“Treasury Ends Obama-Era Retirement Savings Plan” (nytimes):
An Obama-era program that created savings accounts to help more people put away money for retirement is being shut down by the Treasury Department, which deemed the program too expensive.
The 30,000 participants in the program, known as myRA and intended for people who did not have access to workplace savings plans, were sent an email on Friday morning alerting them of the closing.
President Barack Obama ordered the creation of the so-called starter accounts three years ago, and they became available at the end of 2015. Since then, about 20,000 accounts have been opened, with participants contributing a total of $34 million, according to the Treasury; the median account balance was $500.
The program has cost $70 million since 2014, according to the Treasury, and would cost $10 million a year in the future.
So it cost $3,500 per customer to administer a $500 account? And it was going to cost $950 per year going forward to hold onto $500?
OT: Am I wrong to think that our blog host offered an email version of an app like this in the mid 1990s?
If I’m not wrong, then I’d like to thank him for the service, which I used all the time, and miss dearly.
http://www.berkeleyside.com/2017/08/21/could-a-text-alert-help-avert-your-next-street-sweeping-ticket/
Whoa! That is impressively off topic! But yes, we did build that as a fun little exercise, along with a birthday reminder system that is described in http://philip.greenspun.com/panda/case-studies
(Interestingly, the venture capitalists who took over management of ArsDigita desperately tried to shut down all of the little services that we were running and “stick to the basics” of the enterprise software toolkit that was generating the $20 million/year in revenue. But it turned out that companies offering similar services (not this particular one) ended up being worth crazy money in the mid-2000s.)
What you are missing is that for government, wasting a lot of money is not a bug, it’s a feature.
I wish such management fees were in force when I worked for an asset management business. There an extra 0.5% in fees is a huge profit, and performance fees run to then tune of 5-15% of gains over S&P 500 or some baseline percentage gain.