The New York Times reports:
California is preparing to create a mandatory state-run retirement plan for an estimated six million workers at companies that do not now offer any retirement benefits.There's more:
The move could make California the first state to require companies to take part in such a system. Colorado was considering the idea but decided against it in May, and New Jersey and Washington have opted instead for programs with very limited state involvement. But Connecticut, Oregon, Maryland and Illinois are moving forward with their own state-run retirement programs and are looking to California as an example.
Currently, California’s plan would require all companies in that state with five or more employees to take part in what is being called the Secure Choice Retirement Savings Program. The biggest companies will start first, and the smallest companies will have three years to get ready.
Money is not expected to start flowing into the first Secure Choice accounts until sometime in 2017.
The companies will not be required to contribute their own money to the program, only to enroll their workers. Nor does the measure make state taxpayers directly liable. But the financial services industry is questioning whether the program will be financially viable — and what will happen if it is not.
On Thursday, the United States Department of Labor issued a final safe-harbor rule, making it possible for California to run its program without conforming with the federal employee benefits law, known as Erisa, that now covers all nongovernment workers in California and the other 49 states. The Secure Choice program may still be subject to regulation by the Securities and Exchange Commission, however, raising thorny constitutional issues.California can't run CALPERs very well but they want to branch out without SEC regulation!!!
The Investment Company Institute, which represents the mutual fund industry, said the new safe-harbor rule seemed to pose a double standard, because the fiduciary standards for company retirement plans were recently tightened, and state-led plans like Secure Choice were exempt.
In a statement, the institute said the Labor Department “plans to turn a blind eye on the track record of mismanagement and abuse in state-run programs, whether public employee pension plans or municipal securities disclosure.”