Gov. Arnold Schwarzenegger, a Republican who rarely takes a public stance on just-introduced legislation, lost little time throwing his considerable influence behind Democrat De Leon's bill.
"This legislation will help make businesses more competitive, without costing them anything, and will help employees save for their retirement, without costing taxpayers anything either," Schwarzenegger said.
Some small-business organizations are enthusiastic about providing their employees with a new benefit that could make them feel more secure about their futures.
"A lot of small businesses can't afford to provide a 401(k) to employees. There's a cost involved," said Scott Hauge, president of the San Francisco-based advocacy group Small Business California.
However, the country's largest advocate for small entrepreneurs, the National Federation of Independent Business, has taken no position on the De Leon bill. Neither has the California Chamber of Commerce.
CalPERS says it's studying the proposal to see whether legal issues might prevent it from offering investments to clients who aren't government workers or retirees receiving traditional, "defined benefit" pensions, spokesman Brad Pacheco said. The CalPERS board of directors and staff are likely to have questions about their fiduciary or trust relationship with private sector participants, he said. The De Leon bill would indemnify CalPERS board members and investment staff from any liability related to an IRA plan.
Labor unions say they support De Leon's goal but remain noncommittal about his proposal.
"We have a lot of questions about how it works," said Jim Zamora of the Service Employees International Union, Local 1000, which represents more than 90,000 state employees and CalPERS members.
The securities industry isn't pleased with the plan, arguing that the state shouldn't be competing with private sector retirement products.
The Securities Industry and Financial Markets Assn. "believes that the state's resources are better spent on raising public awareness of existing programs." Many small-company executives don't know that some federally sanctioned IRAs are "a cost-effective option that does not place significant burdens" on employers, the association said in a letter to De Leon.
De Leon's CalPERS plan might not create a huge boost in the amount of money that Californians save for the future, said David Wray, president of the Chicago-based Profit Sharing/401k Council of America. The group represents many large U.S. companies that offer 401(k) investment and retirement benefits to employees.
