CalSavers state pension plan survives challenge by Jarvis taxpayers group
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State Treasurer Fiona Ma, chairwoman of the CalSavers Retirement Savings Board, said the ruling preserves “a simple solution to level the playing field for workers who for too long haven’t had access to workplace based retirement plans.”Paul Chinn/The Chronicle
CalSavers, the employee-funded, state-managed retirement system for millions of Californians whose employers have no retirement plan, is a valid program that does not conflict with federal pension laws, a U.S. appeals court ruled Thursday, rejecting a conservative group’s challenge.
The program was established by state law in 2017 and is being phased in through June 2022, when all private employers with five employees or more will have to register their workers’ names with the state. Employees can opt out of the program, but those who participate have a percentage of their pay automatically transferred to a Roth individ
(CN) The Ninth Circuit on Thursday rejected a bid by an anti-tax group to block CalSavers, California’s state-sponsored retirement plan for private workers.
The Howard Jarvis Taxpayers Association (HJTA), an influential anti-tax group with roots in the Golden State, sued the CalSavers program claiming it was preempted by the federal Employee Retirement Income Security Act (ERISA).
CalSavers allows eligible employers that do not offer 401(k) plans or pensions to automatically enroll their employees in the program. Workers can opt out, but if they choose to stay the state of California invests their contributions.
Critics believe the program adds unnecessary requirements for small employers trying to comply with California’s complicated business laws. To that end, Howard Jarvis sued in the Eastern District of California as an employer, and also claimed CalSavers was a waste of money that discouraged people from saving money on their own.
Legal California s state-run retirement savings program not preempted by ERISA - 9th Circuit
Daniel Wiessner
4 minute read
A gavel and a block is pictured at the George Glazer Gallery antique store in this illustration picture taken in Manhattan, New York City, U.S., August 18, 2020. REUTERS/Andrew Kelly/Illustration
A U.S. appeals court on Thursday said California s state-run individual retirement account program for workers is not governed or preempted by the federal law on employee benefits, even if its mandatory contributions are irritating or even burdensome to some employers.
A unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals said the CalSavers program created in 2017 is not an employee benefit plan under the Employee Retirement Income Security Act of 1974 because it is maintained by the state and does not require private employers to establish their own retirement plans.
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