California is pushing ahead with its auto-IRA program, CalSavers, according to an announcement from State Treasurer Fiona Ma. This week, the state is sending out notices to employers about participating in the program. Employers are responsible only for providing the program to their employee roster and remitting employee payroll contributions each pay period.
“Gig” workers can also sign up for the program, starting today.
Employers with more than 100 employees who do not already offer a retirement plan will have until June 30, 2020, to register, according to Ma. Employers with more than 50 employees will be required to register by June 30, 2021. Those with five or more employees will have until June 30, 2022, to register.
Some industry observers see the program as an opportunity for advisors to show their value, potentially using the awareness of the auto-IRA program as a chance to pitch their services to small business owners and individuals being nudged into CalSavers. The program’s initial annual asset-based fees range from 82.5 basis points to 95 basis points, depending on the investment choices of a participant, an expense that's been criticized as too costly by some.
California’s auto-IRA program aims to bring retirement savings services to the state’s more than 7 million individuals who are “currently on their own,” according to the announcement.