In 2016 Governor Jerry Brown signed Senate Bill 1234, the Secure Choice Retirement Savings Investment Program (Secure Choice). The legislation required that the plan was to go into effect 12 months after passage. However, according to Secure Choice officials, the earliest any employers could be subject to implementing the law is 2019. Thus businesses are not obligated to enroll their employees into the program this year or next year and should not feel compelled to make any changes related to their offering of retirement benefits to comply with the law.
Even after the program opens, it will be phased-in over a three-year period, subject to the following schedule:
- More than 100 employees – within 12 months after the program is open for enrollment;
- More than 50 employees – within 24 months after the program is open for enrollment;
- More than 5 employees – within 36 months after Secure Choice is open for enrollment.
Because this is not an employer-sponsored retirement plan, the Secure Choice Board must demonstrate that it has clearly defined the role and responsibilities of employers, so not to subject them to ERISA liability. Additionally, it must develop an operational model that limits the amount of direction and interaction employers will be required to provide employees concerning the program. These and other steps must be accomplished before enrollment can begin.
Recommendation: Members are not obligated to enroll their employees into the program in the immediate future and should not feel compelled to make any changes related to their offering of retirement benefits to comply with the law. More information can be found at the Secure Choice website: www.treasurer.ca.gov/scib.