I'm a big fan of "Saturday Night Live," particularly its Weekend Update segment with Seth Meyers. Every now and then, Meyers is joined at the anchor desk by former Weekend Update co-anchor and "SNL" star, Amy Poehler. Together, they host a snarkfest of a segment called "Really?! With Seth & Amy."
I channeled "Seth & Amy" when I read research from the Investment Company Institute that - even while noting the drop in active DB plan participants from 27 million in 1989 to 17 million in 2010 - concludes that "the extent to which previous generations of retired households relied on income generated by private sector DB plans is often exaggerated," and that consequently, the move from a defined benefit world to a defined contribution world "is unlikely to reduce retirement preparedness."
Really?! Really, ICI?! A 10-million participant drop in DB plans - and the decrease in generation-to-generation wealth transfer that's plausibly aligned with it - is "exaggerated?"
And DC plans don't reduce retirement readiness? Really?!
Okay, sure. I'll grant you that today's workers aren't going to be eating cat food in retirement solely because many of them are enrolled in DC plans. I'll further stipulate that the nation's abysmal saving/spending habits and the woeful lack of seriousness with which many Americans approach retirement planning greatly contribute to retirement readiness, or lack thereof.
But you know what else is a big factor? DC plans.
I mean, really. DC plans are the primary retirement savings vehicle offered to today's employees, and research shows 401(k) balances are at an all-time high.
But at the exact same time, retirement confidence is at an all-time low - lower than during the height of the recession in 2009. Yes, really.
Retirement confidence is so low in fact, that for many Americans, their new retirement planning strategy is to work until they keel over - something a recent NBC News report called "a last resort, not a plan." Does ICI really think people want to be working until they're 80? And that they would, if they had a guaranteed pension waiting for them? Really?!
And really, ICI. There have been federal hearings on whether certain types of DC plans were up to the task of helping Americans save adequately for retirement. Not to mention the uproar IBM caused when it shifted to a once-annually 401(k) contribution. (Read a story about the potential impact for retirement plans on page 22.)
No big deal? Those heated debates are just a blip, perhaps even "exaggerated," just like the value of DB plans? Really?!
This isn't to say I don't understand the complicated history behind the defined benefit and defined contribution systems in terms of workforce demographics/dynamics and employer fiscal challenges. I do. And I know this editorial is a reductionist approach to a complex set of employment circumstances. But you know what else is reductionist? ICI's findings. Yes, really.
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