Congress Kills Jerry Brown’s Forced Pension Savings Plan
A vote by congressional Republicans last week ended California Gov. Jerry Brown’s effort to force 6.8 million private sector workers into a “Secure Choice” public-run retirement plan.
Just 15 months after Breitbart News reported that “California Liberals Want Your IRA–Automatically,” the U.S. Senate voted 50 to 49 to join the U.S. House of Representative under the Congressional Review Act in disallowing an Obama administration rule exempting states from having to comply with the Employee Retirement Income Security Act of 1974 (ERISA) fiduciary rules to set up state-run payroll deduction IRA accounts for private-sector workers who are not enrolled in a workplace retirement savings program.
According to an analysis by Pensions and Investments, the Department of Labor issued “final rules” on August 25, 2016 providing that the eight states that passed laws to create state-administered retirement savings programs for private-sector workers—California, Connecticut, Illinois, Maryland, New Jersey, Oregon, Massachusetts, and Washington—would not be pre-empted by ERISA.
The University of California Berkeley Labor Center estimated that under a state-mandated “Default Auto-Enrollment” requirement imposed on every California employer, about 55 percent of the state’s private-sector workforce would be enrolled to contribute a mandatory 5 percent of earnings each month. At the estimated average mean earnings of $35,000 per worker, the California Secure Choice program would suck up about $11.9 billion a year.
Liberals claim that the State of California, as the world’s largest public pension fund manager, enjoys access to better investment deals and would produce higher returns than individuals can find for themselves. But despite the red-hot stock market, the $302 billion California Public Employees’ Retirement System (CalPERS) latest investment report shows a puny 0.61 percent net return for the 12 months ending June 30, 2016.
Gov. Brown and his Democrat allies are opposed to complying with ERISA participant protections, because “Secure Choice” was designed to be neither secure, nor a choice. Breitbart News reported that CalPERS’ former CEO is in prison for bribery; the fund is alleged to have paid 20 percent hedge fund fees to politically-connected investment managers; and CalPERS is just 52 percent funded — the worst state ratio in the nation.
The U.S. Senate’s move was the 12th time a Republican-controlled Congress has successfully used the Congressional Review Act of 1996 (CRA) to kill an Obama administration regulation. According to the Senate Republican Policy Committee’s website, the deadline has now passed to introduce new resolutions of disapproval on Obama rules, which expired on March 30. But under the legislative calendar, CRA resolutions already submitted to overturn Obama administration regulatory rules have until a May 9 deadline to face a vote.
The Pacific Legal Foundation last week formed a partnership called the “Red Tape Rollback” to mount a legal challenge that argues that the Congressional Review Act gives Congress the power to review and overturn any “illegal” regulation that was never published in the Federal Register or reported to Congress since 1996.