On Oct. 21 the leftist government of Argentina announced its plans to nationalize the country’s private pension plans.
In 1994, the then-conservative government set up 10 private pension plans, which currently have about $30 billion in assets, and take in $4 billion to $5 billion annually.
That’s a lot of money, and socialist President Cristina Kirchner—it’s OK to use that term for HER, isn’t it? —needs a lot of money because tax revenues are dropping while government largesse is rising.
But, you say, what does that have to do with you and your 401(k)?
Well, no good money-grab goes unnoticed by a big-spending Congress that also needs new revenue streams. Recently, Rep. George Miller, Democratic chairman of the House Education and Labor Committee, heard testimony from economist Teresa Ghilarducci of the New School for Social Research in New York.
She proposes having the government nationalize everyone’s 401(k). According to Reuters: “Under her plan, workers would receive an annual $600 tax refund if they set aside 5 percent of their pay into a retirement account run by the Social Security Administration [presumably because SS has managed all its other funds so well!], which would then invest globally in risky assets to see high returns. From that pool, workers would be paid an extra 3 percent a year indexed to inflation.”
Bringing 401(k)s under the authority of Social Security—you can’t make this stuff up. And while Rep. Miller, who asked her to testify for a reason, seems to think it’s a good idea; 401(k) holders may disagree.
While we think it unlikely the idea goes very far, there is a U.S. precedent: A dozen years ago, Congress toyed with the idea of having Social Security gobble up the retirement accounts of 5 million or so state employees and teachers who paid into state programs rather than Social Security. Proponents argued that would provide much-needed money for a financially strapped Social Security system while claiming they were making state employees’ retirement “safer.”
And working Americans, shell-shocked from the huge declines in their retirement accounts, might be more open to the idea than they normally would.
So the government takes your money, gives you an IOU and invests in “risky assets to see high returns”; what could possibly go wrong with that?