate Saving for Retirement Sacramento Bee - April 25, A Bigger Safety Net Los Angeles Times - May 13, Magic of Savings Ventura County Star - May 28, Bill Would Order CalPERS to Offer IRAs San Francisco Chronicle - April 25,2008,

13 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

14 New America Foundation The Retirement Security Project Center for Economic and Policy Research Sargent Shriver National Center on Poverty Law Economic Opportunity Institute Women’s Professional Business Foundation Resources

15 For more Information: Olivia Calderon Legislative Director California Asset Building Program, New America Foundation Thank you!