American Shareholders Association

Aussies Retire with Over $500k Elite Ignores Obvious Social Security Angle

The Australians have a semi-personalized Social Security system known as "superannuation."  According to Employee Benefit News, the average Australian will retire with $550,000 in assets.  That would be enough to finance a pension of around $60,000 per year.

Here's the disappointing U.S. application of this good news by lefty academics:

Jane White, president of Retirement Solutions, proposed a new, Australian-flavored retirement strategy at a recent panel discussion held at The New America Foundation, a Washington, D.C. think tank.  White recommended a system that requires most employers to offer a 401(k) with a 9% employer contribution if they do not already offer a defined benefit plan. Under her proposal, new and small companies would be exempt from the 401(k) requirement, and employees would receive a matching contribution from the government. The system would prohibit cashing out 401(k) funds during a job change.

Pamela Perun, policy director of the Aspen Institute's Initiative on Financial Security, suggested another alternative retirement system for U.S. workers. The "Super Simple" system would be universal, user-friendly and designed to increase the retirement assets of low- and middle-income workers, Perun explained. The system would require workers and employers to make small contributions to pensions, which would be locked up until retirement.

What you don't see there is the obvious application: Social Security personal accounts.  Rather than compelling employers and employees to come up with money they don't have, we might look at converting part or all of the 10.6% OASI payroll tax into Aussie-style personal accounts.

Presenting on Private Equity Taxation In the Big Easy at NCSL

I'm on the ground today in New Orleans, where I'm at the National Council of State Legislators convention.  I'll be presenting a Power Point on private equity taxation, along with Steve Moore of the WSJ.  Interested to see what the audience reaction will be.

Auto-Enrollment Will Help Workers Replace Their Income

A new report by Hewitt Associates claims that under current trends, less than one in five workers will be able to save enough to replace 100% of their pre-retirement income.  Two-thirds are expected to have less than 80% financed, which is the general goal.

Auto-enrollment will help.  If employees consistently contribute 8 percent of their income to their 401(k) plans, they can expect to replace nearly 100% of their pre-retirement income.  It just goes to show you--a little shareholding can go a long way, and auto-enrollment is the key for most workers.

Auto-Enrollment Continuing to Bear Fruit

Auto-enrollment is continuing to bear fruit.  According to a new report by EBRI, auto-enrollment doubles the participation rate within plans, with the strongest upside being seen in low-income workers.  Interestingly, this effect happens independent of there even being an employer contribution.

Insurance Industry Again Seeks To Destroy 401(k) Plans

You might have heard about the Schumer-Kohl bill that would ban debit cards from being used in conjunction with 401(k) plans.  File this under wrong-headed micromanagement, and another sop to the insurance industry (which would much rather that retirees annuitize their nest eggs)