http://www.bloomberg.com/apps/news?pid=20601087&sid=aw1LU5_qRb.I&refer=home
Feb. 24 (Bloomberg) -- House Education and Labor Committee Chairman George Miller said 401(k) retirement plans do not provide sufficient retirement security for many Americans and must be revamped. Miller, a California Democrat, recommended better disclosure of 401(k) fees and more objective marketing of retirement products to investors at a Washington hearing today on the effectiveness of existing retirement savings plans. Investors had $2.7 trillion in 401(k) accounts as of Sept. 30, according to the Washington-based Investment Company Institute, which represents mutual funds. The Congressional Budget Office estimated that workers lost $2 trillion over a span of 15 months from declining stock markets at an October hearing of the House Education and Labor Committee. “For too many Americans, 401(k) plans have become little more than a high-stakes crap shoot,” said Miller. “We are realizing that Wall Street’s guarantees of predictable benefits and peace of mind throughout retirement was nothing more than a hallow promise.” Miller questioned at the October hearing whether the U.S. had gotten its money’s worth from the estimated $80 billion in tax subsidies the retirement accounts receive each year. At the hearing, Teresa Ghilarducci, a professor at the New School for Social Research in New York, proposed replacing 401(k) plans with government-run retirement savings accounts. ‘Preserve and Strengthen’ Today, Miller said “we must preserve and strengthen 401(k)s.” About 55 million private-sector employees have defined-contribution retirement plans, in which workers are responsible for managing their own funds, according to the Center for Retirement Research in Boston. The 401(k) plans, which generally are tax-deferred savings accounts, are one of the most common retirement plans. John Bogle, founder of fund manager Vanguard Group, echoed Miller, saying, “the 401(k) plan is an idea whose time is come” yet “our existing defined contribution system is failing investors” because of high fees, low levels of saving, excess flexibility that permits cashing out and too much borrowing and inappropriate asset allocation. Bogle recommended a single defined contribution structure using low- cost annuities, among other options. Retirement savings are too exposed to market risk, according to Dean Baker, co-director of the Center for Economic and Policy Research in Washington and another witness at today’s hearing. Baker proposed a government-run pension system providing a modest guaranteed rate of return, according to a statement released last night. Employees must work longer to extend retirement savings and social security could be stabilized and supplemented by target- date funds, said Alicia Munell, director of the Center for Retirement Research at Boston College, in prepared remarks. Target-date funds shift money into more conservative investments as an investor approaches retirement. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
