California state treasurer Phil Angelides has no doubts about what’s behind efforts in his state to convert traditional pensions for public employees to riskier accounts that are more like 401(k) plans.

“The California prong of a national attack on the pension funds that have stood up for corporate reform and the interests of ordinary families and investors,” is how the effort is described by Angelides, who sits on the governing boards for the state’s two largest public employee pension funds.

And it should come as no surprise, he adds, that the driving force behind the move in California is “the same crew of anti-tax advocates, free market enthusiasts and Wall Street interests” that is pushing President Bush’s Social Security privatization plan and views the battle in California as a high-priority battle in that effort.

Gov. Arnold Schwarzenegger is proposing to force teachers, faculty and other public employees hired after July 1, 2007, from traditional defined-benefit pensions, which pay guaranteed amounts based on length of service and ending salary, to a defined-contribution plan, under which individual employees are given a sum of money and are responsible for making their own investment choices—whether or not they feel qualified.

Even teachers who have participated in the defined-benefit plan for years would have to switch to the new plan if they move to a different district after 2007, leading to charges that the proposal would hold teachers hostage by denying them pension portability.

And it isn’t only educators who are worried. State attorneys who have looked at the pension ballot measure Schwarzenegger is supporting say it would end payments to police officers and firefighters who die or are injured in the line of duty.

The California battle will be closely monitored in at least eight states that are considering pension changes for public employees, although many are floating the plan, at least initially, as a defined-contribution option rather than as a mandated change. New York City mayor Michael Bloomberg told the state Legislature last year that switching employees to a defined-contribution plan was “worth considering.”

One of the groups to seize most aggressively on the California proposal was Grover Norquist’s Americans for Tax Reform, which sent a letter to governors in all 50 states urging them to adopt Schwarzenegger’s plan, which the group likes to call a “pension liberation” movement.

“Across the country, [Schwarzenegger’s] ideological soul mates are targeting public pension funds for elimination,” warns Angelides. The movement, he says, isn’t about “pension liberation”—its about payback from extremists who loathe managers of public employee pension funds for standing up against Enron, WorldCom and other scandals that have recently plagued the investment industry and the corporate world. “That’s why the governor and his right-wing ideologues have targeted the pension funds … [whose trustees] are leading the fight on behalf of ordinary shareholders to put transparency and accountability back into American capitalism,” Angelides says.

The contributions made by pension fund trustees like Angelides are certainly not lost on New York state Attorney General Eliot Spitzer, who has gained a national reputation for his aggressive fight against corrupt Wall Street practices: “My office has been working hard to address corporate abuses and to ensure that companies act in the best interest of their shareholders. Managers of public pension funds have been strong allies in these efforts, particularly in using their shareholder voting powers to try to implement needed improvements in corporate transparency and accountability.”