CalSavers, the state-run retirement plan for employees whose employers do not provide a plan, had a 2021 befitting a plan created and run by a place called the Golden State.
In an annual report about CalSavers, the CalSavers Retirement Savings Board reports that by many measures the plan grew, and handsomely in some cases.
Participation
Participation in CalSavers increased in 2021 among both employers and employees.
Employers. The number of registered employers more than tripled in 2021. Part of the reason for that, says the report, is that June 30 was the “wave 2” registration deadline for employers with 50 or more employees. In addition, the Board says, there were employers in 2021 with five or more employees who wanted to register well ahead of the “wave 3” June 30, 2022 deadline by which they must do so. Further, the Board cites ongoing efforts to enforce registration by employers with more than 50 employers.
Employees. The report says that the number of Californians actively saving more than doubled in 2021 from 96,000 to 218,000, and among employees who had been offered the opportunity to participate, 70% did so. In addition, the number of funded CalSavers account holders rose 127% from 96,000 to 218,000. And by New Year’s Eve, 35% of participating employees had contributed to their accounts through more than one employer.
Engagement
As with participation, employers and employees also were actively engaged in CalSavers in 2021.
Employers. The number of registered employers tripled to more than 23,000 in 2021.
Employees. Almost all—95%—of participating employees accepted the automatic but voluntary escalation of their contribution rate by one percentage point. For most of them that meant an increase from 5% to 6%.
Assets
Participants’ assets grew dramatically, says the report, increasing five-fold from $28 million to more than $173 million. and in aggregate they were contributing $16 million per month by the end of the year, through an average contribution of $150 per month. And total contributions, before withdrawals and investment returns, amounted to $187 million.
Reflecting the growth in the number of brand new savers, 58% of funded accounts had balances of $500 or less at the end of the year. Longer-held accounts naturally posted higher account balances, and more than 3,000 savers had more than $5,000 amassed by the end of the year.
The highest percentage of assets came from the Accommodation and Food Services industry, 25%; the Administrative and Support and Waste Management and Remediation Services industry accounted for 18%, and the Health Care and Social Assistance industry 14%.
Looking Ahead
The report notes that while participation increased in 2021, it will be increasing much more. They note that more than 70% of employers have not reached the next deadline, June 30, 2022, the date by which employers with five or more employees must register.
The Big Picture
CalSavers Retirement Savings Board Executive Director Katie Selenski hailed the results in the foreword to the report, and also looked beyond to its big-picture impact, saying that while the report highlights participant and program activity, “it can’t begin to capture the impact the program is beginning to make in the lives of hard-working Californians.”
Salenski further suggested that the requirement that employers that do not offer plans make CalSavers available to employees is helping encourage such employers to offer a plan themselves. Said Salenski, “Early evidence suggests that the state’s mandate for employers that don’t offer a retirement plan to join CalSavers may be driving sizeable growth in private retirement plan adoption among employers. We are encouraged by this apparent expansion of quality retirement plan access and look forward to more research on this positive development.”
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