California Secure Choice Retirement Savings Investment Board

What This Means for Employers

Secure Choice applies to employers, with five or more employees, who do not offer an employer-sponsored retirement plan. Employers who fit this definition will be required to either offer an employer-sponsored retirement plan, or enable their employees to make a direct payroll contribution to the employee’s personal Secure Choice Retirement account. This requirement will not go into effect until the Secure Choice program is fully operational, which is anticipated to be sometime late 2018.

Employers who elect to enroll their employees in Secure Choice will have limited administrative responsibilities. They would be required to:

  1. Enable employees to make an automatic contribution from their paycheck into their Secure Choice Account.
  2. Transmit the payroll contribution to a third-party administrator to be determined by the Board.
  3. Provide state developed informational materials about the program to their employees.

When Would the Employer Mandate Go Into Effect?

The mandate will not go into effect until the program is fully operational. It will then be phased in over a 3 year period. The goal is for the program to begin operations sometime in 2018. That means employers with 100 or more employees that do not offer a retirement plan will be required to provide a retirement plan or access to Secure Choice in 2019. Employers with more than 50 employees will be mandated to participate within two years after the program is open for enrollment. which is likely to be 2020, ; and within 36 months all employers with less than 50 employees will be required to participate, likely to be 2021.

Will Secure Choice be subject to the Employee Retirement Income Security Act (ERISA)?

No. State law requires the Secure Choice Board to develop the Secure Choice Program in a manner that  does not subject the program or participating employers to ERISA regulations.

Employer safeguards

  • Employers will not have any liability for an employee’s decision to participate in, or opt out of, the Program;
  • Employers will not have any liability for the investment decisions of participating employees;
  • Employers will not be a fiduciary of the Program;
  • Employers will not bear responsibility for the administration, investment performance, or the payment of benefits earned by participating employees;
  • Employers will not be able to contribute to their employee’s account, as such contributions would trigger ERISA regulation.