Public employee retirement plans: automatic enrollment and escalation.

Existing federal law prescribes requirements for different types tax-qualified retirement plans that permit employees to contribute portions of their pretax wages to individual retirement accounts or that provide for deferred compensation. Existing law authorizes the Department of Human Resources to establish and administer tax-deferred saving plans in accordance with specified provisions of federal law. This bill would authorize a state or local public employer participating in an employee supplemental retirement savings plan, defined to include specified deferred compensation plans and 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 require an employer that provides for automatic enrollment in a supplemental retirement savings to provide a default investment option and default investment plan that meets a variety of specified criteria, including providing employees an opportunity to opt out or withdraw. The bill would provide that an employer that provides automatic enrollment or automatic escalation in an employee retirement plan subject to these provisions 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. The bill would prohibit an employer from making deductions from the compensation of represented employees in the absence of a collectively bargained memorandum of understanding or other collective bargaining agreement authorizing those deductions. The bill would also prohibit an employer that makes employer contributions to an employee retirement plan that implements automatic enrollment of escalation from contributing at a greater rate for nonrepresented, managerial, or supervisory employees than that contributed for represented employees who are in related retirement membership classifications, except in specified instances. The bill would prohibit vendors for the default investment plan from using that relationship to market other products. The bill would prohibit personnel, including members of governing bodies, acting on behalf of an employer from receiving consideration from a vendor in exchange for the promotion of a vendor product.