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Edited on Thu May-03-07 06:20 AM by papau
cause a minor rise in the price level as business adjusted - but it would cause little else as to hurting the economy - and investing would as always stimulate the economy - the money would be forbidden from gov bond investments so as to not be "borrowed/stolen" for tax cuts.
At the moment service company start-ups are told to price so that after minor fixed costs they are getting 20% on wages each year. That rule of thumb becomes 25%. The "business plan" spreadsheet hardly changes. Mid-size operations (10 plus workers) just raise prices by 3%.
As Duer antigop notes - the key is the design - no cash balance, a simple final pay plan of 1.5% per year of service, with no investments in government bonds permitted by the entity that takes the money in, with either sub-management contracts to any and all US investment management firms or required investment in an indexed corporate bond fund and an equity index fund.
The pension plans for the richer folks - the 401k and profit "sharing" plans with the rules that move 98% of the profit to the owner would continue.
On reflection the employee contribution screws things up- better to do that through mandatory offering of 401k plans. Set the price at 4% for 0.75% per year of service benefit.
The end result should be retirement at age 70 at 75% of salary based on the 401k/IRA, the new mandatory final pay pension, and Social Security, with personal savings that are normally minimal being a kicker to get that percentage a little higher, with retirement at 62 at perhaps 50% of final pay - the reduction being similar to the current Social Security reduction factors, with the "reduction" for the 401k/IRA monies being at roughly the same level of reduction as the defined benefit plan reduction but being the natural result of less accumulated and a longer life span for the payout because you retired early.
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