“Government-funded investment accounts for children could be on the horizon,” writes CNBC“and if technology investor Brad Gerstner has his way, American companies will provide equivalent funds…”
Gerstner worked with legislators to promote a legislative agenda known as Invest in America It would create an investment account with $1,000 for every child born in the United States, but it is still too early in the process to publicly name its supporters. However, its objective is to have a law adopted before the next presidential election. At the same time, it is working with corporate America to encourage companies to offer matching funds to help their employees increase their savings.
“The vision is simple: Companies would include a $1,000 Invest America match in the Invest America account of their employees’ children,” Gerstner, founder and managing director of Altimeter Capital, said in an email. “We’ve spoken with companies ranging from Zillow to Dell to Uber and, subject to details, the response has been overwhelmingly positive,” he said. Rich Barton, co-founder and chief executive of Zillow, said it was a “no-brainer” for his company to fully support and match the type of program Gerstner offers. “A 401(k) investment account from birth seems like a great way to combat the growing divide around financial literacy and wealth,” he said in an email. “It’s a small investment to help parents have more peace of mind.”
Representatives for Microsoft CEO Satya Nadella, Michael Dell and Uber CEO Dara Khosrowshahi, other companies cited by Gerstner in a recent CNBC interview as being receptive to his pitch, did not respond to requests for comment. comments by email…
Certainly, businesses that have participated in a matching program can benefit from tangible – and intangible – benefits. For example, the government should offer tax incentives to businesses that would likely operate similarly to how deductions are handled for 401(k) contributions, said Jeffrey Sharp, executive vice president of HUB International, a broker-dealer. global insurance company that provides employee benefits. and other products and services. A person with $1,000 in their account at birth could expect a balance of around $107,000 at age 67, provided the portfolio grows at an annualized rate of 7%, according to CNBC Make It’s, compound interest calculator. With a company match, an investment of $2,000 could reach approximately $215,000, under the same conditions. The result could be even more beneficial if parents provided additional funds.
The article also warns that companies “should consider whether to pay for these types of benefits that not all employees could receive. They might decide, for example, that they would be better off increasing their 401 matching (k) so more employees could benefit from it.”
But “I think we’re in a historic moment right now to get everyone involved in the game of capitalism,” Gerstner said in an interview, noting that it would cost just $3.7 billion to fund 50 million accounts, or “less than 1/100th of 1%”. of the national budget” — and that he hopes to see the legislation introduced next year “in the spring”.