Over the weekend, the Wall Street Journal highlighted California’s move to establish required private sector retirement programs in an editorial that criticized the Obama Administration for taking steps to “socialize” the private retirement business that will end up as a long term entitlement program backed by taxpayers. As often is the case, an idea promoted out of sincere concern opens the door to both politics and the possibility of taxpayers being the insurance of last resort.
The Journal’s criticism focused on the Department of Labor issuing guidelines to allow state mandated private economy retirement programs avoiding any hang-ups with the Employee Retirement Income Security Act (ERISA). Avoiding complications with ERISA laws is a principal concern of the California business community if the Secure Choice plan is ultimately implemented.
The editorial noted that, “nothing in California’s law guarantees ownership or portability. Private financial institutions will putatively insure the plans, but with an implicit taxpayer guarantee.”