Adventures are often fraught with peril. That's what makes them adventures.
Adventures also present exciting opportunities. Last year, the Legislature authorized the initial steps to create the Secure Choice Retirement Savings Program an unprecedented effort to provide retirement security to 6 million Californians employed by small businesses.
The entire cost of the program would be supported by employee contributions and investment income. Employers withhold contributions from their employees' paychecks and send the money to the state, which would invest the money and pay benefits when employees retire.
No other state has a program as ambitious. CalPERS, the world's largest pension fund, serves 1.6 million members, retirees and dependents, about a quarter the number eligible to participate in the new program.
No one questions the Legislature's motives. Half of all Americans are worried that their retirement savings can't provide them with a comfortable standard of living, according to the Employee Benefits Research Institute.
CalPERS and hundreds of other public pension funds across the country have been through rocky times. Unfunded liabilities are in the trillions, and cities like Stockton, San Bernardino, Fresno and Oakland are on the brink of bankruptcy because of soaring pension costs and spiraling debt.
Many lessons have been learned, and it will be up to Gov. Jerry Brown and his successors to avoid repeating mistakes of the past.
The burden of keeping records and transferring funds to the state must not become another reason for businesses to avoid California. Employers should be permitted to calculate and report pensionable wages and make contributions to the retirement plan along with their payroll tax payments.
The Social Security system has its problems, but unreasonable demands on employers aren't on the list. California should duplicate what the feds do right.
Taxpayers have learned the hard way that investment returns make or break a retirement system, and past performance should be the most important factor in selecting investment managers. Fees must be competitive, and managers must be independent of the public fund. Familiarity with the challenges of operating a small business is another prerequisite.
Taxpayers and plan participants are protected if benefits and contributions are calculated on the assumption that funds will be invested conservatively, with minimal risk to the plan. "Guaranteed" rates of return must reflect market realities and determined by experts with no financial interest in the performance of the fund.
Firewalls would prevent lawmakers from raiding the fund to balance unrelated budgets.
Restrictions on employee cash-outs prior to retirement age will help preserve the strength of the fund. When workers switch jobs and roll balances into an IRA or use retirement savings for emergencies, the financial underpinnings of retirement plans are compromised.
It will take time for 200,000 small businesses to adjust. Education and training will minimize mistakes, and legal support is needed when they occur. Allowances should be made for employers who suffer economic setbacks, poor health or crimes in the workplace that cause missed payments, and the plan should help employers get back on track without severe penalties, interest or expensive lawsuits.
An employer/employee ombudsman program could answer questions promptly and accurately and prevent disputes from ending up in court.
The Secure Choice Retirement Savings Plan won't threaten California's economic recovery if common-sense precautions are followed. The reward is worth the effort: retirement security for millions of Californians.
Marcia Fritz is a CPA (inactive) and small-business owner who is president of the California Foundation for Fiscal Responsibility.