Dems Order Private Sector Pensions
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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The L.A. Times ran an amusing story about Lt. Gov. Gavin Newsom’s frustrations at holding his useless position. Gov. Jerry