September 2010

The government isn't going to confiscate your retirement assets

Here's what the meeting is really about
U.S. Department of Labor publishes agenda for September 14-15 joint hearing on lifetime income options for retirement plans
DOL/Treasury Lifetime Income Public Hearing Agenda
Lifetime Income Options Joint Hearing Written Testimony

I would hope that the minutes of the meeting eventually show up in this search:
lifetime income minutes

Here's an article by one of the entities that spoke during the meeting
ASPPA Testifies on Lifetime Income Options for Retirement Plans

lifetime income

There's an "investment" called "lifetime income". Read the sales pitch from New York Life. You set up a contract with a business (probably an insurance company) where you pay them a lump sum (your retirement savings) and they promise to pay you $x/month until you die. They are gambling that you will die earlier. You don't give a damn, because you'll be dead at that point. If you do live longer, you won't be living just above the poverty line on your Social Security paycheck (until the insurance company runs out of money).

The public hearing is for employers that are worried about the risks inherent in gambling big money on life expectancies that can be drastically affected by decades of societal and technological change. They want to know if they'll be on the hook when the insurance companies' numbers are off (and they will be way off) and their former employees stop getting the benefits checks they were promised.

two problems

problem 1) a business with lobbyists now has a financial interest in you dying earlier. You know their lobbyists are going to do their damndest to dismantle or block any kind of government program that helps old people live longer (think the recent health care reforms).

problem 2) if they can't dismantle health care and if life-extending technologies get cheap enough to keep people alive for longer and longer periods of time, the insurers might become insolvent and need a government bailout.

My take on this is that the financial wizards are inventing yet another game for the casino that will once again leave taxpayers on the hook after they've jumped out of the plane and pulled the ripcords on their golden parachutes.

If there is going to be a government take-over of retirement assets, it will be after the financial industry snake oil salesmen have already absconded with the bulk of the value and leave the shriveled husk for the taxpayers to bail out.

- Robert Forsman