Don't Use Enron to Tar Personal Retirement Accounts
February 6, 2002
Opponents of Social Security privatization are poised to use Enron's example as a reason to quash the movement toward personal retirement accounts. But advocates say the naysayers will have to muddy the issues considerably to do so.
- To begin with, personal accounts would be designed to avoid the outcome at Enron by banning the concentration of funds in one stock -- which was the downfall of those who loaded up on Enron shares, rather than diversifying their investments.
- With private accounts, employees would pick a broadly diversified mutual fund -- which would hold much less than 1 percent of their money in any one stock.
- Such an arrangement is quite similar to the Thrift Savings Plan for federal employees -- which has never experienced an Enron-style problem.
Personal retirement accounts hold enormous benefits, analysts report. They would progressively increase benefits to low-income workers, blue-collar workers, African-Americans, Hispanics and women. The accounts would provide workers with real personal ownership of their retirement funds -- as well as the right to bequeath that wealth to their families when they die.
Source: Peter Ferrara (Americans for Tax Reform), "Enron and Social Security," Washington Times, February 5, 2002.
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