Felix has a very nice post on the new retirement program that California is considering. I think it is a very good idea and the state running it is a major plus. It's astounding but true that the very best instruments that I can find in the private sector (currently thinking Vanguard here) seem to run neck and neck with large retirement plans in terms of both fees and returns.
I am a little less thrilled by investment guarantees, unless they are really well adjusted for inflation. But, conditional on that, this would also smooth out returns in a very nice way. Sure, it has the government investing in the markets. But the only other alternative is paygo, which has come under a lot of question as to the willingness of taxpayers to honor previous promises.
I agree that this is an exciting development.
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