California Poised for First State Management of Private Pensions

Saturday, 01 Sep 2012 09:34 AM


  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink

California lawmakers approved a bill that would permit as many as 6.3 million private workers without a pension plan to set aside retirement money for management by the state.

If signed by Governor Jerry Brown, the first state-run pension program for nongovernment employees would add as much as $6.6 billion to funds managed by the California Public Employees’ Retirement System, the biggest U.S. pension. Calpers, as the fund is known, ended fiscal 2012 with $233 billion in assets.

“This is government doing what government is supposed to do, and that’s helping people,” said Assemblyman Warren Furutani, a Long Beach Democrat.

The Assembly voted 44-24 for the plan aimed at businesses with five or more employees that don’t offer pensions or 401(k) savings programs. Companies would be required to contribute 3 percent of a worker’s salary to the retirement account. Workers would be enrolled unless they choose to opt out.

The proposal by state Senate President Pro Tem Darrell Steinberg of Sacramento and Senator Kevin de Leon of Los Angeles, both Democrats, passed the upper chamber 23-13 in May.

Brown, a Democrat, has until Sept. 30 to sign or veto the legislation, or it becomes law without his signature.

About 6.3 million Californians, most of them making less than $46,420 a year, aren’t covered by an employer-provided retirement plan, according to a June 2012 study by the Labor Center of the University of California, Berkeley. De Leon cited the research in promoting his legislation.

Prior Attempts

De Leon introduced bills in 2008 and 2009 that would have put Calpers in charge of retirement accounts for private-sector workers, including those at nonprofit organizations, without a workplace retirement plan. The measures were opposed by both unions and financial firms, and neither came up for a vote.

The California Chamber of Commerce opposed de Leon’s current bill. The state’s largest business organization said the measure would subject employers to “significant cost” and also deprive workers of income, in a statement on its website.

“The legislation could force low-wage workers to choose between being forced to set aside money for retirement and current pressing obligations, including paying the rent and high-interest credit debt,” according to the statement.

The measure wouldn’t automatically entrust the new retirement accounts to Calpers. Rather, the fund, which manages benefits for 1.6 million public employees, retirees and beneficiaries, could bid for the asset-management business in a process overseen by an investment board headed by the state treasurer. Private firms could compete to manage all or part of the money.

In analyzing the 2008 and 2009 proposals, Calpers estimated that starting the program would cost about $1.69 million over two years, according to an Assembly staff analysis of the current bill. It said startup costs could exceed $10 million.

Once established, the program’s costs would be covered by investment income, the analysis said. Calpers hasn’t taken a position on the bill.

© Copyright 2014 Bloomberg News. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Send me more news as it happens.
Get me on The Wire
Send me more news as it happens.
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
You May Also Like

Dr. Evil's 'Saturday Night Live' Skit Hits North Korea, Sony

Monday, 22 Dec 2014 07:26 AM

Mike Myers opened "Saturday Night Live" with his Dr. Evil character taking on both North Korea and Sony Pictures after t . . .

Miley Cyrus' Shriver Ban Creates Kennedy Family Holiday Conflict

Monday, 22 Dec 2014 06:42 AM

Miley Cyrus has been banned at Kennedy holiday events by Maria Shriver who disapproves of the singer's budding romance w . . .

Tom Brokaw Cancer Remission Comes After Months of Chemo

Monday, 22 Dec 2014 05:35 AM

Veteran NBC newsman Tom Brokaw announced Sunday that after months of chemotherapy his cancer is in remission and he soon . . .

Top Stories

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved