Not as catchy as Obama-Care but when the Clinton people, specifically Teresa Ghilarducci, remake the retirement system in this county it will be based on the Guaranteed Retirement Account Proposal which has had a number if incarnations over the years:
The most recent version which could become reality next year has these primary features (as excerpted):
- Require all businesses with over five employees to provide a pension or the GRA
- Mandated 3% savings [on salary up to $250,000] between an employee contribution and an employer contribution
For employees, the 1.5% contribution would be offset by a new $600 federal tax credit—essentially covering the contribution for households below median income.
The cost of the employer’s 1.5% contribution would be substantially offset by ending burdensome workplace administration of existing retirement plans.
Each person’s guaranteed retirement account would be legally owned by the specific individual. But that money would be invested as part of pooled strategies, combining the retirement savings with other GRAs across the country. Individuals would be able to choose their own manager from a national exchange.
At the time of an individual’s retirement, the federal government would guarantee that each individual has earned a minimum return of 2%….The government could charge a modest insurance premium to cover this cost if desired.
Automatically annuitizing everyone’s accumulated savings when they retire or become disabled.
Affluent retirees who receive an income of at least $250,000 from sources other than their GRA in a given year would not be eligible to receive that year’s GRA annuity payment. Instead, they would be entitled to deduct the amount forgone from their other taxable income that year.
I have basically already made up my mind about GRAP but welcome your opinions and alternatives. But first, another excerpt that may be of interest to those of you out there who make your money by being part of that ‘burdensome workplace administration of existing retirement plans”:
By ending the more than $100 billion in federal tax deductions for defined contribution plans—deductions that disproportionately benefit the wealthiest Americans—the government can provide much fairer support for retirement savers.