Headed for a Cliff—After the Election
Democratic Sen. Kent Conrad of North Dakota and
Republican Sen. Judd Gregg of New Hampshire are looking to establish a
bipartisan task force that will eventually recommend Social Security and
Medicare reforms. Treasury Secretary Henry Paulson would head the group. In
hopes of avoiding congressional and presidential campaign politics, the task
force report would be due on Dec. 9, 2008, one month after national elections.
Gregg compares the
upcoming demand on the nation’s entitlement programs to Hurricane Katrina. The
storm will start in 2010 and “reach full force in 2025.” Conrad contends: “we’re
headed for a cliff.”Hopeful
Biden Bidin’
Democratic presidential hopeful Joe Biden has
released his own plan to help Americans prepare for retirement. Biden cites these
woeful statistics:
In the 1980s, 83% of American workers were covered by pension plans, but
today only 20% have pensions and many of those are not secure
The personal savings rate in the United States is less than 1%
Biden suggests raising the retirement age and upping the cap on income subject to the
Social Security tax. It would require employers who do not offer retirement
plans to allow employees to contribute to individual retirement accounts
directly from their paychecks. It would also push for automatic enrollment in
401(k)s where those plans are available. Currently, employees must make a
conscious decision to opt into a 401(k). Under Biden’s arrangement, they would
have to decide whether to opt out.Days
of Costs and Promises
New Hampshire’s
public employee retirement system will be costing its taxpayers more if it is to
keep its promises to state and municipal workers. This projection comes from a
new study that estimates that state contributions to the retirement fund will
more than double in four years from $70 million in fiscal 2007 to $160 million
in fiscal 2011.
Workers who suffer
from depression tend to retire early, according to a new study published in the
Health Services Research journal. "We found a strong relationship between
people in their late 50s who had depressive symptoms and who two years later
were retired," says researcher Daniel Polsky of the University of Pennsylvania.
New Role for the CIO
Chief Information
Officers (CIO) need to launch skills assessment programs to deal with impending
mass retirements of techies, according to a Forrester
study "Skills Assessment, a 21st Century Imperative for CIOs." The report points
out that because the information technology (IT) industry is only about forty
years old, it has never experienced a whole generation of professionals
retiring. Baby boomer retirements will create unprecedented holes in IT
organizations. |
The Financial Industry Regulatory
Authority(FINRA), the major self-regulator of the brokerage industry, is trying
to beat out scam artists from the workplace.
In several high-profile cases, financial
advisors had persuaded groups of employees to hand over their
employer-sponsored retirement plan assets for reinvestment. The results were
disastrous. FINRA, in
response, is developing tools to help employees evaluate financial
professionals.
In one FINRA
survey, 42% of 1,334 respondents said financial advisors had recommended that
they roll over their pension, 401k or other employer-sponsored retirement assets
so the advisor’s company could reinvest the proceeds. Of those that said they had
received such suggestions, 27% said they received them at investment seminars
their employers had recommended.
In the past year, FINRA fined two
firms $5.5 million and ordered them to pay $26 million in restitution to
employees of Bell South and Exxon Mobil who had been stung by early-retirement
investment schemes
What a Revolting Development
American Home
Mortgage, a bankrupt business based in Melville, New York, is trying to take
over approximately $27 million that employees had set aside from their paychecks
as retirement savings. This attempt comes at a time when American Home wants to
put funds into the hands of its approximately 1,000 creditors. If it succeeds,
its workers may never see that money again.
The Russell
Investment Group, in its Retirement Report for 2008, contends that American
corporations are redefining the 401(k) plan so fundamentally that they are
creating a new generation of 401(k)s, a 401(k) version 2.0, if you will. While
Russell cites fifteen characteristics of this new animal, the underlying thrust
is a higher standard in promoting income security for retirement.
Excellence within the Industry
The Retirement Income Industry
Association (RIIA) is a national, not-for-profit organization for sharing
information, strategies and research. Its members receive analyses of retirement
income products and services. The association also sponsors educational programs
and training
This year, for the
first time ever, the RIIA is bestowing Excellence in Communications awards on
achieving members. Awards recognize excellence in advertising and printed
materials as well as Lifetime Achievement in Applied Retirement Research.
The RIIA has
available online a multimedia presentation that summarizes the Association. It
demonstrates RIIA’s extensive efforts on behalf of the retirement income
industry. Find it at
www.riia-usa.org.
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