Nearly 7 million California workers will eventually have access to a new state-run retirement plan.
Gov. Jerry Brown signed Senate Bill 1234 on Thursday, establishing the program. Workers at private companies in California without employer-sponsored retirement plans will be automatically enrolled.
Senate President Pro Tem Kevin de León authored the bill and called its signing a big deal.
"It is morally unjust that so many hardworking Californians, irrespective of who they are or where they come from, work well into their 60s and 70s and even 80s, not by choice, but out of necessity," he said.
It's not yet clear when enrollment will begin, but it’s expected to happen within one to two years. Employees will have 3 percent of their wages deposited into a retirement account, which will be run by a state board. Workers can increase their contributions or opt out if they choose. But a 2012 study found between 70 and 90 percent are likely to take part.
Brown called it an important bill.
"There's millions of people who aren’t saving enough," he said. "And now they are going to dedicate what might have been current consumption for delayed consumption in the form of a retirement program."
California will join Oregon, Illinois and Connecticut in offering such a program. The state will not be responsible for guaranteeing any returns on employee investments.