I applaud you folks for your Oct. 18 editorial "401(k) cashout solution hurts." It's critical to keep reminding the industry about the high level of 401(k) cashouts and the need to correct the situation.
You overlooked one key aspect of fixing the problem, however -- persuading plan sponsors that it's in their plan's best interest to encourage terminating and retiring employees to leave assets in the plan. The more assets under management, the lower the fees to the plan and the greater the value of the plan and its services for the active participants.
The participant who remains in the 401(k) plan not only forgoes the opportunity to spend the money intended for retirement savings, he retains access to a presumably well-structured fund and avoids the need to pay broker or commission fees on any rollover investments. 401(k) plans also often provide cheaper (institutional) fee structures on investment offerings and benefits not present on retail offerings, such as a lack of surrender changes on guaranteed products.
Both parties benefit if the terminating employee leaves plan assets in the plan, but far too few of the pension community seem to what to encourage the practice.
In the editorial "Other monopolies are worse," in the Nov. 15 issue, you make one of the weakest, most irrelevant and, frankly, silliest arguments about the Microsoft Corp. anti-trust activity that I have read. It is factually inaccurate.
The competitive presence of successful mail service providers like UPS and Federal Express refutes the idea that the United States Postal Service (an independent, non-governmental agency, by the way) is in some fashion a monopoly after which the government should go.
These are companies with which I expect you would be familiar. It rests on the fallacious concept that Social Security is somehow a "monopoly" in the same fashion that Microsoft is. You clearly don't comprehend the difference between a governmental program, such as Social Security, which is designed to fill a societal need that business is unlikely to fulfill and which has no profit motive, and a business which has, through illegal tactics, eliminated its competition primarily to make its profit inevitable (that's the definition of a trust).
Finally, it concludes with an argument, that the Justice Department should bring a case against Uncle Sam, that is simply laughable. Unless, of course, you think there actually is a person named Uncle Sam. The fact that Social Security is inherently legal, was introduced and has been sustained by the actions of elected representatives in our democratic form of government and therefore does not merit legal injunction notwithstanding, asking for Justice Department action against Social Security is akin to asking Bill Gates to sue himself for building a trust.
A publication that purports to be a useful source of information and perspective to a sophisticated audience of investment professionals really needs to do a more thoughtful job of characterizing its opinions if it has any hope of retaining credibility with its readers.
John J. Koskoski
Editor's note: It is against the law for anyone other than the post office to deliver mail. Social Security also is a monopoly, compelling participants to pay into it; there is no "Apple" Social Security alternative.