This post was contributed by a community member. The views expressed here are the author's own.

Health & Fitness

Is a Private Pension Plan Guaranteed by the State a Good Idea?

Democrats are trying to create the California Secure Choice Retirement Savings Trust Act with the passage of Senate Bill 1234

A friend of mine was excited to inform me that he was planning to put an addition onto his house.  I was happy for him until he told me that Shoddy-R-Us was the contractor.

“Wasn’t that the same contractor who built your house,” I queried?

“Yes,” he responded, “Why is there a frown on your face?”

Find out what's happening in Walnut Creekwith free, real-time updates from Patch.

I replied, “Your house was 20% over budget, it was six months late for completion, the roof leaked, the foundation was not level, not one of the rooms was squared properly, the windows were drafty, the floors squeaked and the plumbing leaked.”

“Well, they said they would do a better job this time,” he affirmed.

Find out what's happening in Walnut Creekwith free, real-time updates from Patch.

I am not sure on what he based his optimism, but to me it was not founded on the facts because the reputation for “Shoddy-R-Us” had not improved.

This is where the fictional story ends and the facts begin. Right now, the Democrat controlled Senate and Assembly are racing to pass the California Secure Choice Retirement Savings Trust Act (SB 1234). In a nutshell, the Democrats want to create a state-run private pension plan. The Democrats are trying to create a pension program for private citizens in which the state will guarantee the results.

This new private pension plan will “assist” all employees who do not currently have a pension plan. However, California has failed to be a good steward of its public employee pension plans. Consider the abysmal track record for “managing” the public pension funds. It is no secret that the public pension funds are broke.  And the 500 billion dollars in unfunded liabilities do not even include the billions of unfunded non-pension retirement benefits available to public workers. 

There is no need to create another state bureaucracy to help manage private retirements. There are many plans already available including IRA, 401K, SEP, and Keogh plans. The marketplace is already doing a great job for those who want to set aside money for retirement. We each need to take the personal responsibility to plan for our own future. We already have Social Security and we see how politicized that has become. Do the citizens of California really want their pensions to become subject to political campaign promises every two years?

Although the state retirement plan is touted as voluntary for employees, it is not voluntary for California employers. If even one employee in a business wants the California private pension plan, the employer must follow a state mandated plan for all employees who request it. This means extra paperwork and more regulations that this employer must follow. This will just be an additional cost to businesses in a climate that already sees thousands of businesses fleeing this state.

It may come as a surprise to those in state government, but smaller businesses do not have unlimited resources to pay for taxes and other state mandates. For most businesses, making payroll is the largest expense. Small businesses often do not offer a pension because they cannot afford the costs associated with pensions. This is why this bill affects small businesses more than large businesses which already offer some type of pension program for their employees. 

 This bill simply makes it even harder for existing small businesses to operate.  It also discourages other small businesses from coming to California and creating the new jobs we desperately need. We do not need yet another state agency created by the Democrats to “help” us run our private lives.

Mark Meuser is a candidate for State Senate District 7. You can follow him on Facebook.

We’ve removed the ability to reply as we work to make improvements. Learn more here

The views expressed in this post are the author's own. Want to post on Patch?