New U.S. Government Retirement Agency Coming in 2010: The Department of Inefficiency

Report Summary

New U.S. Government Retirement Agency Coming in 2010: The Department of Inefficiency

Given the infrastructure and capabilities currently in place, a new government agency dedicated to retirement savings, with its US$1 billion annual price tag, is a suboptimal solution.

Boston, MA, May 26, 2009 – A new report from Aite Group, LLC details the United States' proposed new retirement savings plan, as it is currently configured, and lists similar services currently offered by brand-name, low-cost firms.

The current U.S. executive branch has shifted its focus for retirement savings initiatives in 2010. Previously on the table was a program to mandate enrollment in employer-sponsored 401(k) plans. Now, the administration has settled on an auto-enrollment IRA program through payroll deduction. While many details of the plan are still in development, Aite Group suggests that a new government agency dedicated to retirement savings, with its US$1 billion annual price tag, is a suboptimal solution - particularly given the existing financial services infrastructure.

"The proposed government agency has a noble charter: to boost retirement savings by Americans in lower earnings brackets," says Doug Dannemiller, senior analyst with Aite Group and author of this report. "However, a new government agency with a US$1 billion budget to oversee a mandated payroll deposit allocation is an inefficient utilization of the existing financial services infrastructure, and a potential a burden to small employers."

This 10-page Impact Note contains eight figures. Clients of Aite Group's Wealth Management service can download the report.

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