Government controlled 401k
I continue to read more and more on proposals on Gov’t takeover of 401ks. 70% income replacement with the plan. Nearly 0 expense. 100% worker coverage vs 43%. 5% of annual pay into the acct every year + 600$ from Govt. Guaranteed annual return of 3% above inflation. Considering a large portion of my big tickets are obviously 401k rollovers, this concerns the shit out of me. I guess I could sell more insurance…what is everyones opinion on this?
Eff that. Go to Mexico...better food, better weather, and you can say, "Heyyy Barbie" when girls walk by.
Move to Canada if it happens.
You are hearing about
"A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York,contains elements that are being considered. She testified last week before Miller’s Education and Labor Committee onher proposal.
At that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months.
Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated"
See the full article at http://www.workforce.com/section/00/article/25/83/58_printer.php
Looks a lot like the Chilean plan allowing for govt administration of a DC plan. But not as attractive or as innovative.
IMHO, never happen. No one actually thinks 600 bucks and a 3% return is a good deal. Except for people who work at places with the the words “Social Research” in the name.
Besides if Social Security is the third rail of politics, see what happens if politicians actually try to take real money away.
But Joseph, if they start throwing around guarantees…with growth…and inflation protection vs giving money to the greedy bad advisor who has lost your acct 30%…hmmm…in times like these…people…will make emotional, not rational decisions. I hate the EIA’s, but the clients who’ve transferred to me with them are looking pretty damn smart right now.
I posted about this a few days ago:
Just had a client call up in a panic (she had been listening to Rush
Limbaugh, so no surprise). She told us the government was taking
people’s 401ks and that she needed to meet immediately (note: client
has an IRA only) to see what she could do to protect herself.
Anyway…you can imagine the rest of the conversation…
More importantly, I found some links to the actual source of these “rumors” or suggestions
Teresa Ghilarducci’s Shared Prosperity site (talks about why 401ks are
broken, and an alternative, known as the Guaranteed Retirement Account,
2) The actual testimony of her suggestions to the Committee of Education and Labor:
Also, just so everyone knows, no legislative proposals have been introduced on this issue. Congress
is out of session until next year. Of the five people who testified
before the committee on October 7th, only Professor Ghilarducci
proposed a detailed solution instead of general policy advice.
NPR had this to say: http://www.publicradio.org/columns/marketplace/gettingpersonal/2008/10/nationalizing_401k_assets.html