The OC Register’s OC Watchdog reported today on the California Secure Choice Retirement Savings Program (SCRSP) passed by the California legislature in the last hours of the 2012 legislative session. The legislation, SB 1234, is awaiting signature by Governor Brown. The legislation establishes a VOLUNTARY pension program for California workers to assist them in supplementing their Social Security benefits which are arguably insufficient to support the financial needs of Californians once they retire.
From the OC Watchdog story:
A recent report by the University of California, Berkeley Center for Labor Research and Education found that more Californians are slackers when it comes to retirement savings than are workers in the rest of the nation, the analysis said:
- In California, 62 percent of private sector workers don’t participate in an employer-sponsored retirement plan, compared to 57 percent nationwide,
- And workers in smaller firms have less access to employer-sponsored retirement plans. In California, 84 percent working for firms with fewer than 25 workers don’t participate in a retirement plan at work.
Companies with more than five workers — which don’t already offer retirement plans to employees — would be required to participate. Employers would withhold 3 percent of each worker’s pay for safe keeping in the fund, unless the worker acts to opt out.
The Watchdog story reported on the strong opposition to the legislation by the Orange County Business Council which has awarded the legislation a “Squirrel.”
“California’s current budget deficit is around $15.7 billion and its unfunded pension liability is around $500 billion,” the Business Council quipped on CaliforniaSquirrel.com. “So, based on the strength of its fiscal management skills, the state would like to jump into the deep end of the red ink and develop a NEW pension system for the private sector. ’No, really, trust me, THIS time I know what I am doing.’ Encouraging folks at every income level to invest in their future is a great thing, but, hello! Pot, meet kettle. Since even the state can’t manage to take their own advice, why should they force more expense and liability on the very businesses that are keeping them from the poor house? SQUIRREL!”
It isn’t surprising to me that the Business Council would choose a red herring argument to oppose legislation the would help keep millions of future private sector retirees out of poverty. They raise the argument of budget deficits and claim that liability for retirement benefits will fall on the California taxpayers. It won’t. In fact, the plan will reduce the need for public assistance which is funded by the taxpayers, but why let the facts get in the way of a good red herring argument. Here are the facts:
SCRSP provides that the state shall not have any liability for the payment of the retirement savings benefit earned by SCRSP participants. Any financial liability for the payment of benefits in excess of funds available shall be borne by entities with whom the Board contracts to provide an insurance, annuity, or other funding mechanism to protects the returns earned by SCRSP participants. The state, and any of the funds of the state, shall have no obligation for payment of the benefits arising from the SCRSP.
Simply put, the Orange County Business Council is the one chasing the SQUIRREL.