Opinion: Not sold on Secure Choice
To the editor: Your editorial notes that any California worker can set up an automatic individual retirement account (IRA) by “filling out some paperwork with a mutual fund company.” Where it errs is in asserting that the state-run Secure Choice plan would give workers a better deal.
( “Closing the savings gap,” editorial, Aug. 23)
Private-sector IRA owners who invest in equity mutual funds pay an average fee of 0.69% of assets, and 401(k) participants pay even less: 0.53%.
Yet the Secure Choice legislation envisions fees of 1% or higher for a low-yielding fund of U.S. Treasury securities. The Legislature effectively just acknowledged that the program can’t keep costs below 1 percent, as it it recently amended the legislation to remove the fee cap for the first six years.
And when the unacknowledged risks of Secure Choice begin to bite, California taxpayers will be on the hook—regardless of the promises today’s legislators make. Secure Choice isn’t secure, and it’s not much of a choice.
Paul Schott Stevens, Washington
The writer is president and chief executive of the Investment Company Institute, a global trade association for mutual funds.
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