New research from Mercer reveals that retirement plan sponsors are split on the ability of the 401(k) to ever provide adequate retirement benefits, with 50% who believe the plans can be fixed now or through additional regulations and 50% who disagree or are unsure.
When asked about lawmakers ideas on alternatives to the current system, 87% of respondents oppose eliminating pretax contributions, while the most palatable alternative is combined savings accounts for retiree health care and retirement income (66% in favor). Nearly half (49%) say DC should focus its retirement efforts on shoring up Social Security.
Some 35 years after the enactment of the Employee Retirement Income Security Act and its subsequent amendments and associated regulations, Americans may have no more secure a retirement future than in 1974, says Amy Reynolds, a Mercer principal and defined contribution retirement consultant. Todays employers are increasingly relying on employee savings plans, such as the 401(k), as the foundation for their workers retirement income yet recent economic pressures underscore the weakness of this approach.
