California Advances Private Sector Retirement Plan Without Feds

California officials vowed to move ahead with a retirement savings program for the state's private sector workers, a day after losing the federal government's support for the initiative.

Senate President Pro Tem Kevin de Leon and State Treasurer John Chiang said Thursday that the state will still enact the Secure Choice program, authorized last year, that will create retirement accounts for nearly 6.8 million Californians. De Leon criticized opponents of the plan as representing the interests of large banks and brokerage firms.

"California will move forward with Secure Choice with or without Washington's blessing," said de Leon, who authored the legislation that created the program. "We will put the future and well-being of our workers over Wall Street greed any day of the week."

California's program would automatically enroll private sector workers into a state-run retirement program. Unless they opted out, employees would contribute 3 percent of their earnings and a state board would oversee and invest the funds.

On Wednesday, President Donald Trump signed a House Resolution nullifying an Obama administration rule that provided a green light and guidance to states designing programs like Secure Choice.

"Retirement security is a difficult challenge facing many Americans," said Rep. Tim Walberg (R-MI), who authored the resolution in Congress, in a statement. "But the answer isn’t a misguided regulatory loophole that would discourage small businesses from providing retirement benefits and put the hard-earned savings of workers at risk."

Opponents of Secure Choice argued that it would hurt private insurance and brokerage companies by providing a duplicative service. Others raised questions about giving the state a new pot of money to invest and manage.

The move by Congress takes away a layer of legal backing from California's program, which Chiang and de Leon said they're prepared to defend in court.

"We're hovering at the same place we were before without the rule," said Chiang. "Clearly we'd like to have that rule, but the legal arguments are the same."