Your Retirement Savings May Be Next

By Rick Manning



Could the Democrats in Congress actually be considering confiscating all 401(k), SEP and IRA accounts in exchange for offering Americans a "guaranteed annuity"?



The subject almost seems too far out there to even write about. While it is something that I had heard rumors of, I just couldn't believe this type of proposal would ever be considered in America. Let alone become part of an active public policy debate.



But when the Wall Street Journal writes on the subject, and the House Republicans on the committee that oversees our nation's pension system send a letter expressing concern to both Treasury Secretary Timothy Geithner and Labor Secretary Hilda Solis expressing concern, and then issue a press release on it, it is time to get concerned.



The least damaging scenario is that the Democrats are considering changes to the retirement security system that takes away the tax deductibility of retirement savings in exchange for using those dollars to create a new "guaranteed annuity" that will provide workers with a fixed amount each month. Sounding eerily like the insolvent Social Security system, these accounts would ensure that all people living in America had some small fixed amount of income each month in retirement.



However, this doesn't really solve the biggest problem facing the Democrats. Their largest donors, organized labor, have a huge pension insolvency problem. Labor unions, both private and public, have severely mismanaged their pension funds. In fact, Moody's considers many private funds to be in "critical condition".



Believe it or not, public employee pension funds are in even worse shape. California's public employee pension fund alone is reported to be underfunded by a whopping $500 billion (that's half a trillion bucks or $500,000,000,000.00).



So, who has the money to make these colossal failures whole and keep union leaders and their members happy?



That's right, you guessed it. The poor slob who doesn't have a guaranteed pension, but has been putting off vacations and eating burger rather than steak for his/her whole career to put 5% of his income into a tax deferred retirement account is the one with the money. Right in his/her tax deferred retirement accounts.



According to the Investment Company Institute, in 2008, $2.4 trillion was invested by private citizens in 401(k) accounts.



Quite a tempting morsel of money if the Democrats in Congress can just convince the American public that they will be getting the security of a GUARANTEED payment every month, rather than dealing with the nasty ups and downs of the market.



As stated at the beginning of this piece, this isn't yet a proposed law, but is merely a twinkle in the eye of those in the Obama Administration and in Congress who are desperate for cash to fill big labors pension black hole. But every bad idea starts as the twinkle in someone's eye, and no bad idea seems to be too extreme for this gang of looters who have temporarily been given the keys to the nation.



So beware readers, when you start hearing about the need to avoid retirement risk coming from those who brought you government health care, and are in the process of putting into law a system that would monitor every single one of your financial transactions all under the guise of economic security.

Realize, that if you have been putting money away for your future, that these same jackals are eyeing your nest egg, to feather the nests of their political supporters.



Remember, forewarned is forearmed. So stay vigilant.



Rick Manning is the Director of Communications for Americans for Limited Government, and the former Chief of Staff of the Public Affairs Office at the U.S. Department of Labor that oversees the 401(k) system.