Today the Howard Jarvis Taxpayers Association filed suit in U.S. District Court against California’s so-called “CalSavers,” an illegal program that leaves taxpayers, businesses and private sector employees exposed to unnecessary costs and risks. Originally called “Secure Choice,” CalSavers is a state-run retirement plan for private-sector employees.
“The program is facially invalid under the federal Employee Retirement Income Security Act (ERISA), which has preempted the area of private-sector retirement plans,” said HJTA president Jon Coupal.
The lawsuit, which named as defendants both the program and State Treasurer John Chiang as administrator, seeks a declaration that Secure Choice is invalid under the Federal Supremacy Clause. The lawsuit also seeks an injunction authorized under California law for illegal expenditure of taxpayer funds (California Code of Civil Procedure, Section 526a).
State-run efforts to establish new retirement systems for private-sector employees like California’s CalSavers program were the specific target of a federal law under the Congressional Review Act enacted last year and signed into law by President Trump.
“Congress has made it crystal clear that the CalSavers program and other similar programs adopted by a handful of other states are illegal under ERISA,” said Coupal. Those programs, which were relying on a President Obama era regulation which ostensibly provided a fig leaf of legitimacy, now have no legal cover whatsoever.”
He added, “There is no need for this program. Private employees already have access to Social Security which is backed by the Full Faith and Credit of the federal government. Moreover, individual retirement accounts (IRAs) are easy to set up. Given the poor performance of CalPERS and CalSTRS, both in terms of investment performance and governance, why would we give state politicians and bureaucrats access to another pension program?”
The state defendants have 21 days to answer the complaint.