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California May Develop First State-Run Retirement Program for Private Sector

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CA Governor Jerry Brown

Jerry Brown, Jr.

On September 28, 2012, California Governor Jerry Brown signed legislation to create a board to begin developing a proposed retirement savings program for California companies that do not offer a retirement plan. The plan called the California Secure Choice Retirement Savings Program will not be implemented until the California state legislature votes to implement the proposed plan solution. If implemented, it would be the first state-run retirement savings program for private-sector workers in the United States. With the anemic financial condition of American public-worker pensions, many believe it will be another mounting liability for state taxpayers. Unfunded pension liabilities continue to haunt California. Republican lawmakers in California felt that Roth IRAs would be a more efficient solution for low-income workers.

The state of California has US$ 617 billion in public debt; furthermore, California has higher per capita debt than the national average.

This new board is tasked to create a plan that would automatically withhold 3% of workers’ pay without any type of employer sponsored retirement plan into a retirement account. The account would be portable. California employees would have to opt out of the plan or the deductions would become automatic. Plan participants would have to sign a liability waiver stating that California would not be liable for losses.

Who will manage the money?
In the legislation it calls for the 3% contributions to be managed by the California Public Employees’ Retirement System (CalPERS) for a fee, the CA State Treasurer, and/or a private manager. This will be determined by the investment board.

California Secure Choice Retirement Savings Investment Board Composition

  • California State Treasurer
  • California State Controller
  • CA State Director of Finance (designee)
  • Expert in Retirement Savings and Investments (Appointed by the CA Senate Committee on Rules)
  • Small Business Representative (Appointed by CA Governor)
  • Public Member (Appointed by CA Governor)
  • Employee Representative (Appointed by CA Speaker of the Assembly)

Blackstone Defeated on Investa Office Fund Bid

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The Blackstone Group threw in the towel on a bid to take over the Investa Office Fund, a vehicle that owns prized Australian office properties. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Temasek’s Bond Expected to Lure Retail Investors

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Singapore’s Temasek Holdings, through its subsidiary Temasek Financial (IV) Private Limited, is planning a 5-year bond that aims to yield 2.7% for retail investors. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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QIA Becomes the Largest Shareholder in Colonial

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The Qatar Investment Authority (QIA) became the biggest shareholder of Inmobiliaria Colonial, SOCIMI, S.A. (Colonial), a Spanish listed real estate company. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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