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.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.