The primary impact of AB 825 is its facilitation of a retirement mechanism for state employees, including those at the California State University, who are unable to participate in traditional social security programs. By allowing these employees to defer part of their wages into a qualified retirement savings plan, the bill aims to enhance the retirement security of those workers. This change will not only affect current employees but could also influence future hiring practices by making state employment more attractive through improved retirement benefits.
Summary
Assembly Bill 825, introduced by Assembly Member Choi, aims to amend Section 19999.2 of the California Government Code, which is concerned with retirement programs for state employees not covered by social security or the Public Employees Retirement System. Specifically, this bill mandates the Department of Human Resources to develop and administer a retirement program that allows state employees to defer a portion of their compensation at a rate of 7.5% of their wages. The intention behind this amendment is to ensure continued compliance with the federal Omnibus Budget Reconciliation Act (OBRA) of 1990.
Contention
While the bill primarily makes nonsubstantive changes and thus may not generate significant controversy, it raises points of consideration regarding the inclusiveness of certain employee groups, especially those at the California State University, who are not automatically covered until trustees authorize their participation. This provision may lead to discussions about equity in retirement benefits among various state employment sectors and the need for policy considerations that ensure all state employees have access to adequate retirement savings and benefits.