On April 11, 2019, the Howard Jarvis Taxpayer’s Association (HJTA) filed its amended complaint challenging the propriety of California’s new CalSavers retirement program after a federal district court dismissed its first complaint on March 29, 2019. See CalSavers Saved from ERISA Preemption By District Court. Like the first complaint, the amended complaint attacks the statutory program in two ways. First, it argues that the program is preempted by ERISA and therefore should be declared void. Second, under California state law, the complaint asks the court to enjoin the implementation of CalSavers as a waste of taxpayer funds.
The amended complaint emphasizes that since the 2016 Department of Labor safe harbor for savings arrangements established by states for nongovernmental employees was repealed by Congress that there is no exception from ERISA preemption. Additionally, since under the CalSavers statute, the state is not liable for any loss of the payroll deduction contributions, the purposes of ERISA are thwarted by the program.
The complaint further alleges that since the CalSavers program has already spent over $1.5 million and has requested to borrow $20,000,000 more to further implement the program, the state is wasting taxpayer money when all California employees already have access and opportunity to save for retirement through private IRAs. CalSavers has until May 25, 2019 to file its answer to the amended complaint.
To learn more about the CalSavers program and lawsuit, attend the Capitol Forum on Pensions on June 5, 2019, at Arden Hills resort in Sacramento which will have a session called “CalSavers is Here…Are You Ready?” featuring a panel of myself, Aaron Karr, from Ameriprise Financial, and a representative from CalSavers. Details of the conference can be found at this link CFOP.