Bill Text: CA SB1297 | 2015-2016 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Public employee retirement plans: automatic enrollment and escalation.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2016-11-30 - Returned to Secretary of Senate pursuant to Joint Rule 62(a). [SB1297 Detail]

Download: California-2015-SB1297-Introduced.html

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BILL NUMBER: SB 1297	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Pan

                        FEBRUARY 19, 2016

   An act to add Article 5 (commencing with Section 7523) to Chapter
21 of Division 7 of Title 1 of the Government Code, relating to
public employees' retirement.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1297, as introduced, Pan. Public employee retirement plans:
automatic enrollment and escalation.
   The California Constitution grants the retirement board of a
public pension or retirement system plenary authority and fiduciary
responsibility for investment of moneys and administration of the
system, as specified.
   Under existing law, public employees may participate in prescribed
supplemental defined benefit plans and deferred compensation plans
established or maintained by employers.
   This bill, notwithstanding any other law, would authorize a state
or local public employer participating in an employee retirement
plan, defined to include certain defined benefit plans, deferred
compensation plans, or payroll deduction individual retirement
account plans, to make a deduction from the wages or compensation of
an employee for contributions attributable to automatic enrollment
and automatic escalation in the employee retirement plan. The bill
would provide that an employer that provides automatic enrollment or
automatic escalation in an employee retirement plan is not liable for
the investment decisions made by the employer on behalf of any
participating employee with respect to the default investment of
contributions made for that employee to the plan, if specified
requirements are met.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 5 (commencing with Section 7523) is added to
Chapter 21 of Division 7 of Title 1 of the Government Code, to read:

      Article 5.  Public Employee Retirement Plans: Automatic
Enrollment and Escalation


   7523.  As used in this article:
   (a) "Automatic enrollment" means an employee retirement plan
provision under which an employee will have a specified contribution
made to the plan, equal to a compensation reduction, that will be
made for the employee unless the employee affirmatively elects not to
have any compensation reduction contributions or elects a
compensation reduction contribution in an alternative amount, in
accordance with the federal Pension Protection Act of 2006 (Public
Law 109-280). An employee retirement plan may provide for automatic
enrollment whether or not the employee retirement plan elects to
provide for automatic escalation.
   (b) "Automatic escalation" means an employee retirement plan
provision under which an employee's salary reduction contribution to
the plan is increased by a specified amount annually up to the limits
imposed by the Internal Revenue Code of 1986, as amended, unless the
employee affirmatively elects not to have the automatic escalation
amount deducted from compensation or elects an alternative
contribution reduction amount.
   (c) "Employee retirement plan" means a plan described in Sections
401(k) or 403(b), or a governmental deferred compensation plan
described in Section 457, or a payroll deduction individual
retirement account plan described in Sections 408 or 408A, of the
Internal Revenue Code of 1986, as amended.
   7523.1.  (a) This article shall apply to all state and local
public employee retirement plans and to their participating
employers.
   (b) The administration of this article shall comply with
applicable provisions of the Internal Revenue Code and the Revenue
and Taxation Code.
   7523.2.  (a) Notwithstanding any other law, a state or local
public employer participating in an employee retirement plan may make
a deduction from the wages or compensation of an employee for
contributions attributable to automatic enrollment and automatic
escalation in the employee retirement plan, regardless of whether the
plan is subject to the federal Employee Retirement Income Security
Act of 1974, as amended (29 U.S.C. Sec. 1001 et seq.).
   (b) (1) An employer that provides automatic enrollment or
automatic escalation in an employee retirement plan is not liable for
the investment decisions made by the employer on behalf of any
participating employee with respect to the default investment of
contributions made for that employee to the plan, if all of the
following requirements are met:
   (A) The plan provides the participating employee at least
quarterly opportunities to select investments for the employee's
contributions among investment alternatives available under the plan.

   (B) The participating employee is given notice of the investment
decisions that will be made in the absence of direction from the
employee, a description of all the investment alternatives available
for employee investment direction under the plan, and a brief
description of procedures available for the employee to change
investments.
   (C) The employee is given at least annual notice of the actual
default investments made of contributions attributable to the
employee.
   (2) The relief from liability of the employer under this section
extends to any employee retirement plan official who makes the actual
default investment decisions on behalf of participating employees.
   (c) Nothing in this section modifies any existing responsibility
of employers or other plan officials for the selection of investment
funds for participating employees.
   (d) Nothing in this section or any other law shall be construed as
authorizing an employer to withhold or divert any portion of an
employee's wages to pay any tax, fee, or charge prohibited by Section
50026, whether or not the employee authorizes that withholding or
diversion.