The Service Employees International Union (SEIU) has formally proposed what some on the left have been hinting at in recent years, a government takeover of your 401(k) plan. Instead of investing your funds privately, your retirement contributions would be pooled with everyone else’s and “professionally managed” by government “experts” to ensure that you have adequate income in your retirement. There is some discussion that we could be required to rollover our 401(k) accounts into such a system.
My initial response to hearing the SEIU proposal was to laugh, but I’ve seen too much lately not to take this proposal seriously, so I went to the union’s “Retirement USA” website (www.retirement-usa.org) for a firsthand look. These guys are serious. Apparently the current confiscation of 12.4% of your income to support the Ponzi scheme known as social security is not enough. They want the government to control your other retirement investments as well. There are so many things wrong with this idea, but I will focus on a few obvious problems.
Let me clarify a few things upfront. I am not a fan of social security. The tax rate is too high, the system is improperly managed, and we don’t have access to our own accounts. But you could argue that a basic social security system has some merit. Requiring everyone to contribute to a plan that provides a basic income upon requirement keeps society from picking up the tab if an individual fails to save anyone on his own. But retirement planning is my responsibility, and the government’s only possible legitimate interest here is the extent to which I might become a burden on society if I don’t save on my own. That’s debatable, but I’ll come back to this point another day.
I am also completely aware that the social security tax rate is 6.2%, with a matching contribution from your employer. If you’re buying the idea that you only contribute 6.2% and the employer’s part is not your money anyway, then you don’t understand how companies look at payrolls.
According to the website, “Retirement USA is a national initiative that is working for a new retirement system that, along with Social Security, will provide universal, secure, and adequate income for future retirees.” From this introduction, we can already see where this plan wants to go. There is no simply need to another universal retirement plan, especially when the first one is approaching insolvency. My retirement is my business, and I have a right to earn as much as I can, save as much as I choose, and live with the consequences. A 401(k) plan allows me to defer taxes on income that I won’t take as income until I retire. Besides, shouldn’t I be the one to decide what is “secure” and “adequate” when it comes to my financial planning?
Click on the “12 Principles for a New Retirement System” linked to the site. I urge you to read them for yourself, but they can be summed up in a single word, COLLECTIVISM. Their argument for “shared responsibility” stresses the idea that you are only PARTIALLY responsible for your retirement; the government and your employer(s) are also responsible. Their argument for “required contributions” means that companies should be forced to contribute to your account (remember—it’s really your money anyway) and government should subsidize the contributions of low income workers by taking others. Their argument for “pooled assets” with “professional management” means that the federal government would become major shareholders in more companies than just GM and Chrysler. Many states already assist in the management of retirement funds for state employees, but this would take this to another level altogether. Government control of private enterprise through regulation and intimidation is bad enough. Government control through ownership is a disaster.
It is clear that the SEIU and other unions (this proposal is also supported by the AFL-CIO) are interested in much more than fair labor negotiations. Like Obama, they also seek to fundamentally change America as we know it, replacing individual liberty and personal responsibility with collectivism anchored by wealth redistribution. They claim to favor a market economy, yet they constantly seek to redistribute wealth when the market does not value the economic contributions of everyone the same. This is a battle against socialism, and we better take it seriously.