Angelides to Fight Governor’s CalPERS Plan

State Treasurer Phil Angelides vowed Wednesday to wage a national campaign against Gov. Arnold Schwarzenegger’s plan to overhaul pension plans for California’s 2 million state and local government workers.

Angelides, a Democratic contender for governor next year, accused Schwarzenegger of joining forces with the Bush administration and state and national business lobbies to attack California’s two giant public pension funds -- the California Public Employees’ Retirement System and the California State Teachers’ Retirement System. The Republican governor, he claims, is pushing a proposed ballot initiative that would partially privatize state pensions as a backdoor way to reduce CalPERS’ clout in the corporate governance arena.

Angelides has enlisted the backing of pension officials from at least two other states, as well as that of Nell Minow, a well-known advocate of corporate reform.

“Gov. Schwarzenegger wants to break these powerful voices of corporate reform into literally millions of pieces, cutting people loose to fend for themselves in the marketplace,” said Angelides, who declined to disclose details of the proposed campaign.

The governor and his business allies contend that the pension overhaul is simply part of a larger plan to balance the state budget. Charges that Schwarzenegger is trying to rein in CalPERS’ corporate governance activities amount to “hysteria and hyperbole,” said H.D. Palmer, a spokesman for the state Department of Finance.

Schwarzenegger wants to convert pensions for state and local workers from so-called defined benefit plans, which make fixed monthly payments to retirees, to defined contribution plans, which are similar to 401(k) accounts.

Schwarzenegger is asking lawmakers to amend the state Constitution to mandate that all new government employees hired after 2007 be covered by defined contribution plans. He also is threatening to put the issue on the ballot later this year if the Democrat-dominated Legislature doesn’t give him what he wants.

CalPERS, which invests $172 billion on behalf of 1.4 million state workers and retirees, grabbed headlines over the last year by aggressively attempting to oust high profile chief executives at Walt Disney Co. and Safeway Inc. Angelides and others worry that shifting responsibility for investing retirement dollars away from CalPERS would weaken its clout.

“The loss of that critical oversight would be devastating,” said Minow, whose Maine-based Corporate Library tracks governance issues. New York State Comptroller Alan Hevesi and North Carolina State Treasurer Richard Moore have joined Angelides and Minow in battling Schwarzenegger’s pension overhaul plan.

Business groups, meanwhile, are backing the governor.

“No one wants to treat public employees inequitably, but no one wants to treat taxpayers inequitably either,” said Bill Hauck of the California Business Roundtable, an influential group of top corporate executives.