California Treasurer John Chiang and state Senate President Pro Tempore Kevin de Leon promised Thursday that the state will proceed with its Secure Choice program for private-sector employees without a retirement plan despite President Donald Trump signing a measure Wednesday that killed an Obama-administration rule that pre-empted the program from ERISA.
The pair insisted they had the legal authority to implement the program without the rule eliminated by Mr. Trump.
“The president has no idea what is going on,” Mr. de Leon told a joint press conference with Mr. Chiang in Sacramento. He said the president was unaware that he was hurting workers without retirement benefits. He said that Mr. Trump signed the bill at the order of Senate Republicans backed by Wall Street interests who want to kill the California retirement benefit program.
“President Trump and congressional Republicans style themselves as populist champions of everyday Americans, but instead they have acted to align themselves with Wall Street interests,” Mr. Chiang said.
The two said they expect the Secure Choice program to be launched in 2018. It requires employers in California to offer workers retirement plans funded by employee contributions, covering an estimated 7 million California residents. Employees will be automatically enrolled but can opt out.
The California plan and similar plans in other states have been opposed by key segments of the money management and banking industry, including the influential Investment Company Institute. They have expressed concern that the plans would divert retirement money that would go to asset managers. California officials have said the argument has no merit because the 7 million workers don't have any retirement assets.
Messrs. Chiang and de Leon insisted at the press conference that all along they felt California had the legal authority to implement the program without Washington's approval, but they had sought approval from the Obama administration of the exemption from ERISA because of pressure from the California Chamber of Commerce, which wanted another level of approval before supporting the plan.
Officials from the California Chamber of Commerce could not be immediately reached for comment.
Messrs. Chiang and deLeon presented a May 16 legal opinion from Washington law firm K&L Gates that the program could proceed legally because, “judicial precedents support a conclusion that IRAs established pursuant to the program should not be considered ERISA plans 'established or maintained' by covered California employers.”
Mr. Chiang said he expected legal challenges and that officials would defend them.