NAIFA-NYS sent the following letter-to-the-editor in response to a February 19 Times Union editorial entitled “A Retirement Plan for All.” The editorial urges state legislators to include Governor Cuomo’s “Secure Choice” Retirement Plan in this year’s budget, claiming that the Governor’s proposal could help many New Yorker’s avoid a “financial crisis” in retirement. NAIFA-NYS, which strongly supports finding ways to enhance retirement security, adamantly opposes government-sponsored retirement plans like the Governor’s. Here’s what we had to say…
The editorial promoting Governor Cuomo’s so-called “Secure Choice” retirement program misses several points that legislators must consider when deciding whether to include it in this year’s budget. These points take the bloom off the proverbial rose. State-run retirement programs for private companies really only work when they are compulsory; no one should believe that the Governor’s proposal will remain “voluntary” for long. And this is what has the state’s employers so concerned. Additionally, a state-run program will directly compete with a vibrant but under-utilized private market for retirement products offered by insurance agents and financial advisors. New York has a long and not so proud history of having government-run programs compete directly with private markets, rather than doing more to promote and protect them.
The editorial also, incorrectly, leaves an impression that this retirement program will somehow be safer than private market 401-K’s and similar retirement instruments. That might be true if this was a defined-benefits construct with guaranteed payouts, but it is not. And there is no entity ultimately responsible to the investor/pensioner if things were not to work out. As they say for every commercial transaction, “read the fine print.”
The National Association of Insurance and Financial Advisors-New York State strongly encourages improved opportunities for retirement security—but the state would do better to promote and expand the number of private-sector retirement products (many offered in other states are not allowed here), and expand the financial incentives for investing in or buying them before creating a state-run program and telling everyone their problems will be solved.
Joseph Tavernite, CLF
17 Elk Street, Suite 3
Albany, New York 12207