Get Ready for a Stock Market Crash Because the Feds Want Our Private Retirement Assets Converted into Government Annuities to Fund the National Debt

Wall Street will crash the stock market to destroy our private retirement assets so that we'll let the government confiscate them in exchange for a guaranteed lifetime annuity modeled on the Federal Employees Retirement System. But unlike federal employees, don't expect to be able to retire in your 50s with a generous pension. Once the feds get a hold of your individual private retirement assets they will be managed like Social Security and benefits will be paid out in the same way. In other words, you won't be able to retire until 67 or 70 (if they increase the retirement age as planned) and your annuity will be greatly reduced.

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

The Obama Administration is using the same tactics to pass a nationalized retirement plan as they did to pass the nationalized health care bill (connect the dots when you read the following articles). In other words, the federal government is going to takeover private retirements assets in the same way it is taking over private health care. These things were planned long ago, and now everything is accelerated under Obama. They have until until December 21, 2012 (if they're following the Mayan calender, as many believe) or January 20, 2013, when Obama's term ends (although he probably will be re-elected) to get the bills passed and signed into law.

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

U.S. RETIREMENT ASSETS DECLINED IN 2008

Download an Excel file of this data.

The Government Wants Your 401(k) and Retirement Account

Compass Corporate Retirement Solutions
July 7, 2010

Hang onto your Individual Retirement Accounts and 401(k) plans because the Federal Government wants them. According to an article by Goldworth, Deputy Assistant Treasury Secretary Mark Iwry, and Assistant Labor Secretary Phyllis Borzi head an endeavor to have Americans convert their retirement accounts. The Government wants them converted into annuities and Treasury bills to fund the national debt. They need to sell $2 trillion dollars of bonds, and foreign countries aren’t buying like before. The world is concerned about the growing debt of the United States.

The powers pushing this idea are the White House, Ford and Rockefeller Foundations, and Congressional activists. Theresa Ghijarducci, of the Swartz Center for Economic Policy Analysis, wants the Government to present the public a proposal of converting these accounts, as early as the middle of July. The announcement seeks to get America’s response to the idea.

The Goldworth article said the New York Times reported the United States would pay out more benefits this year than it takes in from payroll taxes. This deficit will grow, as over 78 million boomers retire and take money out of government coffers.

Last March, Business Week reported our Government wants the converted accounts placed in government-controlled institutions, such as AIG. What the Government seems to have in mind is another power grab, on the lines of the health care plan pushed down America’s collective throats. The national health care plan and the funding of the national debt through converted retirement accounts are brazen acts of Nationalization.

The route to Nationalization the United States is on is similar to the one Argentina took to their demise. In the 1990’s, Argentina had a vibrant economy but it eroded to the point it defaulted on $155 billion of public debt, in 2002. The erosion began when Argentina’s economy slowed, and they continued to spend and print money as a close-gap method to make ends meet. Their peso devalued until it was worthless, inflation set in and the languishing economy never picked up. Finally, with nothing to hold the economy up and their citizenry too broke to keep up with inflation, the economy collapsed. Since then Greece defaulted, for the same reasons, and Spain and others teeter.

Similarly, the United States has a large National Debt, $13 trillion, the interest on it $500 million per day, but the Government shows no sign of slowing entitlements. For example, the Congressional Budget Office predicts the recently passed health care will add $562 billion to the deficit over the next ten years. Our Government is printing money like it’s going out of style, tax rates are going up next year and inflation shows signs of beginning to rise. As a result, per-capita spending is slowing, which takes money out of the economy. The United States can only fund the present debt until 2020, then it engulfs our GNP. Washington DC must stop spending.

Goldworth: 401 (k)/ IRA Nationalization Quietly Moves Forward: goldworth.com

Could the Government Take Away Individual Control of 401(k) Savings?

NuWire Investor
January 13, 2010

A government proposal would take away some control of 401(k) by requiring retirees to convert some of their savings to annuities although 70% of US households oppose it. Whether this controversial plan would give retirees the hoped for security is however doubtful. See the following post from Expected Returns.

Our government is in the middle of a funding crisis that will be resolved as it always has: through the confiscation of citizens' hard-earned wealth. Judging by the way Americans are being conditioned to accept criminal behavior at the highest levels of government, this confiscation will probably be pretty explicit. I'm guessing we'll eventually see a FDR-style confiscation of gold and retirement accounts (401(k)'s).

From the following article in Businessweek, Americans Oppose Initiatives Limiting 401(k) Choices, ICI Says, it seems that day is quickly approaching.

U.S. investors oppose federal initiatives that would force them to give up control over their 401(k) accounts, the Investment Company Institute said.

Seven in 10 U.S. households object to the idea of the government requiring retirees to convert part of their savings into annuities guaranteeing a steady payment for life, according to an institute-funded report today.

7 out of 10 Americans against government control of 401(k)'s? This probably means legislation is going to be shoved down our throats anyway. I mean, isn't this the new trend in our new "government-knows-best" style of government?

Annuity Conversion, aka Theft

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

The coming theft of retirement accounts is one of the most obvious trends for the next 20 years. I mean seriously, the American public stood shell-shocked like 5-year olds while getting looted to the tune of trillions of dollars--what makes you think the government isn't going to steal your retirement accounts?

The government is going to try to sell the move into annuities as a "safe" way to protect the public from the vagaries of the stock market. The truth is, the government is damn broke, which means they will have their hand in every person's pocket. The confiscation will function like this: American citizens will be forced to buy a worthless asset (in this case U.S. Treasuries) and receive a paltry return on capital. Factoring in inflation, returns are likely to be negative.

That the government has to resort to such measures indicates the severity of the current funding crisis. First, the insane monetization of debt. Now, Americans will be compelled to prop up the Treasury market. Five years ago you couldn't make this stuff up; today, it is a reality.

Stock Market Collapse + Retirement Hopes Destroyed

Ok. So the government is basically telling us they are going to confiscate 401(k)'s. Now think for a second what happens when massive forced inflows of capital into stocks turn into massive forced outflows. It doesn't take a genius to figure out stocks are going to crater, and with it, the retirement hopes of millions of Americans.

When a critical mass of the population realizes this, then you will really know what a panic is.

401(k)’s were always structurally deficient products. The standard line is that with tax benefits and company matches, nothing can possibly go wrong! 401(k)'s are for the "wise" investor who is in it for the mythical "long-term". Whenever I hear this ridiculous line from someone, I know the person hasn't looked at a single "long-term" chart in his life. Sorry to ruin the party, but in the "long-term" (at least for Baby Boomers) stocks are going to go down in real terms and taxes are going to rise. And oh yea, you're getting taxed on earned income, which means if your 401(k) is actually worth something, the only person who will be celebrating is Uncle Sam. This is a disaster in the making for the disappearing middle class in America.

2010-2020: Major Paradigm Shifts Coming

These are interesting times. I can tell you this much: a lot of paradigms are about to change in the next 10 years. Most people are already skeptical of our government, which is clearly evidenced by the plunging approval ratings of both Congress and President Obama. However, most people are ignorant about the lengths governments always go to in order to prevent insolvency.

The current forced bond purchase scheme by our government reminds me a lot of what happened in France during the French Revolution, when church property was confiscated in return for assignats--which functioned as bonds. It didn't take long for those assignats to be worthless in value. I expect the same thing to happen eventually with U.S. Treasuries.

There will be a crisis of sorts in the near future. This is just one of the many reasons I am extremely bullish on gold.

This post was republished from Moses Kim's blog, Expected Returns.

Retirement Overhaul: 401(k)s May Not be the Answer Now

USA TODAY
Originally Published on October 23, 2009

When Vise-Grip closed its plant last year in DeWitt, Neb., and moved it to China, Anita Oltmans lost her job. With no job, federal law prevented her from continuing to contribute to her 401(k) plan. She watched her account spiral down as the stock market crashed.

"They closed the doors on Halloween of last year," says Oltmans, 40, who worked in assembly at the plant and is now in college. "Before that happened, I was happy with what I had saved for retirement. But now, it's very scary."

Congress created the 401(k) in 1980 to supplement company pension plans. But with pension plans no longer offered to all workers or frozen, millions of Americans, such as Oltmans, have been relying solely on 401(k) plans to fund retirement. Others — nearly one-third of American households — don't have any retirement savings, according to a McKinsey & Co. report. And only 4% of middle-income married couples who don't have a pension and are nearing retirement are likely to have enough money to last their lifetime, according to a new report by Ernst & Young.

America faces a retirement crisis, says an influential group of organizations that have started a new retirement initiative called Retirement USA. Wednesday, the group meets in Washington, D.C., to begin searching for solutions.

Retirement USA was launched last March by the Economic Policy Institute, the National Committee to Preserve Social Security and Medicare, the Service Employees International Union and the Pension Rights Center. The coalition has grown since, adding the AFL-CIO, the National Caucus and Center on Black Aged and the National Consumers League, among others. The group's goal is to create a new retirement system that works in conjunction with Social Security and existing plans.

"We're not under an illusion that this will happen overnight," says Karen Friedman, policy director of the Pension Rights Center. When the group comes up with a retirement proposal, it will need congressional support.

Members agree that the retirement system must be universal, secure and able to ensure that all will have a reasonable standard of living after they stop working. The current system does not meet those basic needs, they say.

Millions of retirees are barely surviving financially, says Retirement USA. Nearly 24% of Americans older than 65 have incomes below the poverty threshold, according to the Organisation for Economic Co-operation and Development. And the United States, Ireland, South Korea and Mexico have the highest old-age poverty rates among the 30 OECD countries.

"I feel we're watching a slow-motion train wreck," says Steve Bartlett, president of the Financial Services Roundtable, which represents large institutions, such as Citigroup, Allstate and Fidelity. "It's pretty clear that with the current trend, the country's Baby Boomers and the next generation will not have enough money to retire."

O(k), or not O(k)

The 401(k) is clearly the center of the retirement storm. Some consumer advocates say the 401(k) is a failure that should end. Others, especially financial industry representatives, think 401(k) plans are still the best retirement option and they simply need shoring up. Retirement USA wants to keep the best parts of the current system and add to it.

Bartlett says 401(k) plans are now the retirement reality and should be quickly strengthened. The Roundtable is not part of Retirement USA, but it has recommended a number of improvements, including increasing access to retirement savings plans for small-business employers.

"Every day that we delay makes it harder," he says.

Proponents say 401(k)s are good because they're easy to contribute to, they provide tax breaks, and they are portable from job to job. And if an employer offers a company match to an employee's contributions, even better, says Jane White, author of America, Welcome to the Poorhouse.

Many workers who have stayed at one job for years and consistently contributed to 401(k) plans have been able to build decent nest eggs. To urge more workers to start saving for retirement, about half of midsize-to-large employers provide automatic enrollment to 401(k) plans, up from 44% in 2008, according to a 2009 Hewitt Associates survey.

But companies have cut costs due to the recession and have not spared 401(k) plans, often slashing or eliminating contribution matches and not offering automatic enrollments.

Not a panacea

Statistics also show that 401(k) plans don't serve everyone well, and that those who use them often make big investing mistakes, including cashing them out early.

Many workers — especially women, Hispanics and African Americans — don't contribute to a 401(k) plan at all. Only 41% of Hispanic workers say they save money for retirement, and only 25.6% are covered by employer-sponsored retirement plans, according to a new study by the Hispanic Institute, a non-profit organization.

"It's a grim reality," says Dr. Yanira Cruz, president of the National Hispanic Council on Aging.

Women also face an obstacle men do not. They need to replace more of their final pay for retirement — 2% more than the average male — because they live longer, Hewitt says. Women, however, typically save less than men and invest less aggressively.

Not all 401(k) plans provide good options. Although they are voluntary savings plans, employers choose the menu of investment vehicles.

Teresa Ghilarducci, professor of economics at the New School for Social Research in New York, says the Enron debacle, where workers had far too much of their retirement portfolios wrapped up in company stock that became worthless, is a perfect illustration of a broken system. Workers also pay high investment fees, and employers can shift administrative costs to workers without detection, she says.

Those who do contribute to such plans often get subpar investment returns and make bad decisions.

Marshall Goldsmith, 41, a customer care representative for American Hotel Register in Las Vegas, says he stopped contributing to his 401(k) plan and instead contributes to an IRA.

One reason: "Not one of the funds is in positive numbers, even since the market improved in the last couple of months," he says. His company also has dropped its matching contribution.

Many workers agree with Goldsmith: A recent AARP survey found that 29% of workers ages 45 to 64 had stopped making retirement contributions. About 18% of workers in the same age group have withdrawn funds from their 401(k) plans in the past year, either taking loans or cashing out.

Sandy Shore, senior credit counselor at Novadebt, in Freehold, N.J., says she understands the dilemma facing folks, but draining retirement funds to pay off credit card debt or medical bills is a losing proposition.

"They think it will solve their problem, but when the underlying problem doesn't go away they end up not paying back the 401(k) loan and taking the tax penalty," she says.

A change of perspective

For many people, trying to determine when they might be able to retire and how much they will need is simply a vexing question.

Throw in rising unemployment, the stock market meltdown and the drop in some company matches, and it becomes all the more confusing.

Mark Heup, a commodity manager in Baltimore, doesn't have an overall retirement strategy. He lost his job in February, and his wife, Julie, a structural engineer, lost her job last November. They are both 41 and have a son, Matthew, who is 4.

Although they started new jobs in June, albeit in different cities, they're worried about their retirement future. Before they lost their jobs, they had not been contributing the maximum amount to their 401(k) plans.

"We were just buying things or spending money on our house," says Heup, who now works for Black & Decker. "I guess that being out of a job" has made the couple focus on retirement saving, he says.

It's a rougher road because Heup's company has put a freeze on its company match. Some 26% of companies say they are reducting their 401(k) matching contributions, according to a new Grant Thornton survey. Still, Heup is making the maximum contribution.

People who have worked for 20 to 30 years will need to have 10 times their final pay banked to retire securely, says author Jane White. And not many people are that fortunate.

To come close to that, they need to start contributing at age 25 and keep contributing for 50 years, so they have the benefit of compound interest, she says. And they need to have a company match and avoid cashing out any of the savings until retirement, she says.

The Retirement USA members see the difficulties, confusion and current economic circumstances as catalysts for a new system. The group doesn't want to derail the current system so much as improve it and come up with a new plan that provides security for all Americans.

Some longtime supporters of 401(k) plans agree it may be time for a change.

"Now, we're in a different world," says Ted Benna, a retirement consultant who created the first 401(k) plan in 1980 and is semi-retired. "How are we going to move forward from here? It will be interesting to see. And I am not going to lose any sleep if 401(k) doesn't survive."

Retirement’s Future: Pension vs. 401(k)

CalPensions.com
Originally Published on June 15, 2009

About a dozen chief executive officers of public employee pension funds met in Chicago last month to get acquainted and discuss ways to defend the traditional pension model.

It was an unprecedented gathering called by the new CEO of CalPERS, Anne Stausboll, who in January became the first woman to hold the top job at the nation’s largest public pension fund.

After an historic market crash last fall erased a third of the value of many pension funds, the CEOs might have talked about adjusting investment portfolios or “smoothing” techniques that could avoid contribution rate shocks for state and local governments.

But professional staffs can present those options to decision makers on pension boards. What the CEOs did was compare notes on handling a public discussion about retirement security that may be pushed by the Obama administration and others.

“I’m anticipating that when that discussion heats up, they will be coming to the public pension funds to talk about the defined benefit model, how has it worked historically,” said Stausboll. “So it’s a good opportunity for us to be giving some messages about the relevance of the defined benefit design.”

A “defined benefit” is the monthly payment guaranteed for life in a traditional pension. It’s opposite is the “defined contribution,” a 401(k)-style plan that puts money into a tax-deferred individual investment plan that can rise and fall with the market.

The “defined benefit” is the standard retirement plan for government employees. Critics contend that powerful public employee unions have negotiated generous retirement plans that are straining government budgets and may be unsustainable.

Businesses that offer retirement plans (about half of U.S. workers only have Social Security) are moving toward 401(k)-style plans, avoiding the potential for a massive pension debt that has hurt the auto industry and other old-line corporations.

The 401(k)-style plan is portable, moving with workers as they go from job to job in the new economy, where career-long employment with one firm is said to be increasingly less likely.

But critics say the 401(k)-style plan was only intended to be a supplement, and the stock market crash dramatically revealed its shortcomings, devastating the holdings of older persons who cannot wait for investment earnings to rebuild their retirement funds.

So, if it’s “defined benefit” versus “defined contribution,” who’s winning? Both sides sound as if they are feeling a little besieged.

“In addition to talking about the national discussion, we did talk about the negative focus that we have seen in the media and various forums around defined benefit plans,” Stausboll said of the Chicago meeting.

“We talked about what we could do to balance those negative stories,” said the new CEO of the California Public Employees Retirement System. “But again, in an educating kind of way based on our experience.”

The Profit Sharing/401k Council of America shares Stausboll’s view about a coming national discussion of retirement, calling on its website for a stronger voice because “the future of the 401(k) system” may be determined by the current Congress.

“Not only have investment returns recently been poor, but the media has piled on with story after story about how 401(k) itself is the problem,” David Wray, the council president wrote on his web log. “However, the real story is that 401(k) participants continue to save and invest in their plans even in what some term the worst of times.”

The debate over retirement models, with its subtext of government versus private-sector control, takes a number of forms.

A CEO who attended the one-day Chicago meeting on May 4 in an airport hotel, Chris DeRose of the Ohio Public Employees Retirement System, said in recent years he has discussed retirement issues with the Legislature, Congress and system members.

“We have reached out to all of our stakeholders in helping them to understand that there is this challenge and there are people who want to change our plan, whether they want to change how we invest our money or whether they think a mandatory defined contribution plan is the way to go,” DeRose said.

Comment on Calpensions posts from “Bull,” often denunciations of government pensions with words in all-cap letters, are e-mail that can be traced to a large financial firm in New York that sells retirement products.

A new group, Retirement USA, which includes the Service Employees International Union and several think tank-like organizations, launched a drive earlier this year for a new plan to supplement Social Security.

The new group, seeking ideas to be considered at a conference this fall, has proposed a framework that combines traditional pensions and 401(k) plans (with perhaps some new wrinkles) that would be supported by employers, workers and the government.

The California Assembly passed a bill this month authorizing CalPERS to handle the investments for a new savings retirement plan for workers who do not have an employer-sponsored plan.

AB 125 by Assemblyman Kevin De Leon, D-Los Angeles, would allow automatic deductions from paychecks, an option regarded as a key to getting people to save. A similar bill, also opposed by the financial industry, cleared the Assembly last year and died in the Senate.

U.S. Treasury Secretary Timothy Geithner said last month that his office wants to work with Congress “to flesh out the initiatives” in the president’s budget to help the half of working Americans who only have Social Security.

“These proposals would make it easier for people to save for their own retirement, either through their workplaces or on their own, and would move us toward universal retirement savings coverage,” he told the House appropriations committee on May 21.

A hybrid plan that would use an annuity to convert part of a 401(k) savings account into guaranteed monthly income is being discussed by a Geithner assistant, Mark Iwry, who formerly was with the Brookings Institution.

“It’s in the early stages, but there has been a fair amount of interest in our ideas and the core concepts so far,” Iwry told Investment News last month.

A legal affairs newsletter said the appointment of Iwry in late April signals that retirement has become a higher priority in the Obama administration’s Treasury department.

“Policy issues Iwry will be working on include a possible overhaul of rules for private defined contribution plans, funding relief for defined benefit plans, a direct-deposit IRA program for employers that don’t offer retirement plans, and expansion of the saver’s tax credit,” said the CCH Financial Crisis News Center newsletter.

That would be a sweeping agenda. And as with the current health care debate, there would be plenty of room for political conflict over whether retirement programs should be run mainly by the government or by the private sector.

The Treasury Is Soliciting Your Feedback Regarding the Proposed Annuitization of 401(k)

Zero Hedge
February 1, 2010

Yes, slowly but surely it is happening. In a federal notice filed earlier, the DOL and Treasury are soliciting a response on what has been on many investors' mind, namely the process of converting 401(k)s into annuity-like products. To wit:

The Department of Labor and the Department of the Treasury (the "Agencies") are currently reviewing the rules under the Employee Retirement Income Security Act (ERISA) and the plan qualification rules under the Internal Revenue Code (Code) to determine whether, and, if so, how, the Agencies could or should enhance, by regulation or otherwise, the retirement security of participants in employer-sponsored retirement plans and in individual retirement arrangements (IRAs) by facilitating access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement. The purpose of this request for information is to solicit views, suggestions and comments from plan participants, employers and other plan sponsors, plan service providers, and members of the financial community, as well as the general public, on this important issue.

Full Notice here.

A cursory read of the document does not seem to ask about a flat out regulatory requirement for annuitization. We point your attention to item 13:

13. Should some form of lifetime income distribution option be required for defined contribution plans (in addition to money purchase pension plans)? If so, should that option be the default distribution option, and should it apply to the entire account balance? To what extent would such a requirement encourage or discourage plan sponsorship?

For readers who feel compelled to respond to this increasignly socialistic and ludicrous development, we suggest you voice your anger at the following address:

* e-ORI@dol.gov. Include RIN 1210-AB33 in the subject line of the message

Pension Insurer Shifted to Stocks

Concern increases as losses mount; Failing plans could overwhelm agency

The Boston Globe
Originally Published on March 30, 2009

Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.

Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.

The agency refused to say how much of the new investment strategy has been implemented or how the fund has fared during the downturn. The agency would only say that its fund was down 6.5 percent -- and all of its stock-related investments were down 23 percent -- as of last Sept. 30, the end of its fiscal year. But that was before most of the recent stock market decline and just before the investment switch was scheduled to begin in earnest.

No statistics on the fund's subsequent performance were released.

Nonetheless, analysts expressed concern that large portions of the trust fund might have been lost at a time when many private pension plans are suffering major losses. The guarantee fund would be the only way to cover the plans if their companies go into bankruptcy.

"The truth is, this could be huge," said Zvi Bodie, a Boston University finance professor who in 2002 advised the agency to rely almost entirely on bonds. "This has the potential to be another several hundred billion dollars. If the auto companies go under, they have huge unfunded liabilities" in pension plans that would be passed on to the agency ...

In addition, Peter Orszag, head of the White House Office of Management and Budget, has "serious concerns" about the agency, according to an Obama administration spokesman.

Last year, as director of the Congressional Budget Office, Orszag expressed alarm that the agency was "investing a greater share of its assets in risky securities," which he said would make it "more likely to experience a decline in the value of its portfolio during an economic downturn the point at which it is most likely to have to assume responsibility for a larger number of underfunded pension plans" ...

Federal Employees Retirement System (FERS)

According to the Bureau of Economic Analysis for 2008, the average federal employee made $79,197 [the average private sector employee made $49,935]. The pension for the average employee can be calculated as follows:

$79,197 x 30 Years x 1% = $23,759
$79,197 x 40 Years x 1% = $31,678

Understanding the FERS Retirement

When we talk about your FERS Retirement, we're really talking about several different benefits. FERS (Federal Employees Retirement System) has three main components:

1. Basic FERS Pension
2. Social Security
3. Thrift Savings Plan (TSP)

Your FERS pension and Social Security will be fixed dollar amounts. But the money you get from your TSP will depend on how much you contributed and how well you managed the money.

As a FERS, you have a chance to take a more active role in managing your own retirement than CSRS do. But, that means you need to stay up-to-date on your benefits.

Here are some important things you need to know about each part of your FERS retirement...

Reductions to Your FERS Pension

There are some choices you can make that will reduce the amount of your FERS pension:

• Retiring Before Age 62 with MRA+10

  If you retire before age 62 on an Early FERS Retirement (MRA+10), your pension will be reduced. Your FERS pension will be PERMANENTLY reduced by 5% for every year you are under age 62. Click here to see an example of this reduction and how it might affect you

• Survivor Benefits

  Your FERS Pension could also be reduced if you choose survivor benefits. Will my survivor still get my pension when I die?

Thrift Savings Plan for FERS

The Thrift Savings Plan (TSP) is a special account for Federal Employees. The TSP was created as part of the Federal Employees Retirement System in 1986. Most government employees (FERS and CSRS) are eligible for the TSP — even those hired before it was created.

The TSP allows you to save pre-tax dollars in a special personal account. You can choose how to invest those dollars — although your choices are limited.

With your FERS retirement pension and Social Security, you will receive fixed amounts. But with your TSP, the amount you receive depends on how much you put in and how well you managed the money.

Your TSP contributions are optional and separate from your FERS pension.

You may also be able to get your Federal Agency [taxpayers] to contribute money to your TSP. Click here to learn more about the match the government gives FERS employees.

Social Security for FERS

Employees covered under the Federal Employee Retirement System (FERS) are typically eligible to receive Social Security benefits when they retire. Every pay period, the Federal Government takes out 6.2% of your basic pay to put towards Social Security. But just like your FERS pension, your Social Security benefit is not based on your contributions - it is based on other factors.

According to the U.S. Social Security Administration, the Social Security taxes you and other workers pay into the system are used to pay for Social Security benefits.

You pay Social Security taxes on your earnings up to a certain amount. That amount increases each year to keep pace with wages. In 2011, that amount is $106,800.

You pay Medicare taxes on all of your wages or net earnings from self-employment. These taxes are used for Medicare coverage.

If you work for someone else	2011 Social Security tax	Medicare tax
You pay	4.2%*	1.45%
Your employer pays	6.2%	1.45%
If you are self-employed
You pay	10.4%	2.9%

Currently, U.S. citizens cannot collect Social Security benefits until age 62 (lawmakers are considering raising this age to 67 or 70). The maximum Social Security benefit at age 62 is $21,636 per individual.

* The employee contribution was temporary lowered from 6.2% to 4.2% on January 1, 2011.

Government-sponsored speculation and the housing market crash
The housing bubble and the financial crisis
States Budgets Blow as Housing and Credit Markets Crash
Household Wealth in Freefall
The Housing Crash and the Retirement Prospects of Late Baby Boomers
Housing crash will leave millions of homeowners dependent on Social Security in retirement
Boomers, Housing and Retirement: A Symbiotic Relationship Unravels
Defined Contribution Plans May Skip 2009 Minimum Required Distributions
Rollover Rip-off: How the Government Steals Millions from the Unemployed
2009 Global Pension Assets Study
Top 1,000 funds' asset decline slows
The Decline of Defined Benefit Retirement Plans and Asset Flows
Financial Crisis Pulls Billions From Pension Plans, Crimping Consumers' Dreams and Corporate Profits
Will the markets crash as baby boomers retire?
As Baby Boomers Spend Their Savings, Will the Stock Market Decline?
Retirement Assets Drop - How Will Baby Boomers Ever Retire?
Pension Plans Decline in June 2010, No Relief in Sight
Significant Market Volatility Prompts Decline in Global Pension
Five years of pension gains wiped out in 2008

They're Coming After Your Retirement

The Coming Obama Retirement Trap Has Started!

At some time during the next decade, a global run on treasury debt and the dollar likely will take the American stock market down past lows not seen since the financial meltdown crisis in 2008 and 2009. The 50% to 75% stock market pullback during the actual bankruptcy of the Washington debt and paper dollar will send shock waves through retirees and current plan participants as their private retirement plan balances plummet. With asset values tumbling, Washington will have the perfect solution to solve your loss in portfolio values and the debt crisis — Washington will "come to the rescue" and guarantee all private retirement plan market values back to pre-crisis levels. In exchange, you would need to "voluntarily" move your retirement assets into your new Guaranteed Retirement Account managed by the U.S. government. The gullible American public will overwhelmingly support this effort by switching their dwindling funds into the Guaranteed Retirement Annuity. It can only ride into law on a first-class national crisis — and politicians are always able to find one when they need one.

By Ron Holland, LewRockwell.com
January 28, 2010

Mandatory IRAs just proposed by Obama Administration on January 25, 2010, is the first step in stealth nationalization and forced investment of our retirement benefits to support the treasury debt market!

Read the veiled report in Business Week.



A Personal Note from the Author

Dear Concerned American:

I begin with a quote from a politician who believed in an all-powerful central government and in using that power to achieve his vision for a nation.

"He who has his thumb on the purse has the power." ~ Otto von Bismarck, a statesman who created the modern Germany and known as the iron chancellor

But however well-intentioned he might have been, he built the regulatory groundwork and government institutions for a centralized federal state that was later taken over by an evil political leader who created a tyranny seldom seen in the world before, or after. The tyranny started in 1933, 35 years after Bismarck's death, was National Socialism and the leader was Adolf Hitler. All of this came after Germany's military defeat in World War One and a national debt crisis, followed by hyperinflation and currency collapse

I fear that today the control, nationalization and ultimate confiscation of trillions in private US retirement plan assets is on the horizon. Rick Santelli alluded to the possible nationalization and forced investment into treasuries on CNBC as recently as January 8, 2010. There was also similar coverage on Bloomberg and Business Week.

Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is "what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?" Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.

As the United States moves into a new decade of military overreach abroad and national bankruptcy at home, Washington is on a desperate search for more revenue and a solution to the future financing of the trillions in national debt obligations currently held by foreign central banks and investors. Economists, politicians and smart investors know the dollar's days as the world reserve currency are numbered, as is our ability to finance the national debt.

Although the historical government solution to unsustainable government debt loads has always been the destruction of the debts by currency depreciation and eventual hyperinflation, there is always an intermediate step used to buy more time for the politicians in power. This action, usually side-stepped and downplayed by the establishment historians paid to hide the real facts of history, is wealth confiscation.

Napoleon had it right when he stated, "History is a state of lies agreed upon."

The largest source of liquid private wealth remaining in the United States is the $15 trillion in private retirement funds. The ultimate ownership, control and future of these funds has already been compromised and exchanged for the favorable tax treatment of private retirement plans. Congress writes the laws, so they can tax, penalize, hold your funds hostage and, although they'd never use the word "confiscate," use your assets at their discretion.

The retirement trap I'm writing about is only a proposal at the present time, and since it may well begin in the latter years of the Obama Administration, assuming the Democrats can somehow maintain their majorities in Congress, I'm calling it the "Obama Retirement Trap." But make no mistake, the government need for current revenue and their frenzied search for liquidity to monetize their debt obligations is an unspoken quest of both political parties. The establishments of both political parties will do whatever it takes to stay in power, including the raiding and pillaging of your retirement funds.

I am not a Johnny-come-lately to the area of retirement planning. Although I've been in the investment business since the early 1970's, and often write about political and freedom-oriented issues, my background has always been in retirement planning. I've been following the government move to raid private retirement funds since the early 1980's with my The Threat of the Private Retirement System book written in 1983. I warned again about this in my 1994 book Escape the Pension Trap. The threat receded somewhat with the Bush Administration, but it is now back with a vengeance, and the revenue needs of Washington will eventually trump any government promises and guarantees.

I created the first self-directed hard asset IRA account for gold and collectibles back in the late 1970's, and I still remember the day when I was sitting in the office of James U. Blanchard III, a champion of liberty and sound money, in New Orleans. His National Committee to Legalize Gold spearheaded a nationwide grassroots campaign that restored the right of Americans to again own gold bullion following Roosevelt's gold confiscation during the 1930's Great Depression.

Congressman Ron Paul gave us a call to inform us that, at the last minute, language had been inserted into the 1981 Economic Recovery Act, Section 314(b) ruling "collectibles" as not in the "public interest" of the United States and, therefore, prohibited from future retirement plan investments. This language promoted by Wall Street and the banks destroyed the opportunity to buy retirement investments performing best during those years of high inflation. More importantly, this section created a precedent for the Secretary of the Treasury to label any investment as not in the public interest in the future – and therefore prohibited from retirement plans.

You will be forced into another Social Security-like scheme with the proposed mandatory Guaranteed Retirement Annuity (GRA), with 5% of your salary confiscated into the program. You will also eventually find your existing retirement funds forced into the government program, and you will lose your ability to invest and protect your retirement funds outside of the dollar, government bonds, and the US investment markets at some time in the future. The only questions are when and what the final details of this, the greatest potential wealth confiscation in the history of the world, will be.

My goal in writing this report is to make you aware of the threat with enough time to take some of my recommended actions to protect your retirement wealth, and thereby minimizing the Washington threat and their future confiscation efforts. Conventional retirement experts and most Wall Street investment advisors will say that I'm paranoid and crazy to advance such a theory because they want to retain the management, the fees, and the commissions from your retirement investments.

The risks and threats of standing up to Washington’s wealth confiscation and aggression are great. But we have to take a stand.

One of the greatest men in history I've studied was a relatively unknown career army colonel coming from a respected family who lived right across the river from the nation's capitol. Just before the start of a war, the head of the nation offered this officer the opportunity to take command of the entire national army if only he would lead an invasion and turn against his state and people. This officer declined the offer and all that went with it. The head of the nation was so outraged that he had the officer’s home and plantation occupied, confiscated and used as a burial ground for the war dead, never to be returned to his family or their descendents.

The president was Abraham Lincoln, the colonel was Robert E. Lee, and his home, called Arlington, is now known as Arlington National Cemetery right across the Potomac River from Washington, DC.

"Sirs, my name is the heritage of my parents. It is all I have, and it is not for sale. Do your duty in all things. You cannot do more, you should never wish to do less." ~ Robert E. Lee

I believe the best retirement planning advice I can offer to successful individuals is to do exactly the opposite of what the government and most retirement or investment professionals suggest. Washington always recommends what is in their best interest, as do most bankers and investment firms, the so-called financial experts who just received trillions in bailouts and guarantees with your tax dollars.

Can you appreciate the irony and hypocrisy of financial institutions like Merrill Lynch or Bank of America, just to mention a few, who have so little respect for the American public that they can still advertise to manage your investments or even handle your day-to-day banking needs when both went technically bankrupt? They pay themselves outlandish bonuses, yet they only survive in business at all because of the billions in bailouts and guarantees paid for by you, the American taxpayers, and forced on you through the lobbyists they used to buy the bailout votes in Congress.

I'm retired from the investment business. But I want to warn the American public about the growing threat to our retirement assets and benefits from a government gone wild, desperate for revenue, and looking for funds to buy their increasingly risky and ultimately worthless treasury obligations. You've been warned, I've done my duty as an American and an expert in the field. The rest is up to you.

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Key Elements of the Obama Retirement Trap

Stealth Nationalization

Following their attempt at "so-called" health care reform in 2009 and 2010 – the first step in total nationalization of health care – Washington will next turn its attention to another broken program, the private retirement system. Although both health care and the private retirement system need real reform, the government, as usual, will use the problems to expand federal control and redirect the contributions currently going into quasi-private programs back towards the bankrupt coffers of the federal government.

Your Retirement Plan Will Soon Become Washington's ATM Machine

Today over $15 trillion is sitting in tax-favored retirement plans, including $4 trillion in IRA accounts. Retirement savings make up 35% of all private assets. Washington is broke, the deficit is soaring, and Congress simply can’t wait for Americans to retire so they can start taxing these funds. The politicians are tired of waiting; they need your money now.

The Trojan Horse

The nationalization will begin with a modest proposal to increase retirement security and basically create a new, third level of mandatory retirement benefits in addition to private plans and Social Security. This will be described as a Guaranteed Retirement Annuity or Account. Teresa Ghilarducci is the author of this leftist plan which first appeared in 2007 at the Economic Policy Institute: Agenda for Shared Prosperity. In 2008, she became the new Director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research. In her book When I’m 64: The Plot Against Pensions and the Plan To Save Them, she hypes her retirement solution for millions who do not have adequate retirement savings. Her ultimate solution is to confiscate most of the retirement assets of successful and wealthy Americans.

Audio of House Education and Labor Committee Hearing, October 7, 2008,
Teresa Ghilarducci's words can be heard starting at 33 minutes and 23 seconds into the video of the hearing.

"I propose … that the Congress allow workers to swap out their 401k assets, perhaps at August levels, for a Guaranteed Retirement Account. Just a one-time swap, trading your 401(k) for a Guaranteed Retirement Account that will be composed of the equivalent of government bonds that pay a 3% real return." - Ghilarducci, October 7, 2008

In the proposal, the government will even make an annual contribution to every citizen’s account of around $600 annually, covering the unemployed, under-employed and all working Americans. The initial problem for productive, successful Americans is that Washington will require, in exchange for their contribution, that all working Americans contribute 5% of their annual salaries or income into this new "guaranteed account" managed and run by the hard-working bureaucrats at the Social Security System. Successful Americans will of course complain about losing the deduction for this contribution, which is little more than a new 5% tax on income. But this is just the beginning of the problem for Americans with substantial retirement savings and outstanding benefits.

The Devil Is In the Details

Different proposals would delay retirement age until age 64, and some even later. The Guaranteed Retirement Annuity would be structured to allow the government to hold and invest the money. Unlike your current private plan, it would be very difficult for members to withdraw their money before and even after retirement, except over the life expectancy of the participant.

I fear, following implementation of the contributory GRA program, a future legislative action by Congress would be to end the tax deductions and tax-deferred growth of all retirement plans, thus forcing these funds into the government controlled annuity. Your forced retirement contributions would be pooled and professionally managed by Social Security. Also, beneficiaries would be cheated out of half of any benefits remaining at the death of a participant because Ghilarducci’s plan has 50% of all balances at death reverting to the Feds, not the beneficiaries.

The Confiscation Event

At some time during the next decade, a global run on treasury debt and the dollar will also likely take the American stock market down past lows not seen since the financial meltdown crisis in 2008 and 2009.

The 50% to 75% stock market pullback during the actual bankruptcy of the Washington debt and paper dollar will send shock waves through retirees and current plan participants as their private retirement plan balances plummet. At this time, Washington will "come to the rescue" and guarantee all private retirement plan market values back to pre-crisis levels. The gullible American public will overwhelmingly support this effort by switching their dwindling funds into the Guaranteed Retirement Annuity managed by the government.

For the first few years, Washington will probably label those few of us who warn that Americans have lost their retirement benefits as extremists, Ron Paul paranoids, and Tea Party advocates. Then it will become crystal clear to all Americans that their retirement benefits have been given away for a promise by an evil group of plunderers who have never in their history kept a promise, a guarantee, or their word on anything.

The greatest theft of wealth in the history of the world will have taken place, and only those few who took heed of an early warning will still have their retirement benefits and security.

You Will Be Forced To Become The Final Buyer of Last Resort For Collapsing Washington Treasury Obligations

Although the faltering dollar could rebound in the short run, the longer-term prognosis is terminal unless Washington dramatically reduces spending and borrowing. When the global run on treasury debt and the dollar develops, the current relative minor fluctuations in values today will be replaced by a virulent death spiral of historic proportions rarely seen in world history.

Sometime in the next decade, the Washington dollar collapse will take its shameful place in history at the pinnacle of fiat currency robberies by politicians and central bankers. We will lead the world in wealth lost and future generations saddled by illegitimate government debts.

In the meantime, Americans should insulate themselves from the coming dollar and debt debacle by investing in gold bullion stored in the US, as well as outside, in secure facilities like the one offered by Global Gold Inc. in Switzerland, through mining shares, as well as through foreign currency diversification with the euro and Swiss franc. Don’t wait, take action now while you still have the opportunity to protect and preserve your wealth.

In the future, when the rest of the world’s investors, governments and central banks have lost enough purchasing power through their misguided investment in Washington treasury obligations, they will still have the luxury and financial freedom to diversify maturing treasury obligations and new funds into other non-dollar bonds, gold etc. But Americans will not have this choice. They will find that their retirement funds in the mandatory Guaranteed Retirement Annuity will be used to purchase much of the rollover of treasury debt not repurchased by the Federal Reserve System.

The taxpayers will be forced to become the buyer of last resort in the final collapse of Washington treasury obligations. This is sort like being forced to purchase stock in AIG weeks before the final stock crash.

You Are A Narrow Target of Opportunity: Not A Grand Conspiracy

This is just another revenue generator for Washington and a payback for the unions, just like the planned nationalization of health care. The target is successful, productive Americans who make good annual incomes or who have been frugal and built up substantial retirement benefits in qualified plans.

There Will Be No Public Outcry Like With Nationalized Health Care

Don't expect a broad public reaction to the stealth nationalization to protect your hard-earned benefits. Most unemployed, underemployed union workers in failing union plans, and eventually state and local government employees, will benefit from this attack on the retirement assets of productive, successful Americans working in the private sector. You are a minority, and the mob rule of democracy warned about by Thomas Jefferson is just doing what it has always done. But this time with you as the target.

"A democracy is nothing more than mob rule, where fifty-one percent of the people take away the rights of the other forty-nine." ~ Thomas Jefferson

Don't Cry For Us Argentina

Bankrupt governments have a recent history of confiscating and nationalizing private retirement programs. Back on October 21, 2008, Fernandez de Kirchner, the president of Argentina, announced plans to takeover $29 billion of private pension accounts, saying a state-run system would protect retirees from fluctuations in financial markets. Roque Fernandez, an economy minister and central bank president in the 1990’s, said the move is a "confiscation" of people's savings.

How the Government Benefits From the Guaranteed Retirement Annuity

Initially, the government will receive a dramatic increase in revenue as Americans will be required to contribute (without a deduction) 5% of their annual income (without a cap like Social Security) into the GRA. These contributions will be accounted for in some type of statement, but the actual funds will disappear into the Washington coffers just like your annual Social Security taxes.

Secondly, the eventual loss of contribution deductions and tax-deferred growth in competing private plans will kill them, and either a real or contrived financial crisis or tax rules will force most of these funds down the road into the government GRA accounts. Again, trillions of dollars will vanish into the black hole of Washington, Social Security and whatever vested private interests buy their way into management of the program. These trillions in vested retirement funds and benefits will be replaced with a Washington promise to pay you the benefits promised over your life expectancy so the actual costs to the government will be spread over many decades long after your funds have been hijacked for federal programs and government bond purchases.

The final and most important government benefit will be to use the trillions in nationalized private retirement funds first to pay the future annuity benefits. But secondarily, they will use the funds as a slush fund to invest in Washington treasury obligations as a final stop-gap measure as the rest of the world walks away from US government debt obligations and the dollar at some time in the future.

The Majority of Low Income & Union Members Will Benefit At Your Expense

For individuals, the proposal suggests that if your annual income is under $12,000 per year, or if you are unemployed or never worked, then this program will benefit you because the proposal calls for a $600 per year contribution to be made to the GRA account of most Americans. Other lower income people will benefit from more of their income being forced into the GRA if they have enough disposable income to pay for their day-to-day expenses. Otherwise, this program, like most Washington efforts, will take away from Americans in the middle and upper income levels.

The main groups that will benefit from the retirement plan nationalization, in addition to Washington benefiting from increased revenues, are first the inefficient, overpaid automobile unions and their workers primarily in the northern Midwest rust belt areas. This proposal is first and foremost a government revenue generator, but second a bailout of underfunded, mismanaged and corrupt union retirement plans.

Later, as local and state governments continue to flirt with bankruptcy, the GRA funds will likely be utilized to bail out state and local government plans. These underfunded programs will be merged into the GRA program with the benefits paid again by the confiscated funds from participants or with what the government will consider over-funded benefits.

There Is Always A Crisis Just When the Public Needs To Be Motivated

"Nothing just happens in politics. If something happens you can be sure it was planned that way." ~ President Franklin D. Roosevelt

Have you ever noticed how lucky democratic political leaders are when public opinion needs to change. From Fort Sumter at the beginning of the Civil War to the explosion of the battleship Maine starting the Spanish-American War. From the sinking of the Lusitania getting the US into World War One to the creation of the Federal Reserve in response to earlier financial panics. From the Gulf of Tonkin attack and the Vietnam War to the surprise of Pearl Harbor and the Second World War. Then, in today’s age, consider 9/11, Osama, and Afghanistan giving rise suddenly to the Patriot Act and an entirely new foreign policy.

Economic, political and foreign policy crises, actions and responses have the unique ability of molding public opinion almost always behind the government. We saw this in the demands for a bailout of Wall Street when the word "depression" was used in every government and political announcement until the bailout funds were secured, then the word "recovery" became the "word of the day." It will be the same when the global run on Washington treasury debt and the dollar happens. Asset values will tumble, and suddenly Washington will have the perfect solution to solve your loss in portfolio values and the debt crisis.

What Would Spark this Nationalization?

A plan this radical cannot just slip through Congress. It can only ride into law on a first-class national crisis. As we’ve mentioned, somehow the politicians are always able to find one when they need one.

Loss of Triple-A Status for U.S. Treasury Bonds

The loss of triple-A status for Treasury bonds is the most likely trigger. And according to Steven Hess, Moody’s lead analyst for the U.S., it’s not that far-fetched. He states,

"The AAA rating of the U.S. is not guaranteed. So if they don’t get the deficit down in the next 3 to 4 years to a sustainable level, then the rating will be in jeopardy."

Terrorist Attack or Military Disaster

A terrorist attack or a military disaster like the collapse of Pakistan or an Israel/Iran conflict and disruption of oil shipments could close American markets just as we saw in 2001. That would create a financial crisis overnight.

Another Economic Meltdown

After years of deficits, the greatest hazard to our economy is a run on the dollar and on Treasury securities by foreign investors. Although America’s foreign creditors don’t want to start a run on national debt – they prefer a slow, orderly retreat – no one intends to be the last to head for the exit. Political or economic pressures in Asia could force Japan or China to take immediate action, dump our debt, and knock the prices down to fire-sale levels.

What happens if China decides to cut its losses on U.S. Treasuries and issues a $100 billion sell order? That’s only 10% of their holdings, but it could set off panic selling of dollar-denominated bonds and crush the U.S. stock market like an egg shell. Mortgage rates would spike, which would suck the housing market into another air pocket. The President would probably sign an Executive Order closing the markets until order could be restored.

Any of those events would take place in an atmosphere of deep public worry and fear. That’s when Washington would come to your rescue and guarantee to restore your retirement funds back to a "pre-crash" level. How nice, right? However, in exchange you would need to "voluntarily" move your retirement assets into your new Guaranteed Retirement Account.

Implications for Those Who Say "No"

For those who don’t sign up for a GRA because they’re not fooled by the dangled carrot, there would be sticks to consider:

1. Additional withdrawal penalties and wealth taxes on their retirement plan.
2. Limitations on permissible investments – nothing that isn’t "in the public interest."
3. Mandatory minimum holdings for targeted investments, such as Treasury obligations.
4. An end to offshore investments that could protect your wealth and actually benefit investors during a time of hyperinflation.

Remember, these retirement proposals are just in the discussion stage, but progressives are promoting this confiscation agenda to the Obama Administration as a new source of revenue for a bankrupt federal government desperate for additional sources of revenue. When the next economic or stock market crisis hits, your retirement assets will be at risk from this type of confiscation effort regardless of whether the Democrats or Republicans are in control.

How To Protect Your Retirement Benefits & Security

"When plunder has become a way of life for a group of people living together in society, they create for themselves in the course of time a legal system that authorizes it, and a moral code that glorifies it." ~ Frédéric Bastiat

First of all, the final forced takeover of existing retirement plans will be Washington's response to a crisis; a crisis, I fear, welcomed by a majority of the American public. It will be legal, authorized and sold to the public by the media and experts. The reality of the action will slowly filter into the American consciousness over time, but those of you who protected your assets and actually financially benefit from the collapse of the dollar will not win any popularity contests. Remember: misery loves company. And you would do well to live with frugality and a low profile as there will be millions of angry, destitute Americans. The Washington politicians will blame everyone but themselves, including foreign nations, freedom loving Americans, and those not stupid enough to believe all the BS out of Washington and Wall Street.

"It is very easy to awaken resentment against people who not only have money, but also the boldness to send that money abroad...in order to protect it against all manner of domestic insecurity." ~ Wilhelm Röpke

Strategies To Protect Your Retirement Benefits

Retirement plan assets and IRA accounts have a substantial amount of protection from lawsuits, but they are sitting ducks for confiscation and Washington controls. Uncertain times call for certain measures. Note, if you have less than $200,000 in qualified plans, do not follow these termination strategies as you should be OK. Most of the attacks will be targeted toward individuals with higher retirement plan balances.

Still, you should consider the offshore diversification and global investment strategies to protect your personal and retirement benefits from the coming dollar collapse. This way, you will benefit from what may be the investment profit opportunity of a lifetime by being in investments which should appreciate when the dollar falls.

Below Are Some Retirement Plan Protection Strategies For Your Review:

Simply Be Aware of the Risks

Remember, the vast majority of Americans will never wake up to the government threat on their retirement benefits. This will work to your advantage as the politicians will work to generate the maximum amount of retirement funds and revenue in the shortest time and with the minimum amount of effort using the current bureaucracy. These following strategies will allow you to legally avoid and side-step future regulations that they will try in order to freeze your retirement plans, control your liquidity options, and force your investments into the mandatory GRA, government bond obligations and other preferred government investments.

The Swiss Annuity – An Excellent Foreign Investment Strategy For Liquidity & Security

Fixed and managed variable annuities are available. A Swiss annuity can be purchased and held by a self-directed IRA when you have the proper custodian. This is a simple and uncomplicated way to diversify your IRA into hard currencies like the euro, the Swiss franc, or even precious metals. Also, a Swiss annuity purchased through a retirement plan or IRA can usually be liquidated at any time by instructing the IRA custodian or trustee to mail the contract with liquidation instructions to the appropriate Swiss insurance company.

This type of investment liquidity outside US investment markets, investment management firms, banks and mutual funds should remain free of a stock market or bank closure during a future American financial crisis. We all remember how mutual funds, stocks, bonds and even American annuities were effectively frozen in the days following the 9/11 attacks near Wall Street. Therefore, a Swiss or other foreign annuity should retain its investment liquidity in a real or contrived American financial meltdown, terrorist attack or economic crisis.

Swiss annuities are an excellent investment alternative to diversify your IRA or corporate plan outside the dollar and US financial markets. If you have an IRA, you simply decide on the Swiss annuity contract provider and choose among several US self-directed IRA custodians which allow you to direct all or a portion of your IRA funds into a Swiss annuity contract. Then you transfer your existing IRA account and funds to the new custodian and direct them how to invest your funds. Note, do not request or accept the funds personally as this would be construed as a plan distribution, incurring the taxes and penalties associated with a distribution.

The self-directed IRA becomes both the owner (for your benefit) and beneficiary of the annuity contract while you are the person insured. If something should happen to you, the annuity contract will cash out and the funds will go directly to your IRA; the beneficiary payment will follow your instructions provided in the IRA beneficiary forms.

It is also important to remember that with a self-directed IRA, it is your responsibility to review and decide on your investment options, hence the name, "self-directed IRA." Therefore, you should review any proposed investment materials to make sure the IRA investment is appropriate for your personal, tax and family situation under current IRS regulations. You’ll also want to make sure that it meets the investment criteria for your world economic, dollar and political views of the future.

Swiss annuities and other legal IRA offshore investments are usually purchased by American investors concerned about the long-term downtrend in the dollar, future Federal Reserve and Washington actions that might further destroy their wealth, retirement security and future ability to diversify retirement funds internationally to escape a political or economic crisis.

Invest Your IRA & Retirement Plan Outside the Dollar At Home In the United States

Although I believe the seriousness of the threat to retirement plans makes it imperative to either move your retirement assets outside the dollar and the US markets, or consider taking a distribution, there is another alternative to consider in addition to plan termination and withdrawal for retirement investors with less than $200,000 in retirement plans.

Some American banks like EverBank offer foreign currency CD's, and there are advisors and some mutual fund options available for investors who are far more worried about a future dollar collapse than outright confiscation and government control of your retirement assets.

Build Real Retirement Security Offshore With A Private, Non-Qualified Retirement Program

Every dollar you continue to keep inside the United States in qualified retirement plans and, to a lesser extent, IRA accounts, is at risk of being held hostage to the coming mandatory GRA plan. Washington will attempt to force you to transfer into the GRA by the loss of tax deductions, tax-deferred accumulation and likely additional distribution penalties and investment controls.

If you have over $200,000 in retirement funds, you can expect future controls, wealth taxes, and probable excess distribution penalties in addition to current regulations. The best way to reduce the risks of the coming retirement threat is to take your funds out of these qualified plan programs which will soon be under revenue and political attack.

Another solution in addition to termination and taking a distribution, after paying taxes and penalties, is to transfer your distribution offshore, creating a personal non-qualified account offshore in the jurisdiction of your choice. Remember, a plan distribution, or simply adding a monthly investment to your offshore funds, is perfectly legal as long as you meet the reporting and tax requirements.

More and more, Americans want a government jurisdiction where the regulatory environment and legal system protects productive, successful individuals, rather than a system which views them as targets to be plundered and attacked for their personal success. Since this is the environment in the U.S. today, many freedom-loving Americans are following the old adage that if you can't change your government, then at least change the government jurisdiction where you keep most of your wealth.

Building your future retirement nest egg outside the U.S. certainly doesn't guarantee you investment profits or success, but it does vastly reduce the likelihood of future government investment controls, exchange controls, or the forced investment of your retirement funds into government sponsored or mandated investments. As long as the solicitation rules are followed along with reporting and tax requirements, you are free to invest in approved gold bullion (no collectibles), annuities, real estate, and equity and fixed income investments in non-dollar-denominated currencies like the euro and Swiss franc.

Consider Ending Contributions to Your Self-Trusteed Retirement Plans and IRA's

Don't place more of your private or corporate wealth at risk by making additional corporate or personal contributions to an IRA or qualified profit-sharing, defined-benefit, money-purchase or 401(k) plan. After all, when the GRA becomes mandatory, the proposal is for 5% of your salary to be forced into the government Guaranteed Retirement Annuity or Account. So why continue your existing plan?

For Participants In Qualified Retirement Plans

If you are only a participant in a qualified plan and you aren't a plan sponsor or in top management, reduce any required contributions to the minimum necessary to receive the maximum employer matching contributions. This advice is especially appropriate for employees covered under the popular 401(k) plans.

Stop All Voluntary Contributions To Existing Plans

For every type of qualified plan, immediately stop all voluntary contributions, both before and after tax. Here, voluntary contributions transfer private personal funds into qualified plan funds, which are usually subject to increased restrictions on contributions, investments and distributions. Keep your personal wealth out of qualified plans with their soon-to-be increased limitations, taxes and penalties. The current tax benefits, such as tax-deferred growth and sometimes a deduction for the contribution, will soon be lost. There is no compensation for investors in exchange for the ultimate loss of ownership and investment control.

For Qualified Plan Sponsors – Start Terminating Your Plan While You Still Can!

Washington does not want you to terminate your retirement plan now before the GRA is in place. They will need a real or contrived crisis combined with the extra distribution penalties and the loss of tax-deferred growth to make it necessary for most retirement plans and participants to transfer their funds into the proposed Guaranteed Retirement Annuity program. My advice is, depending on your business or personal circumstances, to terminate before the government makes this option prohibitive.

It is important to meet with your accountant or pension advisor and begin the process of requesting IRS approval for the termination of your plan and the distribution of the benefits to the plan participants. Many plan sponsors find it is very difficult to terminate primarily because the plan investment advisors and CPA’s or tax advisors make money from the ongoing continuation of the plan. They find going against the recommendation of these experts is far more difficult than dealing with the required government forms and regulations.

Check with the IRS on how long it takes in your IRS district to receive IRS approval for a plan termination. When more plan sponsors wake up to the pension threat, America will see an avalanche of plan terminations, causing long delays in the IRS processing of termination requests. This is when the politicians and regulators will move to "temporarily" freeze plan terminations. Then rest assured, the temporary freeze will become permanent; you and your retirement assets will be trapped.

If you wait until the rush of plan terminations is covered on the nightly news, CNBC or conventional establishment news websites, you will have waited too long. Your plan assets and benefits will become trapped and forced into the coming mandatory system. The only retirement benefits you'll receive will be the standard annual benefits they allow you to withdraw monthly without penalty or excessive tax rates.

Begin Now To Reduce Your Wealth In Retirement Plans To the Minimum Possible Level

In future years, as a plan sponsor or participant with a fund in excess of $200,000, your goal should always be to have the minimum funds possible in any type of government-approved qualified retirement plan or IRA, since every dollar is at a future risk of forced transfer into a future GRA-type mandatory retirement program. Although there is no way you or your employer can escape the coming mandatory program entirely if you have qualified retirement funds, it’s prudent to at least keep your exposure and risk to a minimum.

This is why I suggest terminating your plan and reducing or ending your contributions as an early step in protecting your retirement wealth and benefits. There is no way of knowing in advance the political timetable of this retirement trap; therefore, predicting the plan termination panic, and when the government will close the door on your retirement funds, is also impossible. Remember, a financial crisis from the future treasury debt and dollar crisis could be sparked by actions from foreign holders of treasury obligations ranging from China, to Japan, to the oil-producing countries.

If Terminating Your Plan – Do You Take the Distributions Now and Pay the Existing Taxes and Penalties?

If you are over 59½ – remember, I believe one of the first moves in the attack will be to delay the early retirement age to maybe age 64 – and your tax bracket is low, then meet with your tax advisor. Ask about whether you should pay the taxes and get your funds out from under the current and future confiscatory qualified retirement plan regulations.

For participants in their 30's to 50's with more than the $200,000-threat-level in qualified plan assets, I would also suggest that you "bite the bullet" – including the early distribution penalties – and take the funds out now, while you still have the opportunity. The costs of getting out from under the existing government plan system will only increase as time goes by. Penalties, controls and taxes will never be reduced, only increased, and Congress will make sure there is no way any productive, working American can escape the annual forced contribution as a percentage of your salary into the new GRA accounts. The GRA system will be just another black hole on your paycheck each month, just like Social Security. They get your money and you get a promise, which they will consistently change over time to their advantage and your detriment.

If Terminating Your Plan – Do You Defer Taxes and Transfer the Funds To An Offshore Self-Directed IRA?

If you expect your income to drop or you require a number of years to withdraw the funds, placing your qualified plan funds into a self-directed IRA can be an excellent decision for a number of reasons. First, the mandatory plan will not be passed for at least a couple of years, and it will be some time later with a new crisis that Washington moves to force all plans into the GRA.

When the passage of the GRA (or whatever they call it) legislation is imminent, that will be the time to immediately close out your IRA account and take the distribution, regardless of taxes and penalties. This may well be the "last train out" for your accumulated retirement benefits. But remember, with an IRA investment like a Swiss annuity, your funds will still be liquid even if a crisis closes the US markets and the banks and you can reinvest the proceeds after paying any taxes and penalties personally or take a distribution in kind to take the distribution, thus remaining in a hard currency like the Swiss franc or euro.

For Existing Large IRA Rollovers

If you are age 59½ and already in an IRA rollover with a substantial balance, then I would begin to withdraw the funds now, with a goal of having at least 50% of the funds out and privately held within the next five years. Remember to discuss all of this with your CPA or tax advisor.

If You Must Keep Your Qualified Retirement Plan, Make Sure You Are the Trustee

If you have only a small number of employees and must continue your qualified plan, either for tax reasons or employee morale, a self-trusteed plan is far superior to one with an outside trustee and custodian. Most importantly, a properly drafted plan will give you, the trustee, the right to be custodian of the plan assets. While this is not an important benefit for mutual fund or investment security accounts (as here, for convenience, an independent custodian should maintain custody of any liquid or trading investments) there is a significant benefit for having personal custody of other plan investments.

In a crisis situation, having stock certificates in certificate form might provide some additional liquidity if some investment firms and outside custodians become insolvent. Also, both domestic and foreign annuity certificates should be held by you as the trustee and custodian for security purposes.

Remember, in the event of a closure or "government mandated emergency" in the securities markets, on the NASD, and NYSE, all American equity mutual funds and variable annuity portfolios can be frozen for the duration of the crisis. This just might be the time you require liquidity and cash most of all. With foreign annuities, a Swiss annuity, or an offshore private annuity outside of American markets, these contracts can be mailed overnight to the respective insurance companies for liquidation or a distribution in kind. This is a taxable event but it can provide you a way to take a legal distribution out of retirement plans in a crisis situation when 99% of American investors are frozen inside a closed US investment market environment with assets waiting to be plucked by Washington.

Prevent Government Control of Your Retirement Investments or Forced Liquidation With A Swiss Annuity For Life Without Refund Option

Whether you have a self-directed IRA or a self-trusteed retirement plan, you can purchase a Swiss annuity policy for life, only with refund or surrender value. In the event of a future financial crisis, Washington might attempt to force your existing retirement funds into the new GRA or to invest a portion of your non-GRA retirement fund in certain government-preferred investments like treasury obligations. This life annuity without refund option cannot be changed, nor can the contract be liquidated. This is a unique situation where restricted investment liquidity might work in your favor. You should discuss this option with a Swiss annuity expert.

Consider A "Distribution In Kind" With an Offshore Annuity Retirement Investment For Ultimate Liquidity

If there is a world-wide crisis and all investment markets close temporarily, you may or may not be able to liquidate your domestic or foreign annuity. In either case, your foreign annuity contract would be far safer from government confiscation attacks than one purchased in the USA.

In this "worst case scenario," foreign annuities could still be withdrawn from qualified retirement plans and IRA accounts by the participant taking a "distribution in kind" of the contract. This is where the contract is re-registered in the name of the plan participant instead of the plan by written instructions, sending the contract back to the insurance company for re-registration of the ownership. Take note that in this case, the beneficiary would also change from the retirement plan to your preferred beneficiary. This is also a taxable event, and whatever distribution penalty and taxes due on the withdrawal would be due at that time.

A "distribution in kind" has been utilized for many years in American plans where the participant prefers the distribution of the actual investment, rather than a distribution by check. For example, American IRA investors might prefer to withdraw their Amazon.com stock in shares rather than liquidating the stock. This is a "distribution in kind."

Delay Could Be Fatal

The bottom line on all the strategies I’ve discussed above is they must be started and in place before the next major economic crisis and threat to your retirement assets occurs. If you, at the very minimum, do not have your offshore retirement program created and partially funded before the crisis and nationalization takes place, none of your remaining wealth in the United States may likely be expatriated outside the U.S.

In a crisis, the government will be forced to control the flow of funds offshore by private individuals, and this prohibition will be total, except for politically-favored individuals and large multi-national businesses which will be exempted from the financial iron curtain descending around our borders. Exchange controls – a prohibition on wiring funds offshore, checks, the movement and ownership of cash and precious metals – will be curtailed. Presidential Executive Orders will destroy the last vestiges of civil liberties; and the Constitution and Bill of Rights, formerly hanging by a thread, will be curtailed for the duration of the crisis. The door will slam shut!

"If you do not say a thing in an irritating way, you may as well not say it at all, because people will not trouble themselves about anything that does not trouble them." ~ George Bernard Shaw

Ron Holland, a retirement consultant, works in Zurich and is a co-editor of the Swiss Mountain Vision Newsletter.

Instituting capital controls seems like the next big event in the government-banking-oligarchy’s great looting of America...One of the first tactics used by the banksters to control your money was to get the SEC to adopt a proposal to allow money market funds to suspend withdrawals during a financial crisis to prevent bank runs...This under-reported piece of legislation is supposed to create jobs through limiting the capital allowed to leave America, and through weak tax incentives for companies to hire people at home... Economist Mark Nestman reported that the law does not put in place strong “capital controls” yet, but definitely lays the groundwork for them: "It’s a terrible law that will make it much more difficult for U.S. citizens to invest, do business, or even live outside the United States"... These rules become effective in 2013... It will remain legal to move money to a foreign country, but you will now have to prove that you paid taxes to Uncle Sam on those funds prior to investing them. So, American citizens are guilty of tax evasion until proven innocent. Therefore, like other corrupt tax laws, you’ll pay massive tax penalties for noncompliance to scare you into submission. What’s more, private foreign banks are being forced to cooperate, as the U.S. government gave themselves the power to close foreign bank accounts for noncompliance. - Activist Post, Capital Controls: The Final Phase in the Great Looting of America, August 13, 2010

Six Ways to Expatriate (and Protect) Your Assets

SEAL 401K Savings Accounts Legislation and the Fear That the Bottom Will Fall Out If Interest Rates Rise

Bob Chapman
May 22, 2011

The amount of money and people withdrawing from 401K’s has been staggering, and Wall Street and government do not like it one bit.

There are those who have been fired, run out of benefits, and have to cash in part or all of their retirement. The villainous ones are those still employed, who have taken up to three loans, many of whom have bought gold and silver with the proceeds.

That said, Senator Herb Kohl, Senator Mike Enzi have introduced legislation to limit citizens to tapping into their 401K’s, called “SEAL 401K Savings Accounts.” The bill would reduce and limit the number of loans workers may take from 401K’s and give participants more time to pay back loans after losing their jobs. In addition, employers would have the option to reduce the number of loans for their plans.

At the end of 2010, 28% of participants had loans outstanding, a record. The average loan balance was $7,860, and 58% of plans permit participants to have two or more loans at a time. If participants are fired or lose their jobs, 70% default on their loans.

Workers generally may borrow as much as 50% of their vested account balance up to $50,000. The loan must be repaid in five years, unless the money was used to purchase a primary residence. The average interest rate is 1% over prime.

We find it of more than passing interest that Mr. Kohl is not running for reelection next year.

If you are going to borrow from your 401K’s, do it now, ahead of this legislation that could interfere with the purchase of gold and silver shares, coins and bullion. This is the main reason for this legislation, to stop you from protecting your assets. Of course, such loans involve selling holdings in the 401K’s, and that puts downward pressure on stock and bond markets, or takes incoming funds destined for those markets away from those markets.

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.”

Read the entire article: 2010 - Obama Administration Plans to Seize 401(k) Retirement Accounts

[Here is your proof, as we have been telling you over and over again, get out of your 401Ks and IRAs before you have nothing more than a promise to pay from a bankrupt government.]

...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.