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Teresa Ghilarducci, Tony James outline plan for mandatory retirement accounts

Guaranteed retirement accounts could become a reality in the U.S., said Hamilton E. "Tony" James, Blackstone president and chief operating officer, at a Washington panel discussion Tuesday.

Mr. James and Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at The New School, outlined their plan for mandatory retirement savings accounts, which calls for employers and employees to each contribute 1.5% of pay into government guaranteed accounts that would be managed by approved asset managers and paid out as an annuity. It would be mandatory for people without retirement accounts; people already with access could also participate.

"The key part of it is investing like pension funds," which historically return 8.5% compared to 401(k) accounts earning 2% to 3%, said Mr. James, who has spoken with major asset managers who "love this plan. ... The economies of scale for a (money) manager are huge," he said.

Half of the workforce would qualify for a tax credit to cover the employee cost. "It's very hard to see how people are going to object to that," Ms. Ghilarducci said at the panel hosted by the Center for American Progress. The accounts would give more people access to diversified portfolios and be a better fit for future workforces, she said.

"The mandate would not be the problem," said Mr. James, who cited focus groups showing approval from Republicans and Democrats. While "the chances did not go up" after Donald Trump was elected, "we think we can sell it" to both parties in Washington, he said.