Guaranteed retirement accounts

Following on from Alan's post, I looked a bit into Guaranteed Retirement Accounts. Probably the best source of information on these is this link from the person who is credited with the idea.

Nothing I read in this description seems to indicate that it would involve nationalizing existing 401k assets, as I've talked about. It mostly seems to be a replacement for the existing 401k program in order to do away with the concept of defined-contribution plans in favor of defined-benefit plans. This is obviously coming from that side of the political spectrum that believes that people shouldn't have any responsibility for their own futures.

The plan (as proposed) is effectively to force everyone to contribute 5% of their income (with half of that supplied by the employer) to a GRA. The GRAs would be administered by the Social Security Administration and would generate a guaranteed 3% over inflation. On retirement, the GRA would become an annuitized income stream. The tax benefits of 401k's would be replaced by a flat $600 tax credit.

What's amusing about the proposal is its political naivete. The link above addresses the question, "Why no simply expand Social Security?", but the answer to that question is, effectively, because Social Security might go bankrupt. "In contrast, the appeal of GRAs is that they are fully pre-funded...." I can't imagine that politicians (or bureaucrats) won't raid these funds in exactly the same way that they raided the Social Security "trust fund".

And while there's nothing explicit in this plan to nationalize existing 401k assets, I wouldn't be surprised to see later action to the effect of, "Gee, these GRAs are working out so well that we think everyone should just convert their existing 401k's into GRAs." But hell, I'm just paranoid that way.