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Pension Plan for Poverty
Friday, January 3rd, 2014
BY GAREN YEGPARIAN
Imagine starting off the 2014 New Year knowing that you're going to
get screwed by your own government in yet another way. That's what our
compatriots in the Republic of Armenia (RoA) face starting January 1.
This time, the injury is being delivered via a `reformed' pension
plan. The new system will put Armenia in the `illustrious' company of
Chile, El Salvador, Mexico, and Kazakhstan - all countries noted for
their extremely caring attitudes towards their citizens, NOT!
What will now happen is that everyone who is actually employed in the
country will be OBLIGATED to contribute 5-10% of their income into the
equivalent of what we know in the U.S. as a `401K' plan. The
preexisting system was a little bit more like the U.S. Social Security
program in that everyone contributed part of their pay and, upon
retirement, received a pension based on years of employment, only (in
this way it is different from Social Security which pays out based on
one's income, not just years of service).
In the interest of avoiding contentiousness about the merits of 401K
plans (which I do not support), let's just grant, for the sake of
argument, that they represent a good approach. But, what goes into
that approach?
Since 401Ks involve investing, usually in stock markets (sometimes
through mutual funds), the first thing that becomes obvious is anyone
using this type of system must be familiar with how such markets
operate. This is not a skill that is easily acquired, nor is it one
that everyone can appropriately master. That's why the professions
known as financial and investment advisors exist.
Now, not that I know for sure, and I don't want to sell our eleven
thousand square mile republic short, but I suspect not too many of
those advisors exist there, given the Soviet era. Add to that the
absence of extensive awareness, collectively, culturally of how
markets fluctuate, when to buy and sell - UNEMOTIONALLY, the sometimes
usurious fees charged by advisors and other handlers of people's
precious retirement funds, and the generally corrupt atmosphere that
prevails, and you have a wonderful recipe for impoverishment upon
retirement. Now, complicate that some more with the simple fact that
some people will hit retirement age when the markets are doing well,
while others will hit that age when they're doing poorly.
Just look around the U.S. and you'll learn of the dissatisfaction, or
at the very least, worry, over how 401K plans are turning out for
their owners. Then think about how bad an idea this type of approach
is for the RoA. I can already hear the bleating as our hardworking
compatriots are fleeced by unscrupulous operators.
At this point, I usually recommend some action to readers, but this
time, I'm stymied. What can I ask you to do? Even though the four
opposition parties in the RoA's parliament are opposed to this
foolhardy change in the law, they are vastly outnumbered by the
governing Republican Party. So appealing to members of parliament is
pointless, the Republicans are dead set on harming the population.
The opposition has filed suit in the RoA's supreme court. Maybe we can
write to them.
Regardless, if you think of an appropriate way to make your
disapproval heard, please do it, and share that way with others.
http://asbarez.com/118009/pension-plan-for-poverty/
Friday, January 3rd, 2014
BY GAREN YEGPARIAN
Imagine starting off the 2014 New Year knowing that you're going to
get screwed by your own government in yet another way. That's what our
compatriots in the Republic of Armenia (RoA) face starting January 1.
This time, the injury is being delivered via a `reformed' pension
plan. The new system will put Armenia in the `illustrious' company of
Chile, El Salvador, Mexico, and Kazakhstan - all countries noted for
their extremely caring attitudes towards their citizens, NOT!
What will now happen is that everyone who is actually employed in the
country will be OBLIGATED to contribute 5-10% of their income into the
equivalent of what we know in the U.S. as a `401K' plan. The
preexisting system was a little bit more like the U.S. Social Security
program in that everyone contributed part of their pay and, upon
retirement, received a pension based on years of employment, only (in
this way it is different from Social Security which pays out based on
one's income, not just years of service).
In the interest of avoiding contentiousness about the merits of 401K
plans (which I do not support), let's just grant, for the sake of
argument, that they represent a good approach. But, what goes into
that approach?
Since 401Ks involve investing, usually in stock markets (sometimes
through mutual funds), the first thing that becomes obvious is anyone
using this type of system must be familiar with how such markets
operate. This is not a skill that is easily acquired, nor is it one
that everyone can appropriately master. That's why the professions
known as financial and investment advisors exist.
Now, not that I know for sure, and I don't want to sell our eleven
thousand square mile republic short, but I suspect not too many of
those advisors exist there, given the Soviet era. Add to that the
absence of extensive awareness, collectively, culturally of how
markets fluctuate, when to buy and sell - UNEMOTIONALLY, the sometimes
usurious fees charged by advisors and other handlers of people's
precious retirement funds, and the generally corrupt atmosphere that
prevails, and you have a wonderful recipe for impoverishment upon
retirement. Now, complicate that some more with the simple fact that
some people will hit retirement age when the markets are doing well,
while others will hit that age when they're doing poorly.
Just look around the U.S. and you'll learn of the dissatisfaction, or
at the very least, worry, over how 401K plans are turning out for
their owners. Then think about how bad an idea this type of approach
is for the RoA. I can already hear the bleating as our hardworking
compatriots are fleeced by unscrupulous operators.
At this point, I usually recommend some action to readers, but this
time, I'm stymied. What can I ask you to do? Even though the four
opposition parties in the RoA's parliament are opposed to this
foolhardy change in the law, they are vastly outnumbered by the
governing Republican Party. So appealing to members of parliament is
pointless, the Republicans are dead set on harming the population.
The opposition has filed suit in the RoA's supreme court. Maybe we can
write to them.
Regardless, if you think of an appropriate way to make your
disapproval heard, please do it, and share that way with others.
http://asbarez.com/118009/pension-plan-for-poverty/