Instead of putting the state's pension plans on sound financial footing, Schwarzenegger's plan "is part of a concerted effort to break apart the powerful voices of public pension funds that have stood up for ordinary investors in corporate boardrooms," said Angelides, a board member of two California retirement funds that manage a combined $300 billion.

The attack on Schwarzenegger's proposal to make California's new public employees use 401(k)-style defined contribution plans after 2007 came hours before President Bush was to make Social Security privatization a key theme of his State of the Union Address. It also signaled a major new partisan fight nationally over the future of public pension funds.

While many Republicans portray such Democrat- and union-dominated funds as corporate scolds and threats to U.S. business, Democrats and public employees say they protect retirees' incomes against corporate scandals. Schwarzenegger's plan, if adopted, would greatly dilute the financial and political power of California's pension funds across 20 years.

Angelides was joined Wednesday by North Carolina Treasurer Richard Moore, New York State Comptroller Alan Hevesi and Nell Minow, editor of the Maine-based Corporate Library, who studies corporate governance issues. Moore and Hevesi have used their states' pension funds, which were burned by billions of dollars in investment losses stemming from corporate wrongdoing in 2001 and 2002, to push for changes in corporate behavior. Pension fund leaders in New York City, Oregon and Illinois also joined the campaign.

Hevesi, a Democrat who oversees the $121 billion New York State Common Retirement Fund, said the new campaign was about stopping a "right-wing cabal from protecting the evil people who have done so much to damage the economy."

"Parts of corporate America were stealing," said Moore, a Democrat who oversees a North Carolina pension system valued at $63 billion. "We helped shine a light on that."

Led by the $182 billion California Public Employees Retirement System -- the nation's largest -- public pension funds have campaigned for curbs on executive salaries, boundaries between the research and sales departments of investment banks and new rules that allow shareholders to nominate their own company directors. That activism has triggered a growing backlash from corporate interests who say the funds have pushed too far into their operations.

Schwarzenegger, in his Jan. 5 State of the State address, proposed privatizing CalPERS and also the $120 billion California State Teachers Retirement System.

Calling the state's pension system "another financial train on another track to disaster," Schwarzenegger said the state's obligation to its retirees had risen from $160 million in 2000 to $2.6 billion this year. The funds attribute the state's higher costs to market losses suffered from corporate collapses such as Enron Corp. and WorldCom, Inc.

Schwarzenegger spokesman H.D. Palmer accused Angelides on Wednesday of "giving hysteria and hyperbole a bad name," saying the governor's plan differs little from those used by many California businesses.

"If you look at the pension plans for most small and mid-size businesses in California, they're not the product of right-wing think tanks," he said. "We are trying to take the long view here, and trying to make sure California has a pension system that is sustainable for the long haul."

Republicans nationally, including anti-tax crusader Grover Norquist, and Stephen Moore, former director of the conservative Club for Growth and now heading a political action committee focused on Social Security reform, support Schwarzenegger's privatization plans.