-----Original Message----- 

From: Gill, Kenneth C LTC MIL USA OSA 

[mailto:kenneth.gill1@us.army.mil] 

Sent: Thursday, April 29, 2010 10:23 AM 

To: EBSA, E-ORI - EBSA 

Cc: kenneth.gill1@us.army.mil 

Subject: Response to Lifetime Income Options for Participants and 

Beneficiaries in Retirement Plans 

As an individual who is currently contributing to a Roth IRA and will 

be drawing a Government sponsored (military) pension; I would like to 

make the following comments reference the Lifetime Income Options for 

participants and Beneficiaries in Retirement Plans. These comments are 

reference to the first two questions on the RFI. 

1. I believe there are only disadvantages with any plan where 

individuals voluntarily or are mandated to convert their current IRAs, 

401(k)s, or other personal retirement accounts into Government 

controlled annuities. 

The first disadvantage is the U.S. Government’s inability to 

effectively manage this type of program and keep it financially solvent 

. This financial ineptness is demonstrated in the U.S. Government’s 

management of its current annuity program, Social Security. Every 

month millions of people pay into a Social Security “trust fund”, a 

trust fund that has “supposedly” been funded by a $2.4 trillion dollar 

surplus since 1983. However, the truth is that there is no real money 

in the trust fund, only IOUs. This is compounded by the fact that the 

program is now running at a deficit level. As the Office of 

Management and Budget (OMB) said in 2000, “These balances are available 

to finance future benefit payments only in a bookkeeping sense. They 

do not consist of real economic assets that can be drawn down in the 

future to fund benefits. Instead, they are claims on the Treasury 

that, when redeemed, will have to be financed by raising taxes, 

borrowing from the public, or reducing benefits, or other 

expenditures”. The bottom line is why should I, or the American 

people, trust the Government to manage more of our retirement assets 

when they have already demonstrated their incompetence with Social 

Security; raiding the trust fund and leaving taxpayers and future 

generations with the bill. 

The second disadvantage is the fact that Government annuities would 

invariably be based on the purchase of U.S. Treasury Bonds whose 

interest rates may provide woefully inadequate compensation when 

compared to other types of investments. This disadvantage is 

compounded when you include the fact that the Government has 

intentionally suppressed Treasury yields during the current 

recessionary period and is likely to do so in the future, especially if 

they now must provide the American public a return on their investment. 

Finally I believe either voluntarily or forcing individual Americans to 

convert their personal retirement accounts into Government annuities 

through the purchase of Treasury bonds would drastically increase 

Government spending or be used for purposes other than supporting an 

individual’s retirement. Just as the politicians have raided the 
Social Security trust fund, they would use this new revenue stream to 

immediately pay for new spending. 

The third disadvantage would be the addition of another Government run 

program and bureaucracy resulting in increased individual dependency on 

the U.S. Government. In reality this program would continue to destroy 

individual responsibility and financial independence; two elements 

critical to the future success of our country. This type of program 

would strip away a personal choice and replace it with a Government 

mandate, supplanting personal financial freedom with decisions based on 

political philosophy or programs. 

The bottom line is that I should have the freedom and responsibility to 

make my own financial decisions reference retirement while having as 

many investing options as possible. This is the only way that I will 

have an opportunity to achieve some level of financial independence. 

Instituting a Government run retirement annuity option will only 

increase individual dependency on Government while significantly 

limiting the potential for financial benefit. 

 2. I believe the premise behind this question, that there is a 

disadvantage to people not selecting a lifetime income option, is 

faulty. Contrary to your stated factor of “poor decision-making by 

consumers”, I believe consumers who have an IRA or 401(k) are very 

knowledgeable about their financial situations and make decisions based 

on their needs and what is best for them. Selecting a lifetime income 

option while appropriate for some individuals is not appropriate for 

all. This is especially true since people can normally achieve a 

higher rate of return on investments outside of a lifetime type 

annuity.