President Bush revealed that his first steps toward realizing a goal to transfer a portion of Social Security taxes into privately managed equity and fixed-income accounts may include cloning a federal retirement vehicle for members of the military known as the Thrift Savings Plan, The Wall Street Journal reports.
In a speech last week, Bush said the Thrift model already enables federal workers to invest their assets in a handful of privately managed stock and bond accounts. Most Thrift plan participants have avoided common investor blunders, such as shifting portfolio assets into equities at the top of a market cycle.
Treasury Secretary John Snow said he is on board with the President's suggestion to make the Thrift plan a working model for privatizing a portion of Social Security assets. But shareholder advocates say the president's plan has significant drawbacks. For example, a small portion of the federal workers who became actively involved in managing their retirement portfolios have succumbed to timing errors and, as a result, endured significant setbacks.
The Thrift plan was developed in 1986 and currently holds $147 billion of assets for 3.4 million government workers.
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