We just got our "SavingsPlus" password and user ID in the mail yesterday 12/24/2012, and what a joke this thing is. Sue wrote a recent blurb on the topic, which is reproduced below. Try not to laugh at the folly of our California lawmakers and what they are trying to foist upon us as "real solutions to real problems". It won't even pass legal muster. Here is the link to California's own website on SavingsPlus. You can read more from this Press Release dated 9/28/2012 on the SavingsPlus program. Read on:
California State Senate Bill 1234 (aka "California Secure Choice Retirement Savings Trust"): California took a tentative (and likely pointless) step toward requiring private employers to withhold 3% of their employees’ wages to give over to a State-run pension plan. The State would collect the money, invest it and eventually pay out retirement sums to the “contributing” employees.
However, the law will not go into effect unless three major hurdles are overcome, which will be very unlikely. The hurdles are:
(1) A State-created board must conduct a market analysis and conclude that the retirement system would be self-sustaining;
(2) the IRS must rule that the contributions can be made on a pre-tax basis; and
(3) the U.S. Department of Labor must rule that the law is not preempted by a federal benefits law known as ERISA.
Given the grossly optimistic assumptions that the State has used in the past to contend that existing public employee pension funds were somehow fully funded, it is likely that the State-created board will pass the 1st hurdle. However, the 3rd hurdle, ERISA preemption, is unlikely to be surmountable. ERISA law clearly provides that no State shall make any law imposing or regulating employee benefits, including pension plans.
The courts have universally applied this rule in a very broad manner, voiding laws similar to SB 1234. The chances of the Department of Labor saying that SB 1234 is not barred by ERISA are slim, at best. But even if all of these hurdles are cleared, additional legislation will be required to actually implement the program.
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