Dems Order Private Sector Pensions

February 24, 2012 - By admin

Katy Grimes: Democrats announced a new pension ponzi scheme on Thursday, under the auspices of wanting “millions of Californians to have guaranteed retirement benefits.” But the plan could be the final nail in the coffin of private industry in California.

Former community organizer and civil rights activist, Sen. Kevin de León, D-Los Angeles, co-authored SB 1234, which would require businesses with five or more employees to enroll them in a new “Personal Pension” defined benefit program. Or the private employer would have to offer an alternative employer-sponsored plan.

Public pensions have now turned out to be the biggest ponzi scheme in history. Experts have estimated that unfunded pension liabilities in the U.S. are worth trillions of dollars.

Democratic Solutions Strangle Business

Despite that 401(k) plans and IRA plans are available to everyone, Democrats are trying to convince the masses that somehow they are being robbed if they do not have an pension plan. According to the Wall Street Journal, in 2011, nearly 60 percent of American households nearing retirement age had 401(k)-type accounts. Anyone can start a retirement plan through any investment firm. There is no reason for the government to be involved in private sector pensions, unless more corruption and mismanagement is the goal.

But the Sacramento Bee reported that the “UC Berkeley Center for Labor Research and Education figures about 62 percent of working Californians – more than 7 million people – have no retirement savings through their employer. If all of them put 3 percent of their wages into a retirement fund, the pot of money would grow to $6.6 billion in the first year, say university researchers.” But nowhere in the story did the Bee mention that anyone can open an account, and start funding a retirement plan, with or without an employer sponsor.

The Democrats’ solution to the half-a-trillion dollar public pension debt, is to make a new law ordering private business to participate in another pension scheme? Is this so that the private sector can end up bankrupt as well? This is nothing more than a tawdry tactic to get private sector money to support the state’s bankrupt, broken public pension system.

The bill is co-authored with Senate Pres Pro Tem Darrell Steinberg. It appears that big union contributors may be getting some payback with another government expansion program. Both Steinberg and de Leon receive very large union political campaign contributions, according to Maplight.org.

Who Gets To Administer The New Program?

Language in the bill states, “The bill would require the Employment Development Department to modify the California Employee’s Withholding Allowance Certificate to create an option for employees to elect to opt out of an employer-sponsored retirement or pension plan. The bill would require the Employment Development Department to assess a penalty on any eligible employer that fails to offer its eligible employees a retirement or pension plan option...”

The new system’s investments would be professionally managed by CalPERS, “or another contracted organization.”

The bill allows for the hiring of additional state employees to administer the new pension program, and calls for the Employment Development Department to enforce business participation. California is about to get pension police. Can you imagine EDD employees with a badge and gun?

“The Employment Development Department shall assess an eligible employer that fails to offer all of its eligible employees an employer-sponsored retirement plan or the personal pension pursuant to Section 10010 a penalty of one thousand dollars ($1,000) for every eligible employee not offered the retirement option,” the bill states. And the collected penalties will be deposited in the state’s general fund.

Called “the Golden State Retirement Savings Investment,” the board, “which shall consist of the Treasurer, the Director of Finance, the Controller, an individual with retirement savings and investment expertise appointed by the Senate Committee on Rules, a small business representative and a public member each appointed by the Governor, and an employee representative appointed by the Speaker of the Assembly. The Treasurer shall serve as chair of the board.”

The very hungry fox will be guarding the henhouse.

FEB. 24, 2012

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Comments(14)
  1. cacheguy says:

    Oh crap….here we go again!

  2. Rex The Wonder Dog! says:

    if everyone had a DB like trough feeders over 50% of ALL revenue in this state would go to pensions, it is mathematically impossible.

  3. Bob says:

    So the state gummymint that has unsustainable pensions is going to force the private sector into the same situaion?

    I say bring it on. The sooner Colliefornia (as Ahnode sez) collapses the sooner we can split it up.

  4. Beelzebub says:

    HAH! This is like Guido offering to share the stolen goods with Guiseppe to get him go along with the thievery and shut up!! :D

    This is being done for one reason and one reason only. To put a lid on the citizen outcry over public pensions. Instead of doing the right thing cutting back on or eliminating public pensions and replacing them with defined contribution retirement programs the thiefs are forcing the honest people to join in!!

    Another thing these government slimeballs fail to mention is that the private sector public pension formula would be .70% @ 67-70 while the public hogs would continue to collect 2.5%/3% @ 50-55!

    And who exactly would guarantee payment of these private pension benefits? I bet you a dime to donut it wouldn’t be the state government. Probably PBGC which is no real guarantee at all if everything goes to hell with the financial system.

    The unions must really be running scared and feeling the pressure to force the pols to pull this scam.

  5. Bob says:

    Darrell Stinkbug and Porky Perez are inexorably pushing for having the State completely control businesses.

    But why not just get rid of businesses entirely and have everyone work for the State?

  6. Beelzebub says:

    The pols always throw the peasants a few crumbs to quiet them down.

    Remember after the meltdown in 2008 when Bush ordered the IRS to send single taxpayers a $600 stimulus check and joint taxpayers a $1200 stimulus check? Bush claimed the purpose of the stimulus checks was to give the economy a shot in the arm. But it had no effect whatsover on the economy. It was only a way to appease the peasants after he gave the banks a $800B TARP bailout.

    The dems are trying the same ploy with the pensions. Throw a crumb or two to the private worker slaves to shut them up.

    Who knows? It might work. In general people are pretty stupid.

  7. David H says:

    You will be required to invest in the system that will make you a bond man(slave).

  8. Bob Smith says:

    If these funds are managed by CalPERS, they will have the opportunity to divert returns earned by private-sector pensions into the public sector pensions. Shave a couple points there, add those points here, with nobody the wiser. Or, outright steal a portion of private-sector pensions. It’s not as if the trustees of CalPERS would go to jail for doing it.

  9. Tough Love says:

    I suspect there are multiple reasons for this proposal:
    (1) As stated, to divert attention to the real issue … a VERY necessary need to reform Public Sector pensions, beyond just reductions for new employees. We need a “hard freeze” on the current DB Plans or a MAJOR (50+%) reduction in the rate of accrual for FUTURE service for CURRENT (yes CURRENT) workers.
    (2) Allowing Calpers to only guarantee fixed income treasury level returns givens them a huge opportunity to invest in equities and keep the excess returns (to fund or expand the benefit level in Public Sector Plans).
    (3) And of course to expand government even further into our lives via MORE regulations, and MORE workers (who pay Union dues of course).

    Too bad it’s illegal to Tar & Feather legislators who propose such garbage.

  10. Bob says:

    So lemme git this straight.

    Employers will be required to enroll their employees in this scheme if they do not offer employees a pension plan but employers will not be required to pay into the scheme.

    Employees will be required to pay in 3% of their wages but can completely opt out of this scheme.

    So far as best I can tell the politicians have not said what employees will get pension wise for paying into the plan at 3%.

    So if employers don’t pay in and employees can opt out who will be dumb enough to stay in and pay 3% of their salary?

    If employees can opt out to prevent a 3% reduction in their pay checks you can bet 90 plus % will do so.

  11. Moxiecat says:

    Keep passing such stupid rules so your employers will come to Texas-we like business owners and the revenue they generate! This was one of the funniest articles I’ve read in a long time simply because it evokes images of the Three Stooges running California…

  12. CalWatchdog says:

    The law will require employers to provide and administer the plan, but employees will make the contributions.

    I am doing a follow up story tomorrow, with more details about the bill, as well as the author’s intent.

    - Katy

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