Catherine Austin Fitts On The Dangers Of A 401(k) In This Economic Climate

Catherine Austin Fitts On The Dangers Of A 401(k) In This Economic Climate

Catherine Austin Fitts on Financial Survival Radio (1.16.2011) on why her money is NOT in a 401(k) and how the federal government is salivating over yours. I have written extensively about the government seizing your 401(k), (and the leftist think tank behind it), and using the last $8 trillion in American’s wealth to keep the ponzi scheme going. Check the related links at the bottom of the post.

Solari Report; Proposals For Annuitization:

By David Liechty

October 13, 2010
Download a PDF version of this article

Introduction

Over the past few years, various proposals for annuitization of 401(k) and IRA accounts upon retirement and automatic enrollment in 401(k) programs have been made. On September 14-15, 2010, the Departments of Labor and the Treasury held a joint hearing on Lifetime Income Options for Participants and Beneficiaries in Retirement Plans. The hearings focused specifically on annuitization of retirement funds and the feasibility for introducing these annuities into 401(k) and IRA plans.

Switch to Annuities/Lifetime Income

The possibility of 401(k) annuitization appears to have caught the public eye primarily in response to the November 04, 2008 testimony of Teresa Ghilarducci before House Democrats and a November 20, 2007 paper she 401(k)wrote entitled “Guaranteed Retirement Accounts: Toward Retirement Income Security,” published by the Economic Policy Institute’s Agenda for Shared Prosperity. A report in the Carolina Journal Online characterized her testimony and the hearings as “proposals to confiscate workers’ personal retirement accounts—including 401(k)s and IRAs— and convert them to accounts managed by the Social Security Administration.” While somewhat polemic in its language, and perhaps not entirely accurate, the Carolina Journal did cover the most salient points of this proposal. Ghilarducci advocates creation of Guaranteed Retirement Accounts (GRAs), which would be mandatory, and which would be funded through payroll deductions in the same way Social Security currently is. These funds would be matched and placed into a pooled account which the Federal Government would invest and manage, guaranteeing a 3% rate of return. Upon retirement, these funds would be annuitized, and that portion of the funds contributed by the individual, minus any benefits received, could be passed on to heirs. Ghilarducci further advocates shifting current employer tax incentives from 401(k)s to these GRAs, and to the extent that tax privileges are, indeed, shifted, there would almost certainly be a shift of funds held in 401(k)s to the GRAs, though there would technically be no “confiscation” of 401(k) assets.

As interesting as Ghilarducci’s proposal is, it pales in comparison to the influence and reach of the writings and proposals of individuals associated with the Heritage Foundation and the Brookings Institution’s Hamilton and Retirement Security Projects.

In April of 2006, the Brookings Institution’s Hamilton Project published “Improving Opportunities and Incentives for Saving by Middle- and Low-Income Households“, in which it advocated mandatory and automatic enrollment in retirement plans for employees of all businesses (“with possible exceptions for the smallest”), universal matching by the Federal Government for all contributions, and “other changes to the retirement system to promote lifetime annuities.” In particular, the paper “recommend[s] that the government set as a default that the matching contributions in each person’s account be annuitized,” which “would set the precedent … that annuities are a sensible use of retirement resources.” These annuities would ideally be provided by the Federal government and processed by the Social Security Administration.

Chief among the individuals associated with the Brookings Institution and its retirement policy proposals is J. Mark Iwry, who is currently serving as Obama’s deputy assistant Treasury J. Mark Iwrysecretary for retirement and health policy. Iwry co-sponsored the September 14-15 Joint Hearing on Lifetime Income Options, and the writings with which he is associated suggest the ultimate agenda of the hearings.

In June of 2008, Iwry co-authored, and the Hamilton Project published, “Increasing Annuitization of 401(k) Plans with Automatic Trial Income“, in which Iwry and his colleagues advocated that “a substantial portion of assets in 401(k) … plans be automatically directed (defaulted) into a two-year trial income product[, i.e., an annuity,] … unless [retirees] affirmatively choose not to participate.” The reasoning for these automatic trial annuities is not clear, and seems simply to be that retirees might run out of money if they manage their own savings themselves.

In July of 2009, the Retirement Security Project of the Brookings Institute published “Automatic Annuitization: New Behavioral Strategies for Expanding Lifetime Income“, in which Iwry and his colleagues continued their proposal for automatic, mandatory trial annuities, and added a proposal for automatic enrollment, mid-career, in a separate annuity fund within existing 401(k) accounts, to which the employer’s matching contribution would be directed.

The push for automatic annuities appears mainly to be rationalized through the demise of the historic private pension plan system in which companies provided fixed income benefits to their employees upon retirement. As 401(k) programs were introduced, businesses opted for these less-burdensome and tax-incentivized plans, abandoning the traditional pension plans. The need for fixed-income payments is also briefly rationalized in an articulated concern over the future of Social Security benefits, something which does not really lend support to yet another Federal government-sponsored annuity plan. Finally, the arguments for automatic annuitization are generally based on the uncertain financial landscape and a general need for guaranteed income on the part of retirees. As important as these factors are to consider, however, the necessary logical conclusion that all retirement accounts must be turned into annuities simply does not follow.

The actual testimony at the Joint Hearings on September 14-15 was varied on the subject of mandatory annuitization. The Vanguard Center for Retirement Research indicated that annuities are not a popular investment choice for retirees, especially given the annuity-like Social Security and Medicare programs already provided, and most individuals want to have the flexibility and liquidity of a lump-sum payment managed under their own direction, rather than a fixed-income annuity. However, several large entities, including TIAA-CREF came out in favor of at least partial retirement annuities, and in support of proposed Federal regulation requiring annuity information on retirement documents.

Making 401(k)s Mandatory

A second aspect of current 401(k) and IRA proposals at issue is the possibility that all business entities will be required to provide 401(k) plans and that all employees will be required to enroll in these plans.

Hit the title link to read the rest.

AYFKM?: Ready To Have Your 401(k) Seized To Bailout Union Pensions?

AYFKM?: Ready To Have Your 401(k) Seized To Bailout Union Pensions?

(UPDATE: 10.14.2010, Law firms based in the District of Criminals are coming out of the woodwork and reading this post. Everybody wave!!)


Fascism is alive and well in the District of Criminals.  Fascism is the only way to describe a federal government so full of themselves that they believe seizing Americans’ 401(k)s is perfectly acceptable; nevermind the immorality or un-Constitutionality of the move.  They really do believe that it is their money and they just let us use it.

I found the link to this story on Market-Ticker and one needs to give credit to a master when it is due (which is just about every day with this guy. I am so freakin’ glad Karl is on the internet!)

Karl’s quote about this story:

If there’s a pitchfork moment in this country it had better show up fairly soon, because if this report is accurate you can bet that these clowns are going to find a way to attach this in some obscure section of a 2,000+ page “must pass” bill – another one of those “you have to pass it so you can read it” deals.

I know we are all just waiting and holding our breath for 11.2.2010 in hopes that flipping this congress will actually make some sort of difference in the slow, agonizing, ‘managed decline‘ of the United States under the progressives who by all appearances are throwing everything including the kitchen sink at the economy in an effort to collapse it.  This is the part, IMO, that the GOP hasn’t gotten the memo on yet (if their pledge is anything to go by); pitchforks before or after the economy completely tanks.

Here’s the story about Congress seizing 401(k)s, Human Events, 10.8.2010:

New Lame Duck Threat to Bailout Union Pensions

Democrats in the Senate on Thursday held a recess hearing covering a taxpayer bailout of union pensions and a plan to seize private 401(k) plans to more “fairly” distribute taxpayer-funded pensions to everyone.

Sen. Tom Harkin (D-Iowa), Chairman of the Health, Education, Labor and Pensions (HELP) Committee heard from hand-picked witnesses advocating the infamous “Guaranteed Retirement Account” (GRA) authored by Theresa Guilarducci.

(You can find the blistering interview with Guilarducci by radio talk show host Mark Levin in 2007 at the link).

In a nutshell, under the GRA system government would seize private 401(k) accounts, setting up an additional 5% mandatory payroll tax to dole out a “fair” pension to everyone using that confiscated money coupled with the mandated contributions.  This would, of course, be a sister government ponzi scheme working in tandem with Social Security, the primary purpose being to give big government politicians additional taxpayer funds to raid to pay for their out-of-control spending.

From written hearing testimony submitted by Economic Policy Institute (EPI) Vice President Ross Eisenbrey:

“We need a comprehensive solution that addresses interrelated problems. For example, a system that places most of the burden for retirement saving on individuals will always have to wrestle with the problem of pre-retirement loans and withdrawals (simply plugging these leaks will not work, because many workers would stop contributing to the system). A system that relies on tax incentives to promote individual retirement savings will necessarily tend to favor high-income workers who can afford to save more and who benefit the most from these tax breaks. Conversely, a truly universal system would need to shield low-income workers from out-of-pocket costs or wage cuts. EPI has published and advocated what we feel would be an excellent national supplemental retirement plan, the Guaranteed Retirement Account which was authored by Prof. Teresa Ghilarducci, Director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research. “

The EPI is housed on the third floor of the building occupied by the George Soros-funded Center for American Progress, a hard-core leftist group whose flavor of socialist policy has brought you the current blend of elitist socialism and crony capitalism bankrupting the American economy.  Which speaks volumes about EPI and the Democrat leadership’s choice of witness.

Brett McMahon, spokesman for the Associated Builders and Contractors (ABC), a trade association, warns this hearing exposed part of a process that may come as early as the November lame duck push to bailout union pensions by attaching the bailout to an across-the-board extension of the current tax rates.

“I am deeply concerned that they will try to attach something like the Casey bill or the Casey bill in and of itself to tax cut extensions bill that is inevitably going to have to be dealt with at some point during the lame duck session,” McMahon told HUMAN EVENTS.

As reported in HUMAN EVENTS the Casey bill from Sen. Bob Casey (D-Penn.) is a new entitlement program that would set up a permanent bailout of the union multi-employer pension plans that are desperately underwater through a new “fifth fund” at the government Pension Benefit Guaranty Corporation (PBGC).  Casey’s bill would create a line item on the federal budget through the PBGC to fund these union pension bailouts annually — union pensions that are underwater as a result of mismanagement that pre-dates the 2008 financial upheaval.

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