Administration Advances Plan to Federalize Private Pension System

Proposal guaranteeing returns could push many into annuities

RALEIGH (By Karen McMahan, Carolina Journal Online) — In February, the U.S. Treasury and Labor departments jointly announced they were seeking public comment on proposed design changes to employer-sponsored 401(k) plans and individual retirement accounts that would centralize the private pension system under structures created and administered by the government.

Supporters say these changes are needed to ensure Americans save more for their retirement and have lifetime income options that prevent them from outliving their retirement savings, protecting them from market risk.

At stake for the millions of Americans with private retirement plans: Would they be able to continue making their own investment decisions? Or would Congress mandate both investment options and distribution methods? Government Retirement Accounts also would prevent workers from owning their retirement savings fully, as they could bequeath only half of their remaining account balances to their heirs.