The retirement cap is a threat to the Retirement Plan Industry

Any industry needs to identify threats to its existence and develop a course of action to defeat that threat. The music industry is a shell of its former self. While they were awarding large contracts to artists like Janet Jackson and R.E.M. in the late 1990’s, they failed to see the threat of mp3 files to their business of selling compact discs. While they had every right to pursue a legal action against Napster for copyright infringement, they needed to develop a legal service for the delivery of mp3 files to those willing to pay. So instead of capitalizing on the idea of an mp3 service, they let a struggling computer company in to develop their own service called ITunes and the rest is history: ITunes led to the IPod, IPhone, and IPad and the music business is a sell of its former self.

Whether you are a Republican or a Democrat, you understand that we have a tremendous national debt problem and the problem will get worse over time. President Barack Obama’s 2014 proposed budget includes a provision that would cap how much people could keep in tax-preferred retirement accounts at $3 million.

The retirement plan industry is predicated on people savings for retirement. Clearly, the upper middle class and upper class save more for retirement than the other half. Clearly, any caps will have a deterrent effect on wealthy people saving for retirement. Whether you have the idea to soak the rich or not, any cap on retirement savings will have a negative effect on the retirement plan industry, especially those who bill on plan assets such as financial advisors, custodians, mutual fund companies, and third party administrators.

While we need a plan to trim our deficit, a raid on the retirement accounts of some of our wealthier plan participants is only going to imperil our bottom line.  The cap is a threat to our livelihood in this industry.

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One Response to The retirement cap is a threat to the Retirement Plan Industry

  1. Ary, you are right, of course, and as usual. However, my orientation on this abysmal and disoriented topic is not my pension practice’s profitability, or growth, or even its continuance. It’s the effect that Mr. Obama’s budgeted changes will have on the sufficient availability of retirement income for our citizenry (or their named beneficiaries) who are no longer members of the working class — whether their severance thereof is due to voluntary retirement, death, or disability. Insufficient income will equate to such Former Workers’ becoming Wards of State, supported by us taxpayers. I believe the politically-correct term is they would become eligible for a Federal “entitlement,” and I personnally decry that labelled definition to those of us who paid [along with our Employers] into Social Security for, lo, these many years. I’ve said it so many times that I will ignore the certain tag of repetitious absurdity (and others) I’ve had bestowed: The United States of Ameria needs a National Retirement Policy which is endowed with stategic foresight for our citizenry’s retirement income sufficiency, and commensurably defended with dogmatic prohibition against recurring political amending attacks on the viability of that National Policy. Yeah, I know; good luck you naive person.

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