Hank Kim: Senate Bill 1234 a win-win for Californians
Senate Bill 1234 deserves a much closer and more far dispassionate review by the Appeal-Democratand others who have voiced disapproval — disapproval not based so much on what the bill would do, but by misplaced feelings about CalPERS.
Loving the state's public pension plan or hating it has nothing to do with SB 1234 and its aim of making an affordable and efficient retirement savings program available to private sector workers who currently have no available options to them.
First, let's be clear about what SB 1234 is not.It isnotan entitlement program. It isnota boondoggle. And it doesnotcost taxpayers a dime.
What the California Secure Choice Retirement Savings Program is is a sorely needed public-private partnership to allow private employers to offer a retirement plan that is affordable, easy to administer and professionally managed — at no cost to taxpayers.
It would address California's profound need for private-sector retirement income with a modest program offering modest benefits based on conservative investment returns. It would tap private insurance — not public coffers — to protect against the remote possibility that those conservative returns are not achieved.
More than 7 million private-sector workers in California have no access to a retirement plan, mostly employed by small businesses. In the Wednesday editorial "Keep state away from private pensions," the Appeal-Democrat refers to them as "workers who could save for retirement but, for one reason or another, choose not to."
For lower-income workers, that choice is not nearly so casual as the A-D suggests. The absence of a workplace retirement plan is their biggest single obstacle. Financial services companies that sell retirement plans historically have had little interest in lower-income individuals and business with a small numbers of employees because those accounts do not generate significant profits.
At the same time, the majority of California small-business owners want to offer a retirement plan, but cannot afford plans currently available.
So it should come as no surprise that a recent survey of 505 small-business owners with two to 49 employees shows overwhelming support for the Senate Bill 1234 plan. Nearly three out of four — 71 percent — are in favor. That support crosses party lines — with 78 percent of Democrats and 70 percent of Republican in support. Backing is strong in every area of the state.
Large majorities say they feel an obligation to offer retirement benefits, that offering those benefits helps them recruit good employees and that having those benefits would boost their businesses' bottom lines.
A public-private partnership of the kind Sens. Kevin De Leon and Darrell Steinberg have proposed is crucial to meeting the needs of small business owners and employees.
It will allow them to participate in a retirement plan that's affordable, that's not an administrative burden and will leverage lower-cost professional investment outcomes through economies of scale.
If millions of California workers must rely solely on Social Security because that is all they have, they will not have enough.
If these workers age into retirement without sufficient assets, they will not be able to make mortgage or rent payments, buy cars, go to restaurants, take vacations, save and invest or engage in other activities that contribute to the economy and generate tax revenues. They will be forced to rely on public services and entitlements, creating a significant cost to taxpayers and stunting or slowing California's economy.
Gov. Jerry Brown has a singular opportunity to protect California's workers, small businesses, economic well-being and government operations well into the future by signing Senate Bill 1234.
Retirement security for private-sector workers will provide a universal financial and economic benefit. It won't cost taxpayers a dime now — and will save them substantial sums in the years ahead.