70% of Eligible Employees Have Joined California’s State-Run Retirement Program

Early evidence suggests the mandate for employers that don’t offer a retirement plan to join CalSavers is driving adoption of new plans.


CalSavers’ Retirement Savings Board’s “2021 Year in Review Report” indicates that the state-run retirement program in California is seeing a steady 70% participation rate among eligible employees.

The report also notes that in January 2021, 95% of savers accepted the automatic escalation of their contribution rate by 1 percentage point (moving from contributing 5% to 6% for most). During 2021, the program also saw a 127% increase in the number of funded CalSavers accountholders, from 96,000 to 218,000.

Saver assets, which include saver contributions and investment returns and exclude withdrawals, grew 510%, from $28 million to more than $173 million by the end of 2021. The report says this growth was driven largely by new savers and new contributions. Total contributions, before withdrawals and investment returns, amounted to $187 million.

Thirty-five percent of savers had contributions from more than one employer by the end of the year. CalSavers says this shows the importance of the portability of the program.

CalSavers notes in the report that the retirement program was created to ensure all Californians have a way to save for retirement by requiring employers to participate in the program if they don’t already offer a retirement plan. So, the report notes, it seems natural that CalSavers employers tend to come from industries that do not typically sponsor retirement plans, including from hotels, restaurants, retail and other service industries. Data shows one-quarter of employers that have signed up for the program are in the accommodation and food services industry; 18% are in administrative and support and waste management and remediation services; and 14% are in health care and social assistance.

Early evidence suggests that the state’s mandate for employers that don’t offer a retirement plan to join CalSavers might be driving sizeable growth in private retirement plan adoption among employers. “We are encouraged by this apparent expansion of quality retirement plan access and look forward to more research on this positive development,” the report says.

CalSavers Executive Director Katie Selenski, in an opening letter in the report, said the board, staff and partners applied insights gathered from the early rollout of the program toward scalable system improvements. For example, in May, the CalSavers team executed a seamless transition from the prior default investment policy, which kept the first $1,000 of participant contributions in a money market fund, to a simpler policy moving participants into a target retirement fund after an initial 30-day period in the money market fund. Ninety-seven percent of assets are in the target retirement fund default.

CalSavers has used a gradual rollout system for employers to sign up. The number of registered employers more than tripled in 2021, driven by the June 30, “wave 2” registration deadline, early efforts to reach “wave 3” employers in advance of their deadline in 2022, and ongoing enforcement efforts with late “wave 1” employers.

The program also announced it will start imposing penalties for noncompliant employers beginning this month.

“Employers that do not offer a private retirement plan and who have more than 100 employees are urged to immediately comply with state law and register for the CalSavers Retirement Savings Program before penalties are imposed this month,” the announcement says. “More than 24,000 employers have already registered. The noncompliance penalties of $250 per employee will be levied on employers by the CalSavers Retirement Savings Board in partnership with the Franchise Tax Board, following dozens of notifications sent by letter and email from the program since it launched three years ago.”

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