So, here’s an idea for pensions in the United States:
Federal employees are among the last group of workers with a reliable pension plan. If you work for the U.S. government, you are automatically enrolled in the Thrift Savings Plan. Five percent of your pay goes into the plan, matched by the government. The assets are invested on a pooled basis in one of five plan options, and the management fees are almost nonexistent—about 0.04 percent compared to around 1 percent for conventional individual retirement accounts.
If others could join the Thrift Savings Plan, with government matching contributions, nearly everyone could have retirement accounts well into six figures by the time they hit retirement age.
Sounds very cool. It also sounds very like a 401 (k). So, here’s the government describing the government’s Thrift Savings Plan:
The Thrift Savings Plan (TSP) is a tax-deferred retirement savings and investment plan that offers Federal employees the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans.
Oh, OK, it is a 401 (k) plan. So, why do we need the Thrift Savings Plan?
Our friend Teresa Ghilarducci has come up with a terrific way of improving retirement income for low- and middle-income elderly people, who increasingly risk poverty in old age as pension systems collapse and 401(k) plans are a proven failure.
We should have a 401 (k) plan because 401 (k) plans are a proven failure.
These people are insane. But then it’s The American Prospect so we knew that.