Recently formulated agendas to restructure 401(k)’s in light of the economic crisis are threatening the stability of America’s retirement system, Paul Schott Stevens, president and chief executive of the Investment Company Institute, told the National Press Club Friday in Washington.
Such agendas make this “a very dangerous moment for the future of America’s retirement system,” Stevens said.
“While Stevens didn’t name the ‘alarmists’ to which he referred and the Investment Company Institute didn’t want to elaborate, he did appear to make reference to a plan that has been put forward by Teresa Ghilarducci at New York’s New School for Social Research. That plan would end the tax breaks for 401(k)s and instead give all workers an annual $600 inflation-adjusted tax credit for retirement and have them invest 5% of their pay into a government-run retirement account managed by the Social Security Administration,” reports Daisy Maxey for Dow Jones Newswires.
“Instead of choosing among assets from the full range of America’s and the world’s financial markets, workers would get yet another government promise – sign over your savings to Uncle Sam, and get a return of 3 percent over inflation,” Stevens said. “Gone will be today’s tax incentives, and with them your control over your retirement savings.”
Regarding steep financial downfalls, Stevens advised investors, “Stick with it. History tells us that markets will recover – and your accounts will rebound along with them.”