Baby Boomers: Don’t Let Wall Street Manage Your Pension!
Miki Saxon over at Leadership Turn brought this item to my attention and I thought you would like to know what’s going on. Miki says this is the beginning of the next financial disaster, and I have to believe her.
This is among the top BAD IDEAS of the century. The financial management firms who can’t be trusted to stay out of trouble during the sub-prime crisis are not lobbying Congress to be allowed to manage your retirement fund.
Business Week reports that a numer of Wall Street firms - including JPMorganChase, Citi, and Morgan Stanley - want to take over management of underfunded plans like Ford Motor Company’s plan. The Treasury Department aparently thinks this is a good idea. NOT!
And the director of the Pension Benefit Guarantee Corporation thinks having these “investment partners” will make pension plans more secure. Of course, that assumes that they weren’t in the first place. These are the funds that companies are holding and making contributions to for the “benefit” of future retirees; they are defined benefits, which will be turned into annuities for employees who are retiring. Many companies are going away from these defined benefit plans
Well, I guess someone needs to manage these plans. And I don’t know who could do the best job. But certainly the people who brought you the sub-prime crises are really not the best people to manage these pensions. Do ya’ think they might have a conflict of interest - more management fees? Do the math - $1.7 trillion dollars in the funds, and 1% to 2% in fees. The Business Week article also mentions the temptation for these advisors to change the conservative mix of funds to riskier investments and to “dump” losing investments into the funds. It’s like letting the fox decide how to run the chicken house.
Read Miki’s post on Leadership Turn on this subject, with more links.
If you are concerned about this, contact your Senator or U.S. Representative and let them know what you think.
Tags: PBGC, sub-prime crisisRelated Stories
POSTED IN: Boomers nearing retirement, Politics
1 opinion for Baby Boomers: Don’t Let Wall Street Manage Your Pension!
An early look at the NEXT financial disaster
Oct 22, 2008 at 11:02 pm
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