Should PERS Handle Private Plans Too?

Assemblyman Kevin de Leon has introduced AB2940 which would open up CalPERS to manage retirement accounts for non-government employees.

On the plus side, this could give many Californians access to plans and professional management to help them save more for retirement.

What I'm afraid of is the negative side. Employers who currently have plans may give them up and turn their plans over to a state program. In addition, CalPERS already has tremendous power and influence in the markets. I'm not convinced it is in the best interest of all involved to increase that power. I'm also concerned about the administrative costs of managing accounts for a transient workforce; government workers usually stay put for a while and don't churn transaction changes. And who is to say that the employers that currently don't offer 401(k) plans will sign up to allow their workers to participate in a CalPERS program?

Most of all, my personal choice is to promote free markets rather than have the government take on additional roles.

My preference would be for the US Congress to amend the tax code to allow those without 401(k) type accounts to increase their contributions to an IRA so they could be on parity with employees who contribute to their retirement savings at work as well as to a personal IRA. The inequity between the employees who have access to plans at work and those who don't has bothered me for quite a while.

We'll wait to see how this develops. There's plenty of sharp people to enter the debate on this.