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  #51  
Old 08-01-2017, 04:36 PM
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http://www.governing.com/topics/mgmt...t-private.html

Quote:
Legal or Not, States Forge Ahead With 401(k)-for-Everyone Plans
Congress jeopardized the future of state plans to help private employees save for retirement. States don't seem to care.

BY LIZ FARMER | AUGUST 2017

......
This July, Oregon became the first to offer a retirement plan to full- and part-time private-sector workers who don’t have access to one through their employer. Eight other states -- California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Vermont and Washington -- are implementing similar plans that should reach full rollout within the next five years. In general, the programs will run independently from the state and will be paid for through retirement account fees. When the nine state plans are up and running, they will serve roughly one-quarter of private-sector workers across the country. In California alone, the plans will cover nearly 7 million people.

This effort to close what many feel is a retirement security gap among working Americans has been batted around for more than a decade, first at the federal level and then by states. During President Barack Obama’s first term, he proposed a national retirement savings program that would automatically enroll workers with an option to opt out. The effort stalled in Congress, so in 2015 the administration launched its myRA program, a voluntary retirement program for workers who could afford only small monthly contributions. By then, states were pushing hard to offer their own retirement plans. California in 2012 and Connecticut in 2014 set up feasibility studies for a state-run retirement plan for private workers. Illinois in 2015 became the first state to pass legislation approving such a program. And last year, California and Connecticut released the findings from their studies, which helped spur adoption of retirement programs in those states and in a handful of others.

But just as the momentum seemed to be building for the programs, Congress delivered a blow to the concept. Earlier this year, it reversed an Obama administration rule that exempted state-run individual retirement account (IRA) plans from some aspects of the Employee Retirement Income Security Act (ERISA), thus calling into question states’ legal authority to sponsor private-sector retirement programs. The move, which was a surprise to many, was spurred by financial groups that opposed these programs. But that isn’t stopping the nine states from moving forward with their plans -- and several more may join them. This determination to push on suggests that states are willing to solve the national retirement crisis without federal help and despite federal roadblocks.

There’s certainly good reason to see the retirement crisis as a state problem: Research shows that it is states that will be footing the bill for Americans who aren’t financially prepared to enter their golden years. “Nothing has happened at the federal level,” says Rocky Joyner, vice president and actuary at the financial firm Segal Consulting. “State officials are saying, ‘These people are retiring in my community, in my state.’”

That reality is one reason why Segal Consulting conducted an analysis looking at what would happen if all full-time workers gained access to retirement plans. The findings, released earlier this year, show that states could save big on future Medicaid costs: a collective $5 billion in the first decade. These savings would be a result of potentially vulnerable households being removed from the poverty rolls by the time they retire. More specifically, the Segal study found that in the first 10 years after a retirement savings plan is introduced, 15 states would save more than $100 million each in Medicaid payments; California and New York alone would combine to save more than $1.1 billion.

The study has validated what experts have long warned -- that states will ultimately pay for poor retirees. That notion has helped fuel bipartisan support in an era of constrained finances. “This is an approach where we can save taxpayer dollars,” says Sarah Gill, senior legislative representative for AARP. “This is not a red or blue state issue.” In fact, the idea of having a government-sponsored, automatic-enrollment IRA plan actually came from a 2006 paper co-authored by researchers from the moderate-left Brookings Institution and the conservative-leaning Heritage Foundation.

But while Republican-dominated states such as Arkansas and Utah are looking at establishing retirement savings programs, the issue has gained the most traction in states with Democratic leadership. That difference likely has to do with the policy’s two biggest opponents: businesses and the insurance and financial industry -- traditionally conservative groups that feel the programs are either too burdensome or in some other way meddle with the private sector.

The ERISA Industry Committee, which lobbies on behalf of large employers that generally already sponsor retirement savings programs, has pushed back against any policy that they believe might be burdensome for their members. For example, Oregon is one of six states that requires employers to participate in the state program if they don’t already offer their own retirement plan. In that state, the committee successfully lobbied to simplify what businesses providing a savings plan have to do to be exempt from participating in OregonSaves. Meanwhile, the insurance and financial industry has protested the programs on the grounds that they are government overreach and aren’t necessary. “Anyone can walk into any of our offices today and come out a couple hours later with a retirement plan that fits their individual needs,” says Gary Sanders, a lobbyist for the National Association of Insurance and Financial Advisors.

When asked why people don’t already do so, Sanders says the disconnect is due to a lack of financial education and desire to save. He points to the relatively low enrollment (about 20,000) in Obama’s myRA since launching in late 2015. Sanders also says the mandate for employers to participate in state plans and facilitate the payroll deduction is a burden. And he disputes the idea that state-sponsored retirement programs would create more business for his members. Even when states choose a private-sector company to run the programs, Sanders says, “you have [businesses that are] winners and losers.”

Advocates for state-run programs have scoffed at such claims. The myRA program, they say, puts the onus on savers to seek it out and sign up. State programs, on the other hand, auto-enroll employees -- a feature that research has shown makes people 15 times more likely to save for retirement. Besides, advocates argue, research by the Pew Charitable Trusts has found that small-business owners view sponsoring their own retirement savings program as overwhelming and expensive. “The retirement industry just didn’t want competition,” says Illinois Treasurer Michael Frerichs.

This past January the opposition to state-run retirement plans found a sympathetic ear in Congress. House Republicans moved to block states’ and localities’ efforts to establish these plans by passing a resolution overturning a Department of Labor rule last year that reaffirmed governments’ legal right to sponsor private-sector savings programs for small businesses. Referred to as the “safe harbor” rule, it specifically exempted state and potential city savings plans from ERISA, which governs private retirement plans and requires certain legal and financial protections for plan enrollees. The measure easily passed in the House, and after more than a month of stalling, the Senate narrowly approved the resolution despite a bipartisan outcry from state and local officials and AARP.

The effort played upon one of the central weaknesses of a state-sponsored retirement plan: While the vast majority of small-business owners support the idea of offering auto-IRAs to their employees, most oppose the plans being sponsored and administered by the state or the federal government, according to a survey conducted by Pew. Seemingly, the negative news regarding many governments’ growing public pension liabilities has cast a cloud over states getting involved in any kind of new retirement plan -- even one where the state has no liability. Oregon Treasurer Tobias Read says he still has to dispel the myth that OregonSaves is a pension plan.

But many feel this perception problem can be fixed. At a retirement conference in Washington, D.C., this winter, John Scott, who directs the retirement savings project at Pew, noted the survey also found that small employers are more comfortable with mutual fund and insurance companies taking the helm as an auto-IRA sponsor. He said that respondents likely thought that government sponsorship meant that taxpayers would be liable for the plans. “If we had explained that sponsorship means partnering with a financial services company,” he said, “we most likely would have seen a higher level of support.”

Despite congressional action this year, all states that had already approved a retirement savings program are moving ahead to implement it. There is widespread sense that this is the most beneficial road to take -- for the state as well as low-income workers. “There are dire consequences to individuals -- to communities -- when you have people who don’t have a secure life and long-term stability,” says California State Treasurer John Chiang.

The plans -- often called Secure Choice -- mainly follow one of two structures. In New Jersey and Washington, for example, the plans are offered through a marketplace. Businesses’ participation is voluntary, but if they opt in they can decide to work with private entities to create their own plan or they can choose a plan through the state to auto-enroll their workers. This approach has met the least amount of resistance from the National Association of Insurance and Financial Advisors, as it allows financial service companies to compete against each other for clients.

The more common course employed by states, however, is a program where a service provider is selected by the state to run and administer the retirement program. Workers are auto-enrolled into an IRA retirement plan in places where the employer doesn’t offer one. Each plan that follows this structure still has its own unique components. Maryland, for example, is waiving the annual business license fee for businesses that already offer a retirement plan and for businesses that eventually will through the state.

Vermont’s plan is a multiple employer plan, and it is voluntary for employers. Those who opt in will auto-enroll employees into the Green Mountain Secure Retirement Plan. It is ERISA-compliant, and so is largely unaffected by the congressional action. Massachusetts passed a similar plan in 2012 for nonprofits. So far, however, the state has been unsuccessful at passing an auto-IRA plan for all workplaces.

In every case, the programs are phased in. Oregon, for example, first rolled out OregonSaves as a pilot program to 11 businesses covering about 150 employees. The state plans to initiate a second pilot program in October and use what it learns from the pilots to fully launch in January, with larger employers going first.

Despite Congress’ repeal of the safe harbor rule, state officials say they are still on solid legal ground: The 2016 rule simply clarified that employers wouldn’t have to comply with ERISA under a government-sponsored retirement plan. In other words, there is no rule or law that says governments have to comply with ERISA. Some state treasurers have sought out legal opinions to back up their beliefs. Others think the issue will ultimately be decided by the courts.


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Old 08-04-2017, 02:16 PM
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Looks like Oregon will use a private firm to manage the recordkeeping for their program, so the industry will still be involved. It's the local brokers and financial planners who are getting pushed aside, along with the small TPA providers
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Old 08-07-2017, 10:19 PM
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CALIFORNIA

https://calpensions.com/2017/07/31/i...ats-in-a-name/

Quote:
In birth of new state program, what’s in a name?
It’s time to bring in some “Mad Men,” like those vintage Madison Avenue advertising professionals in the critically acclaimed television show, and run the name of a new state retirement savings plan up the flagpole and see who salutes.

The current name, Secure Choice, doesn’t say much about a big new program that in five years could be a mandatory option to supplement Social Security for an estimated 7.5 million Californians currently not offered a retirement plan by more than 200,000 employers.

Secure Choice also has a kind of generic bureacratic tone, not exciting or appealing to young people, said a staff report given to the Secure Choice board last week, and it has an “association with other sensitive policy issues,” presumably like pro-choice on abortion.

Early attention to the “brand” comes as the program, authorized by legislation last fall after a feasibility study approved in 2012, prepares to begin no earlier than 2019. A three-year phase-in starts with large employers and moves on to those with five or more employees.

“How you want people to see you, how you want people to know you, and how they feel about it when they hear it — that’s your brand,” said board member Yvonne Walker, president of SEIU Local 1000.

Illustrating the need for professional help, board member William Sokol, a labor attorney, said he would never have chosen a “stupid” name like Google or a name like Apple, with a logo of an Apple with a bite out of it.

“I’ve learned how little I understand about marketing and branding,” said Sokol. “But I’ve learned it’s critical in this new world we live in.”

The board gave the Secure Choice executive director, Katie Selenski, the go-ahead for her plan to contract with a California-based firm to test names and logos. If another name appears best for marketing, Secure Choice could still remain as the name of the program.

California’s version of Obamacare is named the California Health Benefit Exchange but marketed as Covered California, said the staff report. The Oregon Retirement Savings Plan is marketed as OregonSaves.

......
Secure Choice is an “automatic IRA.” A deduction from the employee’s pay, probably 3 percent in the first years, will go into a tax-deferred savings account — unless the employee opts out.

Experts say an automatic payroll deduction, not requiring a decision during day-to-day household budget pressures, sharply increases savings in private-sector 401(k) individual investment retirement plans.

Prior to Trump’s expected signing of the the regulation repeal in May, the Secure Choice attorney, Morse, said he believed the program would remain exempt from ERISA under a 1975 labor regulation.

Morse followed up with an advice letter that includes the issue of whether not requiring the employee to “opt in” is employer influence that might fall under ERISA. He said the employer has no say because offering the program is required by state law.

After Trump signed the repeal, De Leon and state Treasurer John Chiang said at a news conference they always thought Secure Choice was exempt from ERISA under previous regulations, but sought the clarification last year to ease the concern of business groups.

De Leon said “a handful of big banks” profiting from managing retirement plans pushed the repeal legislation. In a letter to California Congress members opposing the repeal, Gov. Brown said “Wall Street institutions” were trying to protect their retirement products.

The U.S. Chamber of Commerce, urging repeal in a letter to Congress, said the regulations allow retirement plans with less worker protection than ERISA plans, may cause some employers to forego ERISA plans, and could cause problems for multi-state employers.

The California Chamber of Commerce has no position on Secure Choice and has not done a legal analysis, said Marti Fisher, a Chamber lobbyist. She said the Chamber is participating in Secure Choice’s employer stakeholder working group.

.....
Some conservatives oppose Secure Choice as government expansion into the private sector that could lead to more public debt. The legislation says the savings fund is not guaranteed by the state and employers are protected against liability.

So, if nothing is guaranteed, perhaps it shouldn't be called "Secure" Choice.
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Old 09-11-2017, 04:40 PM
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http://www.truth-out.org/opinion/ite...ement-accounts

Quote:
Welfare for Wall Street: Fees on Retirement Accounts
Monday, September 11, 2017
By Dean Baker, Truthout | Op-Ed

Most of us are willing to help out those who are less well off. Whether it comes from religious belief or a sense of basic decency we feel are an obligation to provide the basic necessities of life for the poor. But how would we feel about being taxed $1,000 a year to provide six figure salaries to people in the financial sector? Although no candidate to my knowledge has ever run on this platform, this is the nature of the retirement system the federal government has constructed for us.

Twenty or 30 years ago, most middle-class workers had defined benefit pensions. This meant that they could count on a fixed benefit that was some fraction of their average salary during their working years. For example, a person who spent 30 years at a company may be entitled to a pension that was equal to 60 percent of their average salary over their final five years of work.

With a defined benefit pension system, most of the risk was born by the employer. The worker did not have to worry about the stock market being down when she chose to retire. Nor did it matter to her if the pension made bad investment choices; the employer was liable for the promised benefits, unless it went bankrupt.

The virtues of the defined pension system can be exaggerated, although recent research indicates it provided more retirement income than we had recognized. Workers who changed jobs frequently or worked part-time rarely qualified for pension coverage. This excluded many women, African American and Latino workers. But for those who were eligible the defined benefit system provided a substantial degree of retirement security.

That is not the case with the system of 401(k)s and IRA(s) that replaced the defined benefit system. Many workers are never able to put enough into their retirement plans to accumulate much towards retirement. In addition, there is no way to completely avoid the risk that the stock market can take a plunge as workers approach retirement. And some people will inevitably make bad investment choices.

However, there is one item that can be controlled. This is the fees that workers pay on the money they have in these accounts. These fees average 1 percent a year on the almost $6 trillion in 401(k) accounts managed by employers. There is a wide range for the fees on the $8 trillion held in IRAs, but many people pay more than 1 percent annually on these accounts as well.

.....
There are ways to rein in these costs. Several states -- including California, Illinois and Oregon -- have passed legislation that allows workers in the private sector to buy into low cost funds managed through the state. These public systems are supposed to go into operation over the next few years. Presumably, other states will follow this model if these systems prove successful.

At this point, the biggest question is whether these programs will get off the ground. The Trump administration has been trying to sabotage them, using an interpretation of the Employee Retirement Income Security Act (ERISA) that would ban the state-run funds. Apparently Trump is concerned that his friends in the financial industry could not survive if they faced competition from the government.

The future of these publicly-run systems is unclear at this point. It would be a huge step forward if 401(k) and IRA managers simply had to disclose their fees in their quarterly statements, but like cockroaches, they want to remain in the dark.

For now, you should just get used to the idea of these big handouts to the financial industry. You can console yourself with the thought that these are people who probably could not earn an honest living without help from the government.


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Old 10-09-2017, 04:10 PM
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ILLINOIS

http://www.chicagotribune.com/busine...y.html#new_tab

Quote:
Illinois small-business retirement plan faces resistance

Spoiler:
As Illinois moves toward becoming a national model in retirement savings for small-business workers, the designers of the state's new Secure Choice IRA plan were warned this week that if they don't get the plan right, it could be doomed from the start.

At an Aspen Institute forum in Chicago, the state board planning the new program was warned repeatedly that the project could flop if small businesses are overwhelmed with bureaucratic paperwork and if low-income workers feel nervous about saving too much for retirement when paychecks already are stretched thin.

Secure Choice was passed into law in 2015 as a way to give about 1.2 million employees of small companies a way to save money at work so they don't end up poor in retirement. Most small businesses don't offer retirement plans.

Richard Thaler, a University of Chicago Booth School of Business financial behavior expert, told the Secure Choice board: "Why don't companies do this? Because it's a pain in the neck."

He said Illinois' program would fail if the board doesn't "make it easy" for employers and their employees. "Remove the barriers. Sludge is the stuff to prevent. If you have a lot of papers to fill out, that's the sludge."

The Aspen Institute is encouraging states to make the automatic saving possible through individual retirement accounts, or IRAs, at small companies. Aspen is a nonprofit organization that hosts nonpartisan forums "for analysis, consensus building, and problem solving on a wide variety of issues," according to its website.

In the U.S., only about three in 10 small businesses have retirement savings plans at work, and when people don't have access to the simple way of saving on the job, most workers skip it and arrive at retirement with virtually no savings, according to research by the Employee Benefit Research Institute.

.....
In the proposed Roth IRAs, Illinois employees would deposit a portion of every paycheck. They would have the option to skip the plan if desired. But research shows that few workers do when money flows from paychecks into retirement plans automatically.

To generate retirement savings, "the only way to do it is saving at work," said Thaler, one of the nation's academic leaders in saving behavior. He is the author, along with Cass Sunstein, of a book titled "Nudge" that addresses the topic.

Illinois is the furthest ahead, with a plan to require all small employers with more than 25 employees to start making Roth IRAs available at workplaces in 2017.

But as the newly appointed Secure Choice board prepares to accept proposals from companies that would invest and handle the administration of the IRA accounts, the board was warned that resistance from employers or employees could hurt not only Illinois, but set the retirement savings agenda back nationally.

Many small companies employ moderate- and low-income people, and states are grappling with how far they can go with the automatic savings amounts. Illinois' plan calls for automatically placing 3 percent of an employee's pay in a Roth IRA each time the person is paid. Retirement research shows that people will not have enough for retirement with a 3 percent savings rate, and that 6 percent is better. But the concern raised at the Aspen forum was that low-income people would balk at a 6 percent rate.

Illinois and other states eventually want the plan to be self-sufficient and, as now envisioned, Martin Noven, senior director of government markets for TIAA-CREF, said it will probably take two years for the plan to break even and five years to cover expenses of record keeping. Under the Illinois plan, fees — which are paid by workers as they invest in mutual funds in the workplace Roth IRAs — can't exceed 0.75 percent of the money invested.

David Madland, fellow at the Center for American Progress, warned the Secure Choice board to keep fees lower because "they can really affect someone's lifetime earnings."


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Old 10-11-2017, 10:03 AM
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could go here or the public pensions thread, but I'm gonna put it here

WISCONSIN

http://urbanmilwaukee.com/pressrelea...cabe-proposes/

Quote:
PRESS RELEASE
Make state pension system an option for everyone in the state, McCabe proposes
What the Government does needs to be done for our whole society, not just a few.
Spoiler:
Milwaukee, October 9, 2017 – Speaking at a meeting of the Wisconsin Alliance for Retired Americans, governor candidate Mike McCabe said Wisconsin’s entire population should be eligible to participate in the state’s retirement system.

“What government does needs to be done for our whole society, not just a few. The closer we can get to the point where everyone pays and everyone benefits from what government does, the better off we all will be,” McCabe said. “In keeping with its name, the Wisconsin Retirement System should offer retirement security to all of Wisconsin. Employees and employers in every sector of the economy should be able to buy into the WRS, not only the public sector.”

Currently, about 600,000 people are eligible to participate in the Wisconsin Retirement System, or only about one-eighth of the adult population of the state.

“Wisconsin has one of the most financially sound retirement systems in the country. Making participation an option for everyone in Wisconsin would make it even stronger,” McCabe said. “More people invested in the system means even greater financial stability. It also means more people with a stake in sustaining the retirement fund and defending it against political attacks. Social Security has lasted for more than 80 years because every working American pays for it and everyone stands to benefit.”

Employers in the private sector who want to provide a retirement benefit to employees should have the WRS as an option and so should those who are self-employed and want to set aside money for their own retirement, McCabe said. No one should be required to participate, but everyone should be eligible to buy into the system, he added.


Campaign website is GovernorBlueJeans.com.


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Old 02-09-2018, 05:45 PM
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http://www.thinkadvisor.com/2018/02/...paign=02092018

Quote:
Fixing Retirement Without Tax Hikes or Benefit Cuts
Economist Teresa Ghilarducci tells ThinkAdvisor about her plan to fix America’s 'jumbled, broken' retirement system — and how it would reshape advisors’ jobs

Spoiler:
If the federal government mandates all workers and employers to contribute 3% of wages to individual employee pension-style Guaranteed Retirement Accounts, will America’s “jumbled, broken” retirement system be fixed?

Retirement security expert Teresa Ghilarducci, an economics professor at the New School for Social Research, says yes indeed, in an interview with ThinkAdvisor. Her bold plan would also change the financial advisory profession, she argues.

The present retirement system isn’t merely a broken hodgepodge, it’s “a disaster,” according to Ghilarducci. Consequently, the U.S. is headed for a retirement catastrophe, where millions will suffer in poverty-stricken old age.

A Guaranteed Retirement Account (GRA), providing a supplemental stream of income to Social Security, will avert that, Ghilarducci writes in her new book, “Rescuing Retirement: A Plan to Guarantee Retirement Security for All Americans” (2nd edition — Columbia University Press — January 2018). The professor’s co-author is Tony James, president and COO of the Blackstone Group investment advisory firm, manager of large pension funds.

RELATED

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The Social Security Administration would handle GRA payments, but the program would not be a government entitlement.

While Ghilarducci focuses on those earning less than $100,000 a year, a GRA would benefit high-net-worth people, too, by providing them with a safe place to invest versus making costly mistakes in their 401(k)s, as is often the case, she says. The income stream would also help ease anxiety about outliving one’s money, a persistent fear that even the affluent, especially older women, harbor.

Where do financial advisors fit in? They would still help folks manage their entire portfolio; but should a GRA become law, the advisory profession would change dramatically, as Ghilarducci describes in the interview.

Focused on the retirement-funding dilemma for 35 years now, the economist is director of the New School’s Retirement Equity Lab, which researches the future of Americans’ retirement. She is a trustee of the Goodyear Tire and Rubber Co. Health Care Trust and the United Automobile Workers Retiree Medical Benefits Trust.

Further, Ghilarducci serves on the board of the Economic Policy Institute and is a past commissioner of Gov. Arnold Schwarzenegger’s Public Employee Post-Employment Benefits.

Under the GRA plan, employees and employers would each automatically contribute 1.5% from worker salaries. Independent contractors would contribute 3% on their own. All funds would be pooled and invested by a board of professional investment managers appointed by the president and Congress.

Individuals would choose a pension manager, who would be held accountable to investors. These managers, in turn, would select the money managers to make actual investments.

At least a 6% or 7% annual return for each saver would be realized, Ghilarducci estimates.

The “guarantee” refers to the worker’s “protected” principal; that is, each saver will get back at least as much as they put in. Unlike 401(k) plans, people would be prohibited from withdrawing funds prior to retirement.

No congressional bill has yet been introduced for the plan, but Ghilarducci believes it would likely receive serious consideration when the next recession hits — an event she anticipates occurring in two years.

ThinkAdvisor recently interviewed the professor, on the phone from her New York City office. She and co-author James, Costco board chairman and who reportedly declined the post of Commerce secretary in President Barack Obama’s administration, are certain that the GRA plan will ensure “a failsafe” retirement. Here are excerpts from our conversation:

THINKADVISOR:

Why did you write “Rescuing Retirement”?

TERESA GHILARDUCCI:

I want to prevent a coming crisis. For 35 years, I’ve been working on the issue of how to fund retirement. I declare the present system a failure and a disaster.

You write that inadequate funding of workplace retirement is “a political time bomb with potentially devastating effects on [government] budgets and the macro economy.” What could happen?

If we don’t change what we’re doing, we’re going to have millions of middle-class people who are downwardly mobile into poverty.

How will that affect America’s cities and states?

They’ll have to provide more services or let these older people starve. Low-growth communities depend on elders for their spending. Therefore, if we have a big chunk of our population with very little income, it’s going to affect local commerce.

RELATED

Alicia Munnell: The Social Security Fix No One Wants
The influential retirement scholar also talks to ThinkAdvisor about millennials’ grim retirement prospects and three crucial pieces of advice for...

To what extent does your GRA plan help affluent people?

I’m shocked that almost 20% of people in their 50s making $250,000 a year have nothing but Social Security [for retirement]. A GRA will help affluent people have a safe place to invest. Right now, they’re in self-directed commercial accounts, in which they make a lot of mistakes. They have no idea how to decumulate their assets. And they’re worried stiff that they’ll live too long. A GRA would also help the wealthy get their children to save early so they can be more financially independent.

Women outlive men, as we know. You write that “women ages 75-79 are three times more likely than men to be living in poverty.” So a GRA will clearly help them.

I wish I could have put this in red letters in my book: When people have even as much as $1 million and don’t have a guaranteed [retirement] payment stream, they get very worried. When an old woman dies with $25,000 in a shoe box, research shows she probably lived her last years in anxiety, possibly malnourished, because she didn’t know how much money she needed and how long she needed it to last. That, and having to manage the money yourself, is causing trauma, depression and anxiety in a huge part of the population.

Who’d be responsible for investing people’s money?

Pension managers that individual savers would choose [from a long list].

You write that it is they who would select the money managers who’d handle the actual investing. A wide range of institutions would manage the accounts, including money management firms and mutual fund companies, you say.

Yes. It would be the same kind of apparatus — Commonfund, for example — that manages large pension funds.

But savers would have little say, then, as to how or where their savings would be invested.

They could choose among the large managers, but they wouldn’t pick the investments. It would be very similar to a 529 plan in that way.

What role would financial advisors play?

They would help people decide how much to save, help them choose the fund manager and help manage their entire portfolio, including their house and debt. I would imagine financial advisors’ entire profession would change.

Why is that?

They wouldn’t be tied to selling individual products. I think many financial advisors don’t like doing that, anyway. Everyone needs financial advice about how to manage their lifetime consumption, but people don’t need the advice that financial advisors give, which is [often] to choose among mutual funds that charge high fees and for which advisors get a commission for selling. That system has failed.

Many advisors would disagree with you.

Most of the financial advisors I meet are very honest people and are filling an important role in people’s lives. But the piece I’m taking away from advisors is the most controversial one and the one that doesn’t work very well: telling people what funds to invest in. That’s conflicted and inefficient.

You write that people will likely ask if GRAs will be “a windfall for Wall Street.” What’s your answer?

Clearly, we’re going to have private-sector companies invest the money, just as we have private-sector companies build roads and rocket ships. Those companies don’t get a windfall. So this won’t be a windfall for Wall Street either. The companies [who manage the money] are going to be regulated and will be scrutinized for their prices and practices. It will be more regulated than it is now.

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That doesn’t dovetail with President Trump’s deregulation promise and to have less government in Americans’ lives. The GRA plan requires an act of Congress and would be managed by a federal agency. What are the chances for its enactment?

The retirement crisis is on the minds of most voters; and older people [nearing retirement] are much more likely to vote. The plan [adds] onto a program that people already like: Social Security. We look mainly to Congress — there’s not much leadership in social policy coming from the White House. The plan has a lot of elements that Republicans would like. So we believe both parties would support employees securing their own financial future.

Why did you pair up with Tony James to write the new book?

He’s as close to the system as one can get. He understands its weaknesses. He brings the employer vision and the investment vision. He has strong opinions about how public policy should go and contributes a lot to political campaigns. He invests for pension funds and is a corporate director of several companies; for example, he’s the chairman of the board of Costco.

Would the investment firm that he runs, Blackstone Group, have a business role in the GRA plan?

Probably not. He invests money only for very large pension funds, and most of his funds are closed. His motive, as far as the GRA is concerned, isn’t to make more money for his business.

You refer to GRAs as an “annuity.” I assume that’s “annuity” in the generic sense?

Right — an annuity like Social Security pays or that a defined benefit plan pays, not a product that insurance companies sell. Those products aren’t popular, and they don’t work.

You write that GRAs would bring people an annual return of at least 6% or 7%. How do you figure that?

It’s just an estimate, not a guarantee. The principal would be guaranteed [as much money as a worker contributes]. That’s minimizing the downside risk. The upside will be a return that’s smoothed out over the whole group and over time.

When can money be withdrawn from a GRA?

Either when you start receiving Social Security benefits or before then [if you opt to] delay collecting Social Security. The whole idea is that the retirement system isn’t there to help you accumulate money for your heirs.

Is that what people do now?

One of the problems with the system is that we’re giving tax breaks for bequests. That’s not the intention of a tax break for retirement saving. It’s not there for rich people to leave money to their children. That’s bad public policy.

Do you think that all workers will want a GRA?

It’s a budget solution to a problem, [alternative solutions to which] people don’t want. We can cut benefits, raise taxes or force people to save. When you ask which they want, whether Republican or Democrat, they’d rather be forced to save. Right after Trump was elected, we surveyed 3,000 people. Most picked forced savings of those three options. And people don’t like their 401(k)s — and they really don’t like their IRAs.

But probably there would be plenty who say they don’t want the government to force them to save.

I’m not na´ve to think everyone is going to agree with our plan. But I’m speaking to people’s common sense and their emotions of fear and shame. I want to change those feelings into power and hope. The only way you get there is to have a strong Social Security system and constant savings in a well managed financial plan.

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What reaction to the GRA have you had from government?

High-ranking leaders from both parties are very intrigued that it bolts onto an already-established system, Social Security. No politician has [introduced] a bill – but we’re not doing this for next year. We’re planting the flag for a really good idea that can come up at the right time, which might be the next recession.

When do you think that might occur?

Most economists assume there’s an over 50% probability of a recession in two years. The economic expansion has gone on for 10 years now. There’s a lot of concern about debt. Most of us expect a correction. [Prior to Feb. 4], stocks have gone up about 300%, but earnings and sales of corporations have gone up less than 70%.

And that all means?

There’s a big mismatch between the valuations, the stock market and companies. What firms are doing with their money is buying other companies; they’re not investing in new ideas. Very little innovation is going on.

You first published this GRA plan, in less fleshed-out form, in 2008, the time of the financial crisis. What was the reaction then?

People were really open to it. The staff of Sen. Ted Kennedy, who died right around then, was very interested in expanding the Social Security system with these accounts. But short-term problems were the question: The banks and the auto industry had to be saved rather than [focusing on the long-term problem of funding retirement].

Do you think a GRA has a better chance now?

Absolutely. People will be very receptive to it when the stock market takes a dip. A lot of people are smarter and more sophisticated now. Having these ideas on the table when the time is right is very important. That’s why I’m doing what I’m doing.

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