The Labor and Treasury Departments have announced hearings that are the next step in their attempt to control and probably divert individual retirement savings. These hearings are next week.
There is nothing new here particularly. The wondrous workings of bureaucracy require many obtuse steps working toward making recommendations to the legislature. The hearings are that next step. At this point the apparent goal is still just requiring employers of offer a lifetime income option as part of a 401(k) plan. A lifetime income option that is not a pension is called an annuity. (Most non-government pensions are effected by the employer buying an annuity for the pensioner.) The step to government seizing or controlling retirement savings is contained in the justification for beginning this process: retirees are not adequately managing their retirement assets to provide for their entire lives. (I won’t go into the entire discussion on this point. For that discussion see my original post and this for background .)
The only comments of the government’s interest in this issue that I have seen is in the far right blogs and in a couple liberal think tanks. The right has immediately jumped to the conclusion that the government intends to grab the assets, which isn’t irrational. They also propose that this is BO’s idea, which I tended to endorse in my earlier posts. I wonder. I think that the Labor Department is quite capable of thinking this one up on its own.
The blogs ranting about this issue have included IRA’s as threatened by the Labor Department’s intensions. At this time IRA’s have not been mentioned.
The interesting question now is will this process continue if the Dems lose control of the legislature this November. I bet that it will. I think that the process has just as good a chance of succeeding with the Republicans. They are just as paternalistic as the Dems, just as eager to show concern for people’s retirement. After all, Social Security reform was a Republican “achievement”.
The initial legislative step would be to pass a law requiring employers with standard 401(k) plans to offer a lifetime income option. At that point the lifetime income option would probably be an annuity provided by an insurance company. The bad thing about this law would be the added expense and waste of time needed to meet the requirements, plus the fact that the new option would add another bad element for the participant from which to choose.
Soon, the Labor Dept. would discover that few people were choosing to put their money in the annuities, and that, in the opinion of the Labor Dept. the population was still failing to adequately manage their retirement funds. It would also be determined that the insurance company annuities were too expensive (dirty capitalist, profit mongering, insurance companies). Something more would need to be done. Then they would start the hearing, etc. process over again to come up with the need for the government to offer the annuity and that at least a certain percentage of retirement fund contributions be placed in that annuity.
There we are, a large new source of government financing.
(I edited the title because people were getting the wrong idea. The Treasury & Labor Depts will want to control where you can put the money and fund the U.S. debt, but there is no evidence that their intent is to steal those assets.)
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