BlackRock chairman Larry Fink has endorsed a plan by Senators Bill Cassidy and Tim Kaine to create a separate parallel Social Security trust fund seeded with a $1.5 trillion loan from the U.S. Treasury. The new fund would invest in equities and other higher-risk assets for 75 years, after which the Treasury could be repaid with interest and remaining returns could theoretically close the gap between Social Security revenues and benefits. The endorsement comes after the Social Security Board of Trustees' June 9 report warned that the Old-Age and Survivors Insurance trust fund is expected to run out of money to pay benefits in 2032, at which point revenue would cover just 78% of promised benefits, implying a potential 22% benefit cut. The Center for Retirement Research flagged problems with the plan, including its 75-year timeline, the risks of government investing directly in the stock market, and concerns that government investment could influence corporate behavior, and a Monte Carlo analysis showed the fund fails to repay all it borrowed in 64 of 100 outcomes after accounting for equity volatility. Fink compared the proposal to the Thrift Savings Plan for federal workers and noted that countries like Australia invest retirement contributions in the markets, adding that the conversation is needed now because the cost of waiting is only getting higher.
BlackRock IncFink endorses a $1.5T Social Security parallel trust fund plan, but the article gives no clear positive/negative driver for BlackRock itself.
Yulon Finance Corp
