Secure Choice will help workers save

The Legislature is debating a new retirement savings plan called Secure Choice.
The Legislature is debating a new retirement savings plan called Secure Choice. TNS

AARP agrees that improving retirement security is a worthy goal, but we disagree with concerns that have been raised about the proposed Secure Choice retirement savings plan.

There is no question that for millions of Californians, a crisis prohibits retirees from a secure future after decades in the workforce. Many workers do not have access to a system that allows them to save.

Senate President Pro Tem Kevin de León introduced Senate Bill 1234, which is based upon recommendations from State Treasurer John Chiang and the Secure Choice Retirement Savings Investment Board. Passed by the Senate and before the Assembly, SB 1234 establishes an automatically enrolled savings program for private-sector workers whose employers do not offer a retirement plan.

Secure Choice will help millions of workers improve their financial security by offering them a low-risk, low-cost and portable savings plan. This innovative approach is being watched nationwide as a model for improving retirement security for millions of Americans.

It’s also important to note what Secure Choice is and is not. It would be one way for private-sector workers to save for their future by contributing to their own individual retirement account. But Secure Choice is not going to create a long-term liability for the state because it is not a guaranteed pension.

The Secure Choice board conducted four years of market feasibility and legal studies that are available for public review and that confirmed that it would be a self-sustaining program. Further, the legislation states that the state and employers are not liable for market gains or losses. Just like in the private sector, individuals are responsible for the performance of their investments.

With SB 1234, California has an opportunity to be a national leader and create a way for 7.5 million workers to save for their future during their working years. Nearly half of workers age 50 and older have less than $25,000 in savings; 41 percent of those 55 to 64 have no savings for retirement.

Their alternatives are equally grim.

Retirees who rely on Social Security do not have economic security, with an average payment of $1,261 a month. If older adults don’t have money to meet even their basic needs such as food, heat and medications, the state will be on the hook through public safety-net programs. That is a much costlier proposition for taxpayers in the long run.

In addition, there are successful similar models, such as California’s 529 college savings program, which have worked well to date.

At AARP, we recognize that for many Americans, a major barrier to saving for the future is the absence of a retirement savings program at their place of employment. We also believe many small employers want to help their employees save for retirement, but are simply not in a position to arrange for one.

Secure Choice will provide such a tool with the least possible imposition on employers. Fear and speculation should not be obstacles toward a retirement savings plan that addresses this problem. The simple fact is that workers who have access to an automatic-enrollment plan are 15 times more likely to save for their future. More and more people saving is good for the future of all Californians.

Nancy McPherson is California state director of the AARP. She can be contacted at

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