Leading US Retirees 'Like Lambs to the Slaughter,' Trump Labor Dept. Quietly Offers Up 401k Plans to

[Soph0571]

Private Equity Vultures

With the American public's attention consumed by the Covid-19 pandemic and mass protests against police brutality, the U.S. Labor Department earlier this month quietly gave corporate sponsors of retirement plans something they've been agitating over for years: a government green light to invest workers' savings into funds managed by notoriously predatory private equity firms.

The move, announced on June 3 by Labor Secretary Eugene Scalia, allows large managers of 401(k) plans and individual retirement accounts (IRAs) to put workers' retirement savings into private equity investments that offer the possibility of huge returns—and devastating losses.
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Sirota wrote that thanks to the Labor Department's guidance, "private equity firms will now be allowed to access—and skim fees off of—the $9 trillion in 100 million workers' 401k plans and IRAs."

"Now that Trump's Labor Department has opened the floodgates," Sirota added, "a lot more money could end up flowing into these opaque deals, enriching private equity executives and their friends—while leaving workers' meager retirement savings even further depleted."

[link:https://www.commondreams.org/news/2020/06/16/leading-us-retirees-lambs-slaughter-trump-labor-dept-quietly-offers-401k-plans|]
Emphasis mine

You know all those people who still supported Trump because their 401k's where doing really well... heh.
Corruption and outright thievery continues, how much else can they pack in until November. They are staggering in their grift.

[no_hypocrisy]

1. And the same people want to do the same thing for Social Security.

This is a test balloon.

[RVN VET71]

22. Yep. Once this change has been installed

Social Security is next. And the lemmings will praise moves like this and blame its failure, as the greed heads of Wall Street fill their pockets and sell the retirements of we "little people" at a loss, on the Democrats.

Never forget: The Republicans to a man and woman either preached or accepted in silence Dan Patrick's insistence the old people owed it to the rich, who control the economy and are its chief beneficiaries, to just get sick and die.

[LiberalArkie]

2. At least something I don't have to worry about as a retireee. I lost in all in 2008

[RVN VET71]

24. I'm sure Jamie Dimon feels your pain.

Seriously, I hope you've managed to recover at least some what the bankers stole from you in 2008. It's a nasty fucking callous world when it's run by Republicans.

[LiberalArkie]

31. I knew I was going to be poor even before that, so I planned for it. Social security comes in at

$1600 and a tiny pension of $400 a month, So I am bringing in about 1/3 of what I was working. So I can cope. Just wish COLA was realistic.

[redstatebluegirl]

3. They are going to raid and pillage as much as they can before they lose in November.

The time between November and January 20th will be especially worrisome.

[empedocles]

4. Suspect trump trying to offer for sale ['campaign contributions'], anything he may be able

to get away with plundering.

[Newest Reality]

5. Fleecing!

[Faux pas]

6. He

can't keep his (useless) paws off of anything. Although, we all know he couldn't do any of this shit without moscow mitch, leningrad lindsey or the rest of the devil's disciples.

[Hoyt]

7. As long as it remains the employee's choice and safer investments are available, seems

OK to me. 401Ks have always been privatized and one could invest in a lot of questionable funds.

I wouldn’t invest my retirement funds in that stuff, but lots of people would.

I would have a problem with messing with Social Security.

[not fooled]

10. It's just that

many if not most employees aren't well educated enough about finance and investing to make informed choices. There will be slick presentations by skilled salespeople to con naive employees into taking a route that's not in their best interest. Many unsuitable investments are peddled to workers who don't have the knowledge to understand what they're buying, and suffer as a result.

It's open season for the financial predators.

[Demobrat]

13. What's worse is that

they could set it up where if an employee doesn't actively choose otherwise their money goes by default into one of these funds.

[Hoyt]

15. I doubt that. Companies offering 401Ks are afraid of getting sued for just that.

[Hoyt]

14. If someone is a novice, they have no business investing in risky investments.

I think people are smarter than that, there are protections in 401K law that requires less risky investments be included, the firms that manage 401K plans aren’t going to stay in business long if employees are losing money and complaining to company Human Resources that they are being screwed, etc.

Most people with a 401K don’t really need Common Dreams’ protection. 401Ks have always allowed risky investments, but they are required to offer safer investments too.

[Warpy]

17. It's why Pinochet's scam failed so miserably in Chile

People who had dutifully paid into their stock market funds for years retired and found up fees had eaten up nearly all of it. With their social security system dismantled, older folks had to petition their states for welfare payments just so they could eat. It was a total fucking disaster, yet the GOP tries to paint it as a success because highly paid fat cats at the top came out better than they had under social security.

We should all have an extreme problem with any greedhead who wants to mess with Social Security.

[Hoyt]

19. The OP has nothing to do with a dismantled SS system, or a scheme

where you are forced to invest in a system you have no control over. All that has been done is that another investment vehicle is added to a list of investments from conservative USAbond firms to aggressive growth funds. It’s like adding gold, real estate, company stock.

Not everything is a conspiracy to rip people off. Yes, some aggressive people don’t do well. The vast majority who are smart take advantage of the company match and select conservative investments, and end up making money.

[Warpy]

23. Um, but increasing the ability to skim off the top IS pertinent here.

There are now workers who have invested in these things for 40 years. This particular looting scam will reduce their holdings considerably. Many will have little left besides Social Security, and we know that has been in Republicans' gunsights since it was begun back in the 30s.

As for making money, that remains to be seen. The market has been inflated by ill considered tax cut after ill considered tax cut. Eventually there is going to be a reckoning there, and if those "made money" people haven't invested for income as well as net worth, they're going to be in for a very ugly surprise.

[Hoyt]

25. You show me a one who doesn't even look at their statement and the 1% or so taken out in

fees, at least once a year, and I'll show you someone who either ought to just decline participating in the 401K plan or select short-term bond funds or money market funds.

There are plenty of people who are comfortable sitting on the sidelines letting inflation eat up any savings. That's OK too if that makes you comfortable.

[uponit7771]

33. They can hide the fees in loads etc which are ... NOT ... outlined ourright. You'd be correct if

... there was a low to outline where every red penny was going with explanation but there's not.

The fund managers still have fiduciary towards the company still

[Hoyt]

34. Only a fool buys "load" funds. I'm sorry, I think you have experienced the worst in 401Ks.

Most of them aren't like that, and most people who don't know what they are doing have enough sense to either opt out, or invest in the safest options within the plan. Sure, some suck, but most don't.

[uponit7771]

35. Not talking about funds and using load generally. The company doesn't have to show all fees etc

... everything that a plan covers by law ... yet.

Bottom line a plan allow PEF discloses less than than what we have by law now ... IE the private parts.

[Javaman]

8. they want a permanent poverty class for 99% of the pop. nt

[Traildogbob]

9. The looting is well underway

Does that give permission for the shooting to start? Donny said so.

[Tech]

11. It's like we're turnips that have fallen off the truck and they are bleeding us, and it is working.

[LymphocyteLover]

12. is there a non-Sirota source for this?

I don't doubt the story but I don't entirely trust him either

[Celerity]

26. he was just one person quoted, he did not write the article nt

[LymphocyteLover]

36. good, thanks

[aggiesal]

16. That's where they want to send our Social Security n/t

[jaxexpat]

18. Ever since 401-K was invented to create a paper trail on golden parachutes.......

shysters have been hot on the trail to bilk people. As they became popular retirement instruments, employers have mixed into their employees retirement savings far beyond their Social Security responsibilities. During hard times and with the help of unscrupulous CFO's they have been known to dip into employee savings funds. Usually it's temporary. It's always been a case of "if you don't get caught, it doesn't matter".

This latest is representative along that avenue. Equity firm kicks back a portion of their transaction fee to the employer. Employer leans on their under-informed employees to take the "risk for the reward".

Who's gonna know? Convenient that the IRS works on a shoestring ain't it? You just can't trust Republicans with anything concerning finance, healthcare, honesty, international affairs......or anything, really.

[Demovictory9]

20. omg

[Lonestarblue]

21. As soon as I retired, I moved my 401k funds into a tax-deferred IRA.

That gives me far more control over what I invest in (no tobacco, no fossil fuels), and my returns have been better than with the 401k choices—at least until this year with the market ups and downs.

[BadGimp]

27. We are all Food to these people.

[maxrandb]

39. Human Capital Stock

That's what that smirking dipshit economic advisor calls us.

[Jopin Klobe]

28. Labor Secretary: Eugene Scalia ...

... Chef de cuisine: Jeffrey Dahmer ...

[IronLionZion]

29. Even Forbes magazine is against this

Trump DOL Throws 401k Investors To The Wolves

https://www.forbes.com/sites/edwardsiedle/2020/06/13/dol-throws-401k-investors-to-the-wolves/#2fcfee887edd

[Archetypist]

30. ah but thank goodness they are draining the swamp

and being soooo transparent

[Totally Tunsie]

32. Joe Biden will be the busiest incoming President in history

because of reversing all the damage Chump & Associates have done since 2017. Virtually everything Chump has signed or slid through will need to be replaced ASAP.

[Bengus81]

37. I bailed out in early March...........

The DOW has risen back close to my exit but I don't care. The DOW has been going up and up in the wake of closures,massive layoffs,BK and what will be low earnings season for Corporations. There's a day coming soon--like the 1800 point drop the other day but it will be multiple days.

[melm00se]

38. With no intent to denigrate anyone

401k's are perfectly fine vehicles for retirement if you make informed choices as to the investments within.

The best advice I have heard is from Warren Buffett:

"A low-cost index fund is the most sensible equity investment for the great majority of investors. By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals."

In all my years in the corporate world, I have yet to see a 401k that lacks low cost index fund options. My index fund option within my 401k is 0.0176%. My actively managed funds are higher than that but significantly less than the average.

Even with the markets up and down over the last decade plus, large cap index funds (on the benchmark) have turned an almost 13% annual rate of return.

My advice mirrors Buffett's: On a regular basis, put whatever money you can afford and don't need for a 5+ year time frame into an large cap index fund and let it ride. Don't panic, don't pull it out, just let it ride.

If your company has a match to their 401k plan, make sure that you avail yourself to the maximum on that free money. Think of it this was: if someone was willing to give 10/20/50/75 cents on the dollar for every dollar you put into the bank, you would take it, yes?

That is what a company match is: free fucking money. take it, invest it however you like within your retirement account. Don't like stocks? Bond funds. Don't like bonds? Money market funds. Want to be socially responsible? There is an index fund (or dozen) that does that.

Of course, the latter might not be directly available to you but if your 401k has a brokerage option, you can transfer money there and buy whatever fund or equity you want.

I am fairly certain that most people can squeeze out something to put in an employer match fund (of course queue the "No I can't" crowd).

Just for a little background to support that last statement: I spent a most of my previous life's banking career as a volunteer credit counselor at a non-profit and seen more than a few people's budget (more likely a lack thereof) and expenses. I would say that <5% were so bad off that they couldn't squeeze a few bucks out every pay period.

Don't believe me? Here is my stock conversation with clients:

- Did you receive a tax refund last year? (95%+ would say yes)

- Reflect on yours and divide it by 26 (or whatever your payroll cycle is). That is money you are going without each pay period because you send it to Washington.

- Ask your payroll people how to legally adjust your withholding to get as much of that back to your side of the ledger.

- Voila. More income in your pocket. (Based upon the average federal tax refund check that will equal somewhere around $100-125 per pay period. YMMV)

God I have had that conversation more times than I can count.