Once again workers are being raided to cover for unions.
It was either this or pass another tax. And even with a Democratic supermajority of the welfare state running the state, California politicians apparently decided that it would be easier to create a fake mandatory retirement fund. (via American Digest)
California lawmakers are pushing a controversial, first-in-the-nation plan that would require private-sector employers to remove 3 percent from every worker's paycheck. The money would go into a new state fund with a guarantee that all withheld funds plus investment gains will be available for distribution at retirement age.
The idea behind the Secure Choice Retirement Savings Program, which got preliminary approval, is for it to be a state-run supplement to Social Security, but only for people who don't have traditional workplace retirement plans. For an estimated 6 million working Californians, the benefit of a pension or 401(k) is out of reach -- so state lawmakers are trying to implement the new mandatory retirement fund for private sector workers.
California’s major retirement systems now have $222.2 billion in unfunded pensions, up from $211.4 billion five months ago. The report says that number was $110 billion in 2007-2008, meaning the state’s unfunded pensions have doubled in six years.
In January, Sacramento Bee columnist Dan Walters used figures from Moody’s to estimate that California “could have unfunded pension debt approaching $300 billion, plus another $100 billion for retiree health care.”
In 2010, Gov. Arnold Schwarzenegger’s administration claimed the pension overhang for California State Teachers' Retirement System, California Public Employees' Retirement System and the University of California Retirement System was $500 billion.
So you can see where this brilliant idea comes from. Sure it won't cover all that lost money. It won't cover any of it, since like CALPERS, the money will be dumped into socially responsible investing in Green Energy and minority businesses. And to fund any boondoggle the politicians like.
Light rail? Sure, here's your funding. Just 3 percent of every paycheck.
But critics wonder how the state with a turbulent record of budget keeping and a much-ridiculed public worker pension system can be counted on to protect people's money.
"I think you'll find out that what is promised in the (Secure Choice plan) is not possible to deliver," lobbyist Marc Burgat contends. "If you could deliver guaranteed returns with less than one percent costs, no employer liability, no government liability -- that's a fantasy."
Any promise to cover the money is a fantasy. This just makes it a bigger fantasy. Once again workers are being raided to cover for unions.