California’s Program for Folks With out Retirement Plans overcomes the authorized problem

A federal appeals court in San Francisco on Thursday dismissed a legal challenge to the state-sponsored California retirement plan, a development that supports the growing number of public programs for private sector workers who do not have access to retirement plans at work.

By eliminating “uncertainty about the legal status of this program,” the decision could weaken resistance to further adoption of government austerity plans approved by 13 states and two cities, said John Scott, director of pensions for the Pew Charitable Trusts project.

Currently, California, Oregon, and Illinois are enrolling workers, while states like New Jersey, Maryland, and Virginia are developing programs.

The New York City Council approved such a program in late April, making it the second U.S. city after Seattle to do so. In New York, employers with five or more employees who do not offer a pension plan must automatically register the employees in an individual pension account at 5% of earnings. Employees are free to decline or change their savings rate and employers are prohibited from contributing

The lawsuit against California’s CalSavers program began in 2018 when the nonprofit Howard Jarvis Taxpayers Association attempted to invalidate the program in a lawsuit in the US District Court for the Eastern District of California.

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