Supreme Court Won’t Consider CalSavers ERISA Preemption Lawsuit

The move by the high court stops an advocacy organization’s effort to halt the program, which provides workplace retirement savings for private sector workers whose employers do not offer a retirement plan.

The U.S. Supreme Court this week declined to accept an appeal of a lawsuit involving the CalSavers Retirement Savings Program.

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Launched in July 2019, CalSavers is available to self-employed individuals and to California workers whose employers don’t offer a workplace retirement plan. Under the program, savers contribute to an individual retirement account that belongs to them, with payroll deferrals being facilitated by their employer. Private-sector employers with five or more employees have to register with CalSavers by June 30, 2022, while employers with more than 50 employees were required to register by June 30, 2021.

The move by the Supreme Court comes after the 9th U.S. Circuit Court of Appeals affirmed a lower court’s dismissal of claims by a group that sought to block the program’s implementation. The lawsuit, filed by the Howard Jarvis Taxpayers Association, aimed to block CalSavers on the grounds that the federal Employee Retirement Income Security Act pre-empts it, thereby invalidating the program.

In its dismissal, the Circuit Court ruled in no uncertain terms that ERISA does not pre-empt CalSavers.

“We hold that the pre-emption challenge fails,” it said in its ruling. “CalSavers is not an ERISA plan because it is established and maintained by the state, not employers; it does not require employers to operate their own ERISA plans; and it does not have an impermissible reference to or connection with ERISA. Nor does CalSavers interfere with ERISA’s core purposes. Accordingly, ERISA does not pre-empt the California law.”

The Supreme Court has effectively endorsed the 9th Circuit’s ruling by declining to itself take up the case.

California State Treasurer Fiona Ma, who chairs the CalSavers Retirement Savings Board, says the Supreme Court’s decision is a victory for her state and its citizens.

“The United States Supreme Court’s denial of review preserves the ability of millions of hard-working Californians to save for their futures through this portable, simple option,” Ma says. “CalSavers is a simple solution to level the playing field for workers who for too long haven’t had effective access to retirement savings plans. Without this program, and programs like it across the country, millions of Americans would be left behind.”

“It’s great that this matter is finally behind us after nearly four years, but we never let it slow us down,” says CalSavers Executive Director Katie Selenski.

Selenski says more than 30,000 employers have registered since the program launched, while more than 233,000 workers are saving with funded accounts amounting to more than $186 million.

“We are laser-focused on bringing on tens of thousands more employers this year leading up to and following the June compliance deadline and supporting hundreds of thousands more savers as they begin their savings journeys,” she adds.

Record Diversity Additions and Scholarship Awards for CFP Board

The increase in gender and racial diversity among CFP professionals supports the board’s goal of increasing public access to competent and ethical financial planning.

This year, the Certified Financial Planner Board of Standards has hit two milestones, including a record increase in new women, Black and Hispanic CFP professionals, and a banner year of scholarships awarded to students and recent graduates working to attain CFP certification.

The increase in gender and racial diversity among CFP professionals supports the organization’s goal of increasing the public’s access to competent and ethical financial planning, the board says. As of December 31, the number of CFP professionals reached an all-time high of 92,055, an increase of 3.8% from 2020.

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The number of female CFP professionals increased 4.2% from 2020, reaching 21,504, and there was a 13.8% increase among Black and Hispanic CFP professionals, to 4,196—an increase nearly four times the growth rate of all CFP professionals. Among CFP professionals, there are now more than 1,650 who are Black, nearly 2,500 who are Hispanic and 45 who are biracial Black and Hispanic.

Overall, for the class of 2021, the CFP Board says it welcomed its largest and most diverse class in its history, with 5,273 new CFP professionals. There were 1,374 new female CFP professionals in 2021, compared with 1,167 in 2020; 150 new Black CFP professionals in 2021, compared with 139 in 2020; 267 new Hispanic CFP professionals in 2021, compared with 200 in 2020; and six new biracial Black and Hispanic CFP professionals in 2021, compared with two in 2020.

The CFP board has established goals of increasing the number of women and people of color who are CFP professionals, which will have a positive impact not only on the business but also on the public, says D.A. Abrams, Center for Financial Planning managing director. Dating back to 2015, the board has taken steps to achieve these goals with the help of its diversity advisory group and by the more recent hiring of Dawn Harris as director of diversity and inclusion.

“As the U.S. population continues to diversify, the demographics of wealth will change,” Abrams says. “More diverse CFP professionals will better meet the needs of their clientele and help them achieve their financial dreams. The center will continue to develop innovative programs to build a financial planning workforce that better reflects the population it serves.”

Building on the successes it’s already achieved, the CFP board plans to collaborate with historically Black colleges and universities (HBCUs) and Hispanic-centered institutions to share with students what it is like to be a CFP professional, Abrams says. That will be in addition to continuing to host the organization’s annual Diversity Summit, which brings together people from all sizes of advisory firms to connect and share best practices within the industry.

The CFP Board also announced a new single-year record of scholarships awarded to students and recent graduates working to attain their CFP certification. The CFP Board Center for Financial Planning presented 80 new scholarship awards in 2021—an increase of 67% from 48 awards in 2020. The 2021 scholarships offer more than $300,000 to recipients—up 50% from the more than $200,000 awarded in 2020.

This milestone brings the center to a total of 180 scholarships awarded, providing more than $800,000 to aspiring CFP professionals since the launch of the first scholarship program in 2016. Created jointly with sponsors and donors, the CFP Board Center for Financial Planning currently administers 10 different scholarship programs that assist individuals with completing the education and exam requirements for CFP certification.

The costs related to attaining the educational component for the CFP certification have been identified as a potential barrier to people receiving the designation, particularly for people of color and women, and the scholarship offerings help to bridge the gap, Abrams says. The scholarships can defer the costs of the certification and, in some cases, eliminate the expense all together, which is significant, because this can also help with the CFP Board’s diversity and inclusion program and efforts.

“Scholarships play a critical role in building a talent pipeline to ensure that the financial planning profession can recruit and retain the talent it needs to grow,” Abrams says. “We commend the scholarship sponsors for making the commitment to train new financial planners. These scholarships will help foster a more diverse workforce that reflects the changing demographics in the United States.”

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