More than half of American workers — roughly 55 million — don't have access to a retirement savings plan on the job.
While those people can open an individual retirement account with an investment company, less than 1 in 3 American households has an IRA and even then most of those people have access to an employer-sponsored plan such as a 401(k).
The California state Assembly on Thursday approved a bill that would enroll employees who are not covered by an employer-sponsored retirement plan at work into a state-run one. A similar measure has already passed the state Senate. The legislature, which is controlled by Democrats, will now have to reconcile the bills before sending the proposal on to Democratic Gov. Jerry Brown, which he is expected to sign.
California, the nation's most populous state, is not alone. Since 2012, more than half of state legislatures have considered bills that would create government-run retirement plans for private-sector workers:
- Connecticut, Illinois, and Oregon have passed laws to create state-run plans for private-sector workers, which will be available next year. Maryland's plan will be implemented in 2018.
- Massachusetts provides a retirement plan for non-profit workers and is studying the feasibility of one for private-sector employees.
- Washington state established an online marketplace and New Jersey will follow suit next year.
In addition, the Obama administration on Thursday announced that the Department of Labor issued a rule to encourage states and some large cities and counties to offer government-run retirement plans for private-sector workers.