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A federal appeals court has upheld the law creating CalSavers, California's state-facilitated retirement savings program, a move that could encourage other states to open their own programs.
Nearly half of all private sector workers ages 18 to 64 work for businesses that do not offer a retirement plan, AARP research shows. AARP has long supported state-facilitated savings programs that enable those who work for small employers without their own plans to save for retirement.
Since CalSavers began in 2018, more than 10,000 companies have registered to give their employees an opportunity to enroll. In 2018, the nonprofit Howard Jarvis Taxpayers Association (HJTA) filed a suit to invalidate the program in the U.S. District Court for the Eastern District of California. HJTA argued that CalSavers violated the Employee Retirement Income Security Act of 1974 (ERISA), which governs pensions and retirement savings plans. The district court dismissed the case in 2020 and a federal appeals court affirmed the dismissal on May 6. AARP and AARP Foundation filed an amicus brief with several other organizations in support of CalSavers.
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"'Work and Save’ programs like CalSavers are some of the most important to help Americans without workplace retirement plans build savings and a more secure future,” AARP Executive Vice President and Chief Advocacy & Engagement Officer Nancy A. LeaMond said in a May 7 statement. “This will help millions — including those who work for themselves or small businesses — have access to retirement savings programs."
The three-person federal appeals panel consists of two judges appointed by former President Donald Trump and one appointed by former President Barack Obama. The judges ruled unanimously that CalSavers is not an ERISA plan because it's established and maintained by the state, and not employers. “AARP applauds today's decision to uphold CalSavers, which ensures nearly all Californians have access to workplace retirement savings programs,” LeaMond said.