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June 10, 2010
Federalizing Your Retirement: Ready for WealthCare?
Posted by The MaryHunter at June 10, 2010 5:55 PM
As reported here back in January, Chairman Zero is interested in your 401k. Very interested. Whatever could be a bigger boon to a government drowning in unimaginable debt than to let that government seize control over the trillions of dollars worth in assets held by you, me, and 61% of private-sector working Americans? Proponents of federalizing pension plans claim that, due to the recent (Democrat-policy-enabled, subprime-mortgage-induced) financial meltdown, millions of Americans are less confident of the financial system and are at serious risk of losing their pensions. That idea went over like a lead balloon with 90% of 3,000 households surveyed by the Investment Company Institute, but it hasn't stopped the Obama regime from dreaming that dream.
Oh sure, the government sought out public input on the idea this spring (barely publicized; only 700 folks commented) and at least two detailed reports were prepared.
Two reports referenced in recent Committee hearings and the U.S. Labor and Treasury departments' joint RFI discussed government-run options. The Annual Report of the White House Task Force on the Middle Class, released in February, strongly favors automatic IRAs, annuitization, and GRAs (see Annual-report-middle-class.pdf). A July 2009 Government Accountability Office report on private pensions prepared for the House committee details the advantages and trade-offs of alternative retirement options currently under consideration (see GAO-09-642.pdf).
One option would be the Universal 401(k) Plan giving every worker, including part-time employees and recent hires not yet eligible for an employer-sponsored plan, access to a government-administered defined contribution retirement savings account. Workers would be enrolled automatically unless they opted out.
The Guaranteed Retirement Accounts plan proposes a mandatory system with both defined benefit and defined contribution features. The report makes it clear in footnote 79 that this system would work only if everyone has to participate: "A mandatory retirement system cannot ensure 100 percent coverage if certain groups, such as very low-income workers, are exempt from the mandate."
The report also warns that requiring workers and employers to contribute to any type of pension plan would increase the costs and divert funds from other uses, such as employers' business expenses and workers' basic necessities. Under such a scenario, employers might have to reduce compensation to employees, disproportionately affecting lower-income workers and small businesses.
[...]
Finally, the report concludes that any centralization or nationalization of the private pension system, especially one that guaranteed a rate of return, "may be a costly and complex effort that requires new regulatory and oversight efforts. These costs could be passed on to workers, employers, and taxpayers in general."
Mmmm, more regulatory and oversight efforts by the government. Who'da thunk? Just imagine what could happen to the retirement assets of millions of Americans if Uncle Sam got hold of them. Those assets would become IOUs faster than Obama's post-election plummet in the polls, and the fruits of the government regulatory and oversight efforts would doubtless be redistributed through funding of numerous unfunded mandates.
As Roger Daltrey sang: "I hope I die before I get old." I sure as hell won't have any way to afford getting old, if things irrevocably go the Hopeychange way.
On a rich tip from Bergbiker.
