Posted on 12/17/2015 1:48:41 PM PST by QT3.14
Tony James and Teresa Ghilarducci are unlikely allies. He is president of Blackstone, the giant private equity firm; she’s a labor economist who has long advocated replacing 401(k)’s with a universal, federally managed saving plan.But the two have teamed up to push what they are calling Guaranteed Retirement Accounts, a government-sponsored plan that would require participation and contributions from any employer without its own 401(k). They both view the 401(k) defined contribution retirement system as a faulty experiment that covers too few workers, generates inadequate savings and replaces too little income in retirement.
(Excerpt) Read more at nytimes.com ...
Several problems with current system illustrated by a true story. A guy requested his 401k all be put in a no-load mutual fund in Jul ‘85. By Jun ‘87 the 401k had many thousands. But in Jun ‘87 he was let go and told he had to take all his money out. So he requested it be rolled over to an IRA in the same mutual fund. Many others were terminated at the same time and also requested a roll over.
The benefits manager said they could only do it at the end of each quarter and it was too late to do it this June. Only when it finally was rolled over did he discover that a benefits manager in ‘85 thought it was a bear market. So he held all the money in cash. Finally in Aug ‘87 the benefits manager was converted and now believed it was a true bull market. So he took all the cash of hundreds of people and put it in the market at the peak. Then, when the market crashed in the fall, he executed the roll overs. People lost thousands. The money now in the IRA never, ever reached the amount that had been put in, even though the mutual fund closely tracked the averages.
Story #2 Employees attended a meeting where 3 men pitched them on putting their money in a 401k. Every single opportunity had a fee/load. The lowest fee was 1.2% for a money market. An all stock fee was over 5%.
So we asked the 3 men if there were additional fees. They tried to dance around the language, saying “the funds” didn’t charge any additional fees. So the issue was pushed. Do each of you get your money from the fund, or how? Each finally admitted that each took out 0.5% before the money ever went to the fund that was above and beyond the fees of the fund. They had the gall to say “You know what they say: If it’s less than 1% then it is good”
A large minority of people have lost money big in 401k precisely because the law requires benefit managers and other middlemen who game the system for themselves.
A savings plan is only good if it works the same as direct deposit. The employer transfers a specific amount to the savings account with no sales fees, no overhead.
Each “investor” is personally responsible for his own money and not required by law to use a broker, advisor or benefits manager.
Inevtiabley it will come to....Socialist Stupidty is completely bankrupt and we are going to convert your mandatory retirement account/401K to a government run (and race/means tested) payment of substantially reduced value because too many minorities have zero saved.
The reality is that this is a “get whitey” scheme to finish off what’s left of the middle class.
You mean another one? I thought that's what Social Security was supposed to be. Any new fund will be just another trove to plunder.
No thanks, just let me keep my own money and I'll decide what to do with it.
An apt description.
These 3 jerk offs make the 3 Stooges look like Einstein.
> Fedzilla will rob it of every penny,
Nah, only those “rich” people with more that $500K in the account.
Ultimately, this will be no different than a bail-in, aka legalized theft.
I don’t think the central banksters care as to whether people will scramble to get money out of the stock market. The central banks are expanding balance sheets, minimizing debt and flooding the market with no interest money to keep stock prices up via buy backs, and buying treasuries, netting profit.
Don’t worry about this folks.
Good conservative Republicans like Paul Ryan and Mitch McConnell will step up and stop this scheme in its tracks. / bitter sarcasm
This would make it easier for the government to steal everyone’s retirement money — and you know that’s exactly what they’d do.
I agree - the 401k was supposed to be the “free market” pension alternative. Workers were coerced into giving up company pensions by promises of matching contributions and unlimited growth - a noble goal, and fine in theory; only to see those contribution matches get limited, first temporarily (”just until things pick back up...”), then eliminated altogether. Now the 401k is simply another chance for many companies to develop B2B partnerships with their corporate banking friends, while screwing their employees with what amount to volatile, heavily expensed (if pre-tax) savings accounts.
Some employers are starting to offer what I feel is a nifty alternative - you put in what you want, and they fund a guaranteed interest rate (7.5% as an example i know of) on the balance. Their costs are manageable, and employees get a solid, Wall Street level of return without the risk or the sneaky fees.
Open up the Government employees Thrift Savings Plan to the public.
Ghildarducci is a Marxist economist and crazy. End of story.
Oh, she’s also a college professor, which explains a lot about why our economy is in the Marxist toilet.
Story #2 is a simple case of an employer who doesn't have the employees' best interests in mind, and signs up with a predatory investment manager who is out to screw the 401(k) participants. Fortunately (or not), workers have powerful legal avenues that they can pursue to recover exorbitant fees that were charged through their 401(k) plans. A U.S. Supreme Court decision earlier this year established the fact that employers have a fiduciary duty to their own employees when it comes to managing their 401(k) plans properly.
Employees Winning 401(k) Lawsuits Over High Fees and Other Shortcomings
Hey cutiepie,
I read the article and the thread. Was hoping someone would have added more links to others stories on this topic. Do you have any more links to credible sites that discuss the stealing of 401k’s? Thanks.
You bought it. Social Security is insolvent?..
Please explain to me why welfare and food stamps are never insolvent.
You bought it, you feed it. Just more leftist bullshit.
“Investments would be managed in a pool, with a guaranteed 2 percent annual return”
A guaranteed lousy investment - by design - mandated for all.
The amount of Insider Trading (by the LEGAL definition) that occurs in Congress is shocking. Most of them are guilty as hell, and should be in Federal prison. I am not making this up as some wack job. There are legal analysts who will soberly tell you that members of Congress are engaged in massive Insider Trading. 
Repulicans and Democrats.
Social Security Version 2.0. Yeah, that’s what America needs...
Someone has read "The Plan."
Treasury Secretary Lew has already "borrowed" from it three times.
Yet, people keep pouring a significant portion of their salaries into it. TSP is already insolvent - the chess game has just not been revealed yet. And 401Ks, IRAs, and stock investments (which Baby Boomers have 90% of their retirement assets) are a glass house - ready to be broken.
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