Given Social Security, not only as a concept, but how it has been used as a piggy bank by a spendthrift Congress, the likelihood that a GRA would suffer a similar result is close to certain.
"Giving money and power to government is like giving whiskey and car keys to teenage boys."--P.J. O'Rourke
The (HR person of the) employer chooses what to allow in a 401k. Normally you have a dozen funds or so available. And the choice by the employer doesn't necessarily align with the employees interests, as the high fee funds would love to send you that amazon gift card, whereas the low fee funds wouldn't even reach out to you. ;-)
Some companies have experienced people looking at many companies and picking one based on the lowest costs and wide selections.
Other companies might pick Joe Blow Company because the salespeople are attractive and the lunches and dinners are expensive. Vanguard might have salespeople if you're big enough but most companies aren't.
Locally, there was a company that got its hands on a lot of union pension money. They took the trustees on safaris in Africa, etc. https://www.wweek.com/portland/article-23437-sept-21-2000-th... In a lot of cases, the people making the recommendations aren't evil but just overwhelmed by the personalized attention that a high-cost alternative can give them.
And, one doesn't need some magical financial acumen to do this. You can buy a "target retirement" fund which simply holds things in a ratio (based on financial industry consensus) recommended for your retirement age.
Anyway, the general strategy is to move from stocks to bonds and then government bonds the closer you get to retirement. Definitely not something you need a money manager for
I hope someday we can all see why this is both amazing and ridiculous...
> In Rescuing Retirement, Ghilarducci and James promote what they call a “Guaranteed Retirement Account” (GRA), a system of federal retirement savings accounts that would combine features of defined benefit and defined contribution plans.
Nice to see a proposal in the article.
> GRAs would be professionally invested and would, Ghilarducci and James argue, generate greater returns than existing 401(k)s by taking advantage of access to the more profitable investments and lower fees that large pools of assets can offer. The accounts would follow workers throughout their careers, even if they changed employers. When the time came, the GRA would be transformed into an annuity, which, alongside Social Security, would pay out a consistent and lifelong income.
I don't know anything about 401(k)s but do they really operate on some foundational condition of less-profitable investments and higher fees?