US - Federal Reserve chairman Alan Greenspan has urged Congress to tackle the condition of the nation's state pension system or face heavy budgetary pressure in years to come.
In his testimony to the House Budget committee, he again affirmed his support for President George W. Bush’s proposal for private savings accounts but stressed the challenge of pressures on Medicare brought on by an ageing population was more problematic than the state of social security.
“You will need to consider not only the distributional effects of policy changes but also the broader economic effects on labor supply, retirement behaviour, and private saving,” Greenspan told Congress.
“In the end, the consequences for the US economy of doing nothing could be severe. But the benefits of taking sound, timely action could extend many decades into the future.”
Meanwhile, Democrat representative George Miller has called for comprehensive reform of US traditional pension plans and 401(k) plans.
Speaking to the Senate committee on finance, Miller said he was concerned the Bush administration’s proposal for pension funding reform was a “fairly harsh medicine that will kill the sick patient”.
“401(k) plans have lost over US$60bn since 2000,” he said. “The median account balance only US$14,000. And 401(k) assets are being managed by advisers with rampant conflicts of interest who are eating up workers’ hard earned retirement savings with excessive hidden fees.”
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Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point