What is Cal-Savers?

CalSavers is California’s new retirement savings program for workers in the private sector who do not currently have a way to save at work. It’s simple and completely voluntary for employees.

In 2016, California Governor Brown signed Senate Bill 1234 requiring the state’s Secure Choice Retirement Savings Investment Board to develop a workplace retirement savings program known as CalSavers for private-sector workers whose employers do not offer a retirement plan.

As a result, any employer with five (5) or more employees who does not currently sponsor a “tax-qualified retirement plan” like a 401 (k), must provide a retirement plan for their workers or register for CalSavers and facilitate employees’ contributions to individual retirement accounts.

IMPORTANT:

If you already offer a qualified retirement savings plan, your employees cannot participate in the CalSavers program, and you are not required to register.

Who is Eligible?

Anyone 18 years or older, working in California, and receiving a W-2.

What Do Employers Need To Do?

• Register for the CalSavers program in compliance with the above schedule.
• Within 30 days of registering, provide the CalSavers program administrator with a collection of personal information about each individual employee. This information includes: the name, Social Security number, date of birth and contact information for each eligible employee.
• Ensure that each employee receives a packet of information from the program administrator.
• Calculate the appropriate rate of deduction for each employee, based on a schedule contained in the regulation.
• Deduct each employee’s contributions to the CalSavers program from their salary.
• Remit the employee’s contributions to the program administrator within seven days of deduction.
• In addition, if a new employee is hired after registration, that individual’s information must be submitted within 30 days of the date of hire.

But I Don't Want to Deal With This...

Employers are expressly prohibited from encouraging or discouraging employees from participating in the CalSavers program, or from providing any advice about any decisions related to investment and contribution relating to the program.

But My Employees Don't Want to Deal With This...

Employee participation is completely voluntary, and employee can opt in or out at any time on the CalSavers website, by phone, by overnight mail or by regular mail.

Fine, I'll Do It. How do my employees participate?

The CalSavers program is set up for automatic enrollment. Once an employer reports eligible employee information to the program administrator, the administrator will send information to the employee about CalSavers. If the employee doesn’t opt out of CalSavers within 30 days of receiving that information, the employee will be automatically enrolled. Employees can opt out on the CalSavers program website, by phone, by overnight mail or by regular mail. Employees who opt out can re-enroll at a later date.

By default, enrolled employees will see the default contribution amount (5 percent) be deducted from their pay, and they’ll see that percentage automatically increase by 1 percent annually until it reaches 8 percent, at which point it will cease increasing. However, employees can also elect alternative contribution amounts ranging from 0 to 100 percent of their compensation.

Detailed information about the contribution amounts, automatic increases and investment options can be found in the CalSavers Program Disclosure Booklet.