[tomder55]

It's happening elsewhere ,and there have been suggestions by some law makers that it could happen here.

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

European nations begin seizing private pensions - CSMonitor.com

It goes on to say that similar grabs are happening in Bulgaria, Poland, France and Ireland.

As I have posted ,a proposal to do something similar was floated by economics professor at 'The New School 'in New York ,Teresa Ghilarducci ,in testimony to the House Committee on Education and Labor in 2008.

It's complicated ,but the essence of the plan is to seize the assets of private 401k plans and pool them into government run 'Guaranteed Retirement Accounts '(GRAs). Then it would be mandatory for all American workers to register into the GRA.Workers contributions would be no less that 5 % of their income which would be invested entirely in government bonds with returns of 3% a year. 401k accounts invested in the stock market would necessarily be liquidated and invested in these Treasuries.

Upon retirement a worker would have their combined GRA and Social Security converted into life annuities that would pay out a fixed benefit .

This proposal is in the works. Joe Biden's task force on the Middle Class has proposed studying this option also.

“Some have suggested the creation of Guaranteed Retirement Accounts (GRAs), which would give workers a simple way to invest a portion of their retirement savings in an account that was free of inflation and market risk, and in some versions under discussion, would guarantee a specified real return above the rate of inflation.”

http://www.whitehouse.gov/sites/defa...ddle-class.pdf (page 28)

... “free of inflation and market risk”meaning they would be under the absolute control of the Federal Bureaucracy.

This has moved under the radar a lot further than is realized. Last year it made it into the Federal Register as a proposal .

“While defined contribution plans have some strengths relative to defined benefit plans, participants in defined contribution plans bear the investment risk because there is no promise by the employer as to the adequacy of the account balance that will be available or the income stream that can be provided after retirement.”... “The Agencies are considering whether it would be appropriate for them to take future steps for them to facilitate access to, and use of, lifetime income or other arrangements designed to provide designed to provide a stream of income after retirement.”

Internal Revenue Bulletin - March 15, 2010 - REG-148681-09

In other words ,'employers are not to be trusted to manage your private retirement account... we think we can do a better job'.
Yeah ;they've demonstrated that with a history of mismanagement of Social Security .
Social Security was supposed to be held in the famous Al Gore described 'lock box'. Instead they have added the funding to the general revenue and have used the numbers to massage the real government debt. History shows that any funds they plunder from private accounts will be simularily mismanaged.

[NeedKarma]

I don't see where the gov is trying to grab people's private 401k plans. It just seems like offering another alternative to retirement planning.

[tomder55]

Offering ? Sounds like the Godfather... 'making an offer you can't refuse'.

If workers are mandated to participate, and 401k's are forceably converted into this government run program ,how could it not be a seizure ?

Argentina did it in 2001 ;European countries are doing it now. It is a seizure not a choice.

[NeedKarma]

If workers are mandated to participate, and 401k's are forceably converted into this government run program

That's the part I don't see. Where does it say that 401Ks "are forceably converted into this government run program"?

[tomder55]

The articles I posted already outline the strategy . By eliminating tax deferred status and regulating where 401k accounts are funded ;along with incentives to convert the 401k to the GRA they will effectively eliminate the 401k system.
They are a little more subtle than an outright grab. They will kick in $600 bucks for the conversion .

Bottom line... at the end of the day;the government has full control of all retirement funds .

[NeedKarma]

You really need to re-read pages 27 and 28 of the PDF that you linked to. It says nothing of what you wrote above.

[tomder55]

And you need to do some more searching on what Teresa Ghilarducci is proposing .
The only real question here is would her plan be mandatory. Just like the Healthcare plan ;unless their plan has mandatory participation it will not succeed .

But if it was enacted the 401k system would wither on the vine.. it would in fact be an effective seizure of private pension funds into a government plan.

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.

“I want to stop the federal subsidy of 401(k)s,” Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”

House Democrats Contemplate Abolishing 401(k) Tax Breaks | Human Resources News Information

[NeedKarma]

Ah I see. That's different info than what's on the White House website. Eliminating the tax break would indeed be counter-intuitive to making it worthwhile for people to plan for their retirement. Our RRSPs are set up with the same tax breaks. It remains to see how far this proposal will get.

[excon]

Hello:

Our economy, as I've said before, reminds me of a poker game that is in the process of being raided... BEFORE they run for the doors, EVERYBODY grabs for the cash in the pot... It doesn't matter whether a player has a financial interest in the pot, or not. He knows the game is over. He no longer cares for his fellow players, if he ever did, so he grabs for what's left...

Buy gold, and DON'T let ANYBODY know you have it.

excon

[tomder55]

I'm sad to say I agree. This doesn't even address how woefully underfunded State pension plans are. NY will never be able to collect enough tax money to fix the problem and States like California and Michigan are in worse shape.

I see this move as another possible funding for bailouts to State pension funds ,and I'm sure our law makers see it.

[paraclete]

Tom governments have become concerned that private financial planners have dishonestly managed these plans for their own gain thereby costing participants billions leaving the state with the burden. People like Madoff have fraudently siphoned off savings but even if this hasn't happened high management fees have lowered the return without providing higher returns or prudent management.

Since such investments are tax protected the governments feel they have a stake in ensuring their effectiveness and security.

I have noted the spin you have put on your objections. Not everything a government does is a grab or a hidden tax

[tomder55]

BS there is no bigger mismanager of money than the government.

Madoff?? Lolol . His investors had a choice . This scheme if implemented is mandatory.

The libs here went nuts when Bush proposed that workers should have the right to invest a small portion of their SS on their own . Now we know why. They think we are stupid !

The lie is that they see an untapped source of revenue in the billions of dollars that they want to get their hands on. My 401k is doing very well thank you .
I get a match from my employer and a relatively safe return in a guaranteed fund greater than the percent return that the Ghilarducci scheme guarantees. That combined with my employer's matching contribution is a much better deal.

They are selling this on a lie. Even if they use 2008-2009 market results ,the fact is that the markets have recovered all the losses. Over a 10-20-30 year term there is no way government junk bonds are superior to the stock market... even when factoring in fees. I'll gladly pay them over the taxes imposed on me by the government .

This is the same cr@p they did in the 1980s when they saw IRA's were a popular investment. They changed the rules to make them less attractive. Any way you slice and dice it ,they don't want the people to have independent options .

[TUT317]

BS there is no bigger mismanager of money than the government.

Madoff ??? lolol . His investors had a choice . This scheme if implemented is mandatory.

Hi Tom,
I don't know about that. In Australia government involvement in terms of managing, administering and supervising super funds has a pretty good track record to date.


It would seem the 'invisible economic hand' sometimes finds it way into not so invisible pockets.

Tut

[tomder55]

Trust the Aussie government if you like. Here they defacto pooled Social Security with general revenue and that has contributed greatly to it's long term insolvency.

I don't know why Aussie would be different .All over the Western world where entitlement programs have been offered ,with the assist of confiscatory taxation ,the systems are in collapse due to unfunded mandates.

[tomder55]

I'm sad to say I agree. This doesn't even address how woefully underfunded State pension plans are. NY will never be able to collect enough tax money to fix the problem and States like California and Michigan are in worse shape.

I see this move as another possible funding for bailouts to State pension funds ,and I'm sure our law makers see it.

Maybe this deserves it's own OP . But I'll continue it here...

Here are the numbers Governor Cuomo of NY has to deal with...

There is a short fall of $205 billion in unfunded pension benefit coverage for NY's unionized labor force.
And that's just NY. It hasn't been put aside .
The money doesn't exist ;it's just not there.

[paraclete]

Trust the Aussie government if you like. Here they defacto pooled Social Security with general revenue and that has contributed greatly to it's long term insolvency.

I don't know why Aussie would be different .All over the Western world where entitlement programs have been offered ,with the assist of confiscatory taxation ,the systems are in collapse due to unfunded mandates.

Well Tom maybe it is because we have seen government as providing prudent regulation without being a service provider. Our Social Security is also these days provided out of consolidated revenue. Our Taxation is not confiscatory but excesses in both directions are tightly controlled. In other words, there are limits as to how much income you can protect from taxation in superannuation and there is an interaction between superannuation and pension entitlements.

As to why Aussie's are different, it is because we have a different philosopy on life, must be all that sunshine and salt water. We believe in what we call a fair go and that it cuts both ways. If you take something from government then government is entitled to regulate. We also don't allow waste by government in boondoggling the electorate and this means the budget is not under strain to provide Social Security. Also the unique structure of Federal/State means that the Federal government is not involved in service provision on the ground and so what it does is directed towards Commonwealth wide objectives, not local initiatives. We also don't have the same aversion to tax and state enterprises since for much of our history there has been insufficient capital to get private enterprise to take on the big nation building projects such as utilities, inferstructure, communications

[speechlesstx]

Government control of pensions is not a good thing. I'll manage my own thank you very much.

[tomder55]

The situation in Prichard is extremely unusual

I don't believe it is . There have been cities that have been informed by States that they can't declare bankruptcy ,or they already would've .
Someone told me that NYC pays out more to retired fire fighters in pension and benefits than salaries for active ones.