US - CalPERS has fought back against California governor Arnold Schwarzenegger's plan to shift the state’s pension schemes to defined contribution - saying the "slap-dash" idea would be a disaster for everyone.

"CalPERS has more than 70 years experience generating investment income to cover pensions," said Rob Feckner, acting president of the California Public Employees' Retirement System board of administration.

"I believe it is unwise to abandon that model for a slap-dash effort to rush onto the law books a defined contribution plan that will be disastrous for everyone."

Feckner was responding to Schwarzenegger's jibe in his State of the State address that California's pension system is "out of control" and should shift to DC. The plan is part of a wider programme aimed at cutting the state's spending.

"Our investment research shows the defined contribution model will provide a meagre retirement for most public workers, which today is on average only $20,000 a year, and it will cost more," Feckner said.

"Public workers will not be allowed to invest in all asset classes, and they'll pay six to seven times more in professional fees for the privilege of investing.

"It will not reduce the cost of government, in fact it will add to the costs for many years to come."

He added a shift to DC would hurt California's economy because it will cut pension cash being "ploughed back into the California economy".

"More than $19bn dollars of our pension assets are invested into real estate, private businesses and communities in California," Feckner said.

The democrats said Schwarzenegger's proposal was "fatally flawed".

"This plan to eliminate California's defined benefit pension is straight out of President Bush's playbook," said assembly member Alberto Torrico. "It's no different from the president's plan to privatize Social Security. They're both windfalls for Wall Street at the expense of Main Street and working people."

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