The California state Senate today approved a bill 23-13 to create a statewide retirement program for private workers who do not contribute to a different retirement savings plan.
The retirement plan envisioned by Senate Bill 1234 would be voluntary and help "that population that has been very hard to reach," according to Sen. Kevin de León, D- Los Angeles, the bill's author.
De León said private employees who make less than $50,000 a year do not usually participate in the market and retirement packages. This bill, he said, would "try to create savings for this population."
"This is a population that is the most vulnerable," de León said. "This is a population that has been ignored by Wall Street and the private sector financial services."
The bill came under fire from both sides of the aisle.
"It's one of the most dangerous pieces of legislation I've ever seen," said Sen. Ted Lieu, D-Torrance.
Lieu said he was concerned that if the retirement plan failed to make money, funds might be taken out of the state's general fund. The bill explicitly prohibits that, but Lieu said he did not think this would hold up in court. He argued that if the value of the retirement fund dropped, a judge might award money to the retirees to make up for it.
"There are paths for savings that can reach our goal without putting us in fiscal peril as a state," said Sen. Ted Gaines, R-Rocklin.
"Nobody is wishing ill on any worker in California, whether a public or private employee, but we are having a hard time making ends meet, and we should focus on the real world today," added Sen. Joel Anderson, R-Alpine.