Congress has introduced legislation to limit citizens to tapping into their 401K’s, called “SEAL 401K Savings Accounts.” One aspect of a new and improved federal regulatory scheme is the seizure of 401(k) retirement plans and the subsequent government-administered disbursement of the funds. In Chapter 3 of the Annual Report on the Middle Class released in February by Vice President Biden and the White House Task Force on the Middle Class, the Obama administration calls for enhancing the “retirement options” for the middle class by imposing “new regulations to improve the transparency and adequacy of 401(k) retirement savings.” In the US, the Fed probably will buy $1.6 trillion in Treasury and Agency debt over the next year, although we see the Treasury currently tapping government pension retirement funds to fund the lack of US debt extension, and that license could be used to relieve the Fed of some of the burden. Needless to say, that is not a permanent solution. If that tactic is employed, private pensions, as we have warned for the past two years, could become a victim of the government as well. At the same time, the world economy is again slowing, and that does not bode well for borrowers either. Once it becomes visible through the veil of government propaganda that conditions are deteriorating, real interest rates will rise, sending bonds down and the stock market will follow. What else can they do with no recovery, a falling dollar, 22.2% real unemployment, 10% inflation, a minus GDP and exponential creation by the Fed and the Treasury of money and credit. - Bob Chapman, Fearing the Bottom Will Fall Out If Interest Rates Rise, May 22, 2011
I believe Congress' next target for funding new spending is the trillions of dollars in private, individual retirement accounts. How would the U.S. government get away with this? It's diabolically simple. First, there will be some big unforeseen market event... another financial catastrophe similar to the market meltdown we saw in 2008 after Fannie and Freddie collapsed. This is when Congress will step in… citing its desire to “protect” the American people from future market shocks. Then politicians will mandate that a portion of all managed retirement funds be invested in the “safety and security” of U.S. Treasury bonds. - Urgent Warning -- How to protect yourself today from a desperate, bankrupt government, Sovereign Man, June 22, 2011
U.S. Government Hit Its $14.294 Trillion Debt Limit on May 16, 2011, But the Good News for the Feds Is That Retirement Plan Assets Returned to Record Levels for a Total of $17.5 Trillion in 2010, More Than Enough to Cover the National Debt
Spencer’s Benefits Reports
May 17, 2011
Retirement assets in the United States grew by 9% in 2010, from $16.0 trillion in 2009 to $17.5 trillion in 2010, according to the 2011 Investment Company Fact Book published by the Investment Company Institute (ICI). The $17.5 trillion breaks down as follows:
- $4.5 trillion was in defined contribution plans (401(k), 403(b), 457, Keogh, and other employer-sponsored plans);
- $8.3 trillion was in “other plans” (defined benefit, government plans, fixed and variable annuities, etc.); and
- $4.7 trillion was in individual retirement accounts.
Defined contribution plans have grown from $1.717 trillion in 1995 to $4.525 trillion in 2010, which represents the most assets held by defined contribution plans since $4.444 trillion was held in 2007. Of the $4.525 trillion, $3.056 trillion is held by 401(k) plans, $939 billion is held by 403(b) and 457 plans, and $530 billion is held by other defined contribution plans without 401(k) features (Keogh, profit-sharing, thrift-savings, stock bonus, and money purchase plans).
Average asset allocation by 401(k) participants varied by age according to research conducted by the ICI and the Employee Benefit Research Institute (EBRI) in 2009, as follows:
|Asset Type||In Their 20s||In Their 60s|
|Target Date Funds||23.5||7.6|
|Balanced (non-target date)||11.2||6.9|
|GICs & Stable Value||5.5||19.9|
A breakdown of what percentage of account balances were held in equities revealed that 54% of the participants in their 20s had more than 80% of their account balance in equities while only 22% of participants in their 60s had more than 80% of the account balance in equities. Conversely, 14% of participants in their 20s and 18.9% of participants in their 60s had no equities in their accounts.
The market share of target date funds has grown from 57% of the 401(k) plans that offered target date funds in 2006 to 77% of the 401(k) plans in 2009. In 2009, 33% of 401(k) plan participants held at least some plan assets in target date funds versus 19% of 401(k) plan participants in 2006. Assets invested in target date funds has grown from 5% of total assets in 2006 to 10% of total assets in 2009.
Participants in their 60s with at least 30 years of service at their current employer had an average account balance in 2009 of $198,993.
When lump sum distributions are made from a defined contribution plan, 14% of the recipients spend all of the proceeds while 56% of the recipients rolled over all of the proceeds to an IRA. The remaining 25% spent some of the distribution and either rolled over some of it to an IRA and/or reinvested some of the distribution in another asset. The ICI survey noted that “because retirees who spent some or all of their lump sum distribution tended to have lower account balances, only 7% of the total dollars distributed as lump sums at retirement were spent immediately.”
At year end 2010, 27% of the $17.5 trillion in retirement assets ($4.687 trillion) was invested in mutual funds. IRAs have $2.222 trillion invested in mutual funds followed by 401(k) plans with $1.803 trillion invested in mutual funds, 403(b) plans with $365 billion, 457 plans with $75 billion, and “other plans” with $223 billion. Domestic equity funds represented 44% of retirement assets invested in mutual funds ($2.074 trillion), followed by 15% invested in bond funds ($710 billion), 19% in hybrid funds ($878 billion), 14% in foreign equity ($675 billion), and 7% in money market funds ($351 billion).
Retirement plans (defined-benefit or defined-contribution) are available to 67 percent of private sector employees but 90 percent of public sector employees. [Source]
The public sector pay advantage is most pronounced in benefits: the typical government employee gets a guaranteed defined benefit pension under very generous terms, while the private sector norm is a 401(K) defined contribution plan that is subject to the ups and downs of the economy. [Source]
Predominance of Defined Benefit Retirement Plans: Public employees are typically covered by expensive defined benefit retirement programs, while private employees are typically covered by less expensive defined contribution plans. Approximately 90 percent of state and local government employees are covered by "defined benefit" pension plans. [Source]
Under defined-benefit pension plans, the employer puts up all or most of the money...unlike defined-contribution plans, such as 401(k)'s, the nest eggs accumulated under a defined-benefit plan can't be demolished by a cratering stock market. [Source]
Change pensions from ‘defined benefit’ to ‘defined contribution’ pension plans, meaning retirees receive only what has been built up in their 401K-type retirement accounts. [Source]
The Federal Employees Retirement System: Federal employees are automatically covered under the Federal Employee Retirement System (FERS), which includes both a defined-benefit and a defined-contribution pension plan. Employees in the defined-benefit pension with 30 years of experience may retire at the age of 56 with a full pension. Employees with less tenure may retire with full benefits at 60 or at 62. They receive annual benefits of 1 percent of their average pay in their three highest earning years multiplied by their number of years of service. Any federal employee willing to accept reduced pension benefits may retire at age 56. Unlike Social Security, federal employees may collect their pensions while working in a non-federal job. This allows federal employees to retire in their late 50s and take a job in the private sector while collecting pension benefits from the government. [Source]
Private sector defined benefit (DB) plans, private sector defined contribution (DC) plans, and state and local pension plans have all suffered declines of over 25 percent of their 2007 values, but that is simply another way of stating that the three types of plans (in aggregate) had basically the same portfolio composition at the end of 2007. The one exception is the federal government's civilian retirement plan, which (for the DB portion) is similar to Social Security insofar as the investments are completely in non-marketable government debt issues ... To date, the most immediate effects of the stock market crash have been on DC participants planning to retire in the next few years. However, all DC participants observe, when reading their quarterly statements or checking on-line balances, that they have incurred dramatic losses ... The extent to which the 2008 stock market crash affected pension participants obviously depends on the extent to which those participants were invested in the stock market before the crash. We use data from the Federal Reserve Board's Flow of Funds Accounts to measure the aggregate change in pension assets across the four broad categories of plans: private sector DB, private sector DC, state and local, and federal civilian. Of these, all but the federal civilian employee plan were greatly exposed to the drop in equity prices. This distinction is reflected in the approach to funding pensions before 2008; all but the federal civilian plan relied on equity exposure to achieve funding targets, which allowed lower contribution rates. [How will the stock market crash affect the choice of pension plans?, National Tax Journal, September 1, 2009]
We suspect that when the Dow hits 4,000, the average pension fund will have assets to cover 30% to 40% of benefits. That said, they will probably cut payouts by some 50% or more. This should occur in a year or two. In two to three years, public pensions and Social Security will be cut an equal amount. As we have said previously, pull cash values out of life policies and terminate annuities. Many insurance companies will go under. We have listed several already near the edge. State insurance funds will be unable to cope with the losses as the financial edifice falls apart. [Bob Chapman, Crime, Corruption and Collapse on Wall Street, The International Forecaster, March 11, 2009]
May 16, 2011
It was just last Thursday, May 12, that lewrockwell.com posted an article (see next story) on how the United States will follow the examples of the governments of Argentina, Hungary, and Ireland by going after private retirement funds as a new
robbery revenue source.
On April 5, 2011, the Federal Times ("Treasury may borrow federal retirement funds in debt emergency") reported:
The government could temporarily tap tens of billions of dollars from two federal employee retirement programs if Congress fails to raise the federal debt ceiling next month, Treasury Secretary Timothy Geithner told lawmakers. The government expects to hit a $14.3 trillion debt ceiling on May 16 or before, Geithner said in a Monday letter...
Geithner said borrowing money from the federal retirement programs and other "extraordinary measures" available to the government would stave off the need to raise the debt ceiling until around July 8. Once those measures are exhausted, the government "will be limited in its ability to make payments across the government," Geithner said. In that case, retirees' pensions could be affected.
Adcock said that, if that were to happen, any impact on retirement payouts would be "the least of their problems because we'll face a worldwide economic collapse. "I think people would understand what's at stake and cooler heads would prevail."
Today there is a news story that the United States Secretary Treasury Geithner announced “that he will halt investments in two big government pension plans so the government can continue to borrow money.”
Though this is only involving public pensions for the moment, rest assured that this is the first small step in tyranny that will sooner than later be followed by the United States government announcing that it will either start taxing private retirement funds like 401Ks and IRAs or demand that private retirement funds set aside a small portion of their capital to purchase government bonds in order to pay down the federal debt.
The government gave, and the government will taketh away.
May 11, 2011
Following in the footsteps of a rather ignominious list of nations like Argentina and Hungary, the government of lreland is set to take its ‘fair share’ of private retirement funds.
Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the government has announced that it will now tax private pension savings in order to raise 470 million euros (roughly $675 million) per year… a lot of money in a country of only 4.4 million people.
Somehow, the government expects to be able to create 100,000 jobs to bring down an unemployment rate at 14.7%. Perhaps they plan on hiring 100,000 new workers to go around the country and collect the tax.
It reminds me of what I saw in Bolivia a couple of weeks ago — there’s a tax or toll or fee for nearly everything you do. Driving on the highway (if you can call it that) outside of Santa Cruz, you pay a toll… obviously not for the maintenance of the road, but to pay the salary of the toll collector.
At the airport, you have to pay an airport tax before departure… obviously not for the upkeep and efficiency of the airport (it took 2-hours to make it to my gate), but to pay the salaries of the guys who collect the airport tax.
This is what politicians consider ‘job creation,’ yet these positions only serve to destroy value. That they would stick up the retirement funds of hard working people is even more immoral.
Here’s the best part, though. If you are a government worker in Ireland, your pension is exempt. They’re only going after people in the private work force. It’s truly disgusting logic to force private workers to pay for years of political incompetence while absolving government employees.
Coincidentally, there are a few other loopholes as well, particularly for non-residents and non-resident funds. Apparently those Irish who saw the writing on the wall and got busy moving themselves and their assets offshore will get to keep all of their savings.
Ireland is not the first country to call this play, nor will it be the last. Pension funds are attractive targets for politicians who have wide eyes and the most carnal thoughts at the site of any large pool of cash.
Think it can’t happen where you live? Think again. Late last year, the French government went through an elaborate process to change its pension laws, ‘legally’ allowing politicians to steal retirement funds from the public in order to pay off other debts.
In the US, public pensions have been raided for years; Congress routinely ‘borrows’ from Social Security to make up budget shortfalls. This is what talking heads mean when they play down concerns of a $14 trillion debt “because we owe it to ourselves” — $4.6 trillion of the debt is owed to intragovernmental agencies like Social Security.
Chances of this money being repaid to Social Security in full? Slim. The trend is more debt, not paying off existing debt. In fact, I’m convinced that politicians have their eyes firmly fixed on the trillions of dollars in private, individual retirement accounts (IRAs) in the United States to fund new spending.
Here’s how it will go down:
First, there will be some event… some sort of financial cataclysm, similar to the market meltdown we saw in 2008 after Lehman.
Bear in mind that most IRAs are managed by boneheads at big financial institutions; they get compensated not based on the performance of their portfolio, but on the total amount of assets under management. Your interests and their interests do not align.
As such, most IRAs are callously tossed into S&P index funds or some such generic vehicle, citing the safety of broader market diversification, as if that nonsense they teach in MBA finance classes is how the real world actually works.
When a big crash occurs, these unhedged broad market positions get hammered the most. Don’t worry though, your fund manager will still get a big fat bonus check, because his performance is irrelevant.
This is when Congress will step in. Citing its desire to ‘protect’ the American people from future market shocks, the politicians will mandate that a portion of all managed retirement funds be invested in the ‘safety and security’ of US Treasury bonds. And, just to be on the safe side, let’s park them in 30-year bonds that yield 4.35%.
Sound fair? Well who asked you anyways… just be a good citizen and turn over your money already. The important part is that the big financial institutions still get their big fat fees, and the government gets its hands on the mother lode.
This is how US taxpayers will end up being forced to loan their hard earned retirement savings to the government at rates far below any expected inflation.
Right now, there is a window of opportunity to take action: US taxpayers with retirement accounts can set up a special kind of IRA structure that allows you to take control of your retirement savings, and even ship it offshore if you want to, completely legitimately.
After taking control of your IRA, you can do any number of things: buy and store gold and silver coins overseas; hold foreign currencies in an offshore bank account; buy securities on international stock exchanges; purchase agricultural property overseas, or even a beautiful apartment on the beach in some sunny country.
The possibilities are incredible… but the most important thing is that you get this retirement money off the radar of the politicians before they pull an Ireland and announce some new measure, virtually overnight. These things can happen very, very quickly.
I’ve talked about this before a number of times, and every time I read the news of yet another country taking this approach, it serves as a reminder to take action.
If what I’m saying makes sense to you, my recommendation is to check out Terry Coxon’s book on this subject, Unleash your IRA. As one of the world’s foremost experts on this strategy, Terry walks you through the process of protecting your retirement savings quickly and legitimately. You can read more about it here.
I’ll be out tomorrow looking at some fantastic deals on agricultural property in Chile’s beautiful Central Valley, stay tuned for more.
May 16, 2011
Are 401(k) Retirement funds safe in a Debt Emergency? Good question.
2010 - Obama Needs Your 401(k) to Balance His Budget
New American2010 - Obama Administration Plans to Seize 401(k) Retirement Accounts
August 25, 2010
The Obama administration is “taking the first steps to confiscate retirement dollars,” according to Dr. Jerome Corsi who predicts that the end result will be retirees with 401(k) plans holding near-worthless government debt “that will be paid off in a devalued currency worth … pennies on the dollar.”
The move to confiscate those retirement dollars for government purposes was best illustrated by Christina Kirchner, President of Argentina, in 2008 when she announced plans to seize her citizens’ private pension funds. Writers at the Heritage Foundation said that while Kirchner claimed such seizure was necessary to protect her citizens’ investment accounts from the global meltdown, “most observers believe[d] her real motive [was] to use the $30 billion in seized assets to ease the massive debt obligations her leftist spendthrift government [had] run up.” The Wall Street Journal agreed, saying that “taking over the … pension fund assets [would] ease the cash crunch faced by [her] government.”
Corsi said he has a letter from the Treasury Department, Bureau of Public Debt, informing U.S. citizens that the federal government is rolling out a new program called “Treasury Direct” that will allow citizens “to purchase, manage, and redeem…savings bonds” electronically, as well as offering an option to purchase such bonds automatically through payroll savings or a personal checking account. This happened to coincide nicely, according to Corsi, with a bill offered by Senator John Kerry (D-Mass.) to create “Automatic IRAs” that would require all employers and employees to invest in IRAs using that automatic deduction option, “whether they want to do so or not.”
And this happened to coincide also with a program being pushed by the Service Employees International Union (SEIU) called “Retirement USA” which would create a government-forced retirement program with assets being directed into special Treasury Retirement Bonds, or R-Bonds. “Retirement USA” is promoting the idea that all workers have a “right” to a government retirement account, in addition to Social Security and any private pension plans those workers already have in place. Others behind “Retirement USA” also support more government dependency for workers, including the AFL-CIO, the Economic Policy Institute, the National Committee to Preserve Social Security and Medicare and the Pension Rights Center.
All of this is being promoted by the idea that individual citizens aren’t saving enough for their retirement, and that consequently government has to “do something.” Rep. Jim McDermott (D-Wash., above photo), Chairman of the House Ways and Mean’s Committee’ Subcommittee on Income Security and Family Support, is confused about whose money is in those 401(k) plans: the individual contributor, or the government. He said that “since the savings rate isn’t going up for the investment [Congress is making] of $80 billion [in 401(k) tax savings], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”
The world view of Rep. McDermott is revealing, and brings clarity to the point of view of many in the Washington establishment that the $4.5 trillion currently invested in 401(k) plans and other private pension plans that enjoy tax breaks actually belong to the government, and that when Congress loses $80 billion that would otherwise flow to Washington due to those tax breaks, it’s an “investment” that must “generate what we say it should”, or else it must be replaced with something else that works better.
The real “story behind the story” was revealed by Joe Wolverton here when he said,
…since the day of his inauguration, Barack Obama and his congressional co-conspirators have consistently and unapologetically set out to systematically nationalize the economy of the United States: first the banks; then the insurance companies; then the auto industry; then healthcare; and now the piece de resistance, the private savings accounts of millions of middle-class Americans.
But, thanks to the SEIU and their program “Retirement USA,” it’s all dressed up to look like a good deal for unsuspecting owners of retirement plans. In “Making the Case for a New System” they take the view that “A secure retirement is part of the American dream. Yet our retirement system is failing many Americans. Social Security is the cornerstone of our system, but as currently structured, is not meant to be our only retirement program. Pensions and savings plans are supposed to fill the gap, but too many workers don’t have plans, and too many plans don’t do the job.” They complain that:
Private retirement plan coverage is not UNIVERSAL…
For millions of Americans, private retirement benefits are not SECURE…
And Private retirement benefits are not ADEQUATE…
And, continues “Retirement USA”’s website, “Social Security must be preserved and strengthened… [and] we must encourage employers to offer and maintain them.”[emphasis added]
Underlying all of this is, of course, the statist presumption that government knows best what’s good for the citizens, and when the citizens’ behavior fails to meet government expectations, then mandates and force must be used to do for those citizens what the government thinks is best.
And the fact that Washington is looking at annual trillion-dollar deficits “for as far as the eye can see,” that $4.5 trillion of private monies is just too tempting to ignore.
New American2009 - Timothy Geithner Announces Retirement Savings Initiative
May 5, 2010
One aspect of a new and improved federal regulatory scheme is the seizure of 401(k) retirement plans and the subsequent government-administered disbursement of the funds.
In Chapter 3 of the Annual Report on the Middle Class released in February by Vice President Biden and the White House Task Force on the Middle Class, the Obama administration calls for enhancing the “retirement options” for the middle class by imposing “new regulations to improve the transparency and adequacy of 401(k) retirement savings.”
The plan, as sketched in the 43-page document, calls for the creation of something called “Guaranteed Retirement Accounts” (GRAs). Biden slyly shifts the onus for the idea through weasel words typical of the federal government: “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.”
These accounts would be “free of inflation and market risk” because they would be under the direct and absolute control of the federal bureaucracy. There would be no risk because the funds would no longer be moored to the free market and subject to the fluctuations thereof. Rather, the retirement funds of every hard-working American dependent on a 401(k) for their retirement security would be nationalized and made subject to the whims and will of the executive branch.
The current administration is practiced in the erection of such straw men to deflect their own socialistic and absolutist intent. The record is clear, however, and since the day of his inauguration, Barack Obama and his congressional co-conspirators have consistently and unapologetically set out to systematically nationalize the economy of the United States: first the banks; then the insurance companies; then the auto industry; then healthcare; and now the piece de resistance, the private savings accounts of millions of middle-class Americans. This is an unlawful usurpation of power unprecedented in the annals of American political history.
Coinciding with the publication of the report described above, the Obama White House, together with the Departments of Labor and Treasury, issued a so-called “Request for Information” calling for a detailed analysis of the pros and cons of the “annuitization” of individual 401(k)s. The scheme was set forth in a set of “Proposed Rules” published on February 2, 2010 in the Federal Register.
The document reads in part, “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.” And furthermore, “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.”
The upshot of that clunky prose is that the Obama administration believes that employers cannot be relied upon to adequately manage the 401(k) retirement accounts it provides for their employees, therefore the federal government will relieve them of that responsibility and take sole discretionary control of those funds, thus eliminating the risk of mismanagement. In other words, the Obama administration is planning to divert the “stream of income after retirement” and channel it right through Washington, D.C.
Under the section of the Proposed Rules marked “Background,” the document declares that it is the intent of the agencies considering these changes to further “their efforts to promote retirement security for American workers.” And, to “provide wages that support families, and rise with time and productivity.” Since January 2010, it seems that the only thing rising with time is the likelihood that the economic wealth and might of our once enviable Republic will be methodically eradicated through the exercise by the executive branch of unconstitutional authority over every financial aspect of our nation’s people.
While the time for commenting on these Proposed Rules has passed (May 3, 2010 was the deadline), there is yet time for concerned citizens to contact their elected representatives and voice their opposition to President Obama’s proposed seizure of their 401(k) retirement accounts.
In response to the White House’s pronouncements, many Republicans in the House of Representatives, including GOP leader John Boehner (R-Ohio), have joined together to defend against the federal assault on the financial freedom of the middle class. Boehner and a cadre of colleagues known as the “House GOP Savings Recovery Solutions Group” (an organization founded by Boehner to, “help Americans protect and rebuild their hard-earned savings as quickly as possible while making sure the federal government does not hinder the process”) have written a memo to the secretaries of Labor and Treasury, imploring them to “take no action” to nationalize the retirement security of millions of Americans, representing trillions of dollars. The text of the letter is reprinted below:
Dear Secretaries Solis and Geithner:
As members of the Republican Savings Solutions Group, we write today to express our strong opposition to any proposal to eliminate or federalize private-sector defined contribution pension plans, such as 401(k)s, or impose burdensome new requirements upon the businesses, large and small, who choose to offer these plans to their employees.
In the Annual Report of the White House Task Force on the Middle Class, Vice President Biden discussed at length the creation of so-called “Guaranteed Retirement Accounts, (GRAs)” which would provide for protection from “inflation and market risk” and potentially “guarantee a specified real return above the rate of inflation” — presumably at taxpayer expense. In the Report, the Vice President recommended “further study of these issues.”
The Vice President’s comments are troubling, insofar as they come on the heels of testimony before Congress from supporters of GRAs proposing to eliminate the favorable tax treatment currently afforded to 401(k) plans, and instead use those dollars to fund government-invested GRAs into which all employees would be required to contribute a portion of their salary — again, with a government subsidy. These advocates would, essentially, dismantle the present private-sector 401(k) system, replacing it instead with a government-run investment plan, the size and scope of which remain to be seen. This despite data showing that 90 percent of households have a favorable opinion of the existing 401(k)/IRA system.
In light of these facts, we write today to express our opposition in the strongest terms to any effort to “nationalize” the private 401(k) system, or any proposal that would dismantle or disfavor the private 401(k) system in favor of a government-run retirement security regime.
Similarly, and more recently, the Departments of Labor and Treasury have jointly issued a “Request for Information” regarding the “annuitization” of 401(k) plans through “Lifetime Income Options.” While we appreciate the Departments’ seeking guidance and information from all parties and stakeholders in advance of regulatory activity, we strongly urge that the Departments not proceed with any regulation in this area before they have carefully and thoroughly considered all of the information received.
More specifically, we urge that the Departments take no action to mandate that plan sponsors — often, small businesses — include a “lifetime income” or “annuitization” option if they choose to offer a 401(k) plan to their employees, or that beneficiaries take some or all of their retirement savings in such an option. Data shows that 70 percent of Americans oppose the concept of a mandated annuity or government payout of their 401(k) plan. On a more fundamental level, Congress should not be in the business of choosing “winners” and “losers” among retirement security stakeholders. Instead, we urge the Departments to make it easier for employers to include retirement income solutions in their savings plans and to help workers learn more about the value of their retirement savings as a source of retirement income. Finally, to the extent new mandates and bureaucratic red tape from Washington push small employers out of the business of offering these plans to their employees, we would submit such an effort weakens, rather than strengthens retirement security.
We appreciate your consideration of our views in these important matters and stand ready to work with you and the Administration to promote secure and adequate retirement savings for all Americans.
Sincerely, House Republican Leader John Boehner (R-OH)
Rep. John Kline (R-MN)
Rep. Dave Camp (R-MI)
Rep. Sam Johnson (R-TX)
Rep. Dean Heller (R-NV)
Rep. Brett Guthrie (R-KY)
Rep. Michele Bachmann (R-MN)
Rep. Pat Tiberi (R-OH)
Rep. Bob Latta (R-OH)
Rep. Erik Paulsen (R-MN)
Rep. Lynn Jenkins (R-KS)
Rep. Ed Royce (R-CA)
Rep. Buck McKeon (R-CA)
While the goal of Boehner’s group is noble and laudable, the tactics it uses to resist the administration’s attack on middle-class savings seems somehow to justify them, as well. If Congressman Boehner and his allies are genuinely committed to helping “Americans protect and rebuild their hard-earned savings,” then their interest, as well as that of our Republic and the citizens thereof, would be best served by a bold and relentless campaign to drive all branches of the national government to retreat to a place within the borders of their constitutional authority.
September 5, 2009
U.S. Treasury Secretary Timothy F. Geithner today announced an initiative designed to improve Americans' ability to save toward retirement. The initiative's four-prong approach includes expanding opportunities for automatic enrollment in 401(k) and other retirement savings plans; making it easier for Americans to save portions of their tax refunds; allowing Americans to convert a portion of their unused vacation into savings; and help Americans better understand their retirement options through clearer language.
To expand opportunities for 401(k) enrollment, Mr. Geithner is proposing streamlining the process that allows 401(k) plans to adopt automatic enrollment; making it easier to increase savings over time; and allowing automatic enrollment in SIMPLE-IRAs.
Acknowledging that only one out of ten Americans eligible to make IRA contributions are doing so, Secretary Geithner emphasized the Obama administration's proposal to automatically enroll workers without workplace retirement plans into IRAs through payroll deposit contributions at the workplace.
Secretary Geithner also reiterated the administration's proposal to expand a savers tax credit which would match half of a family's savings up to $500 per individual each year.