Investment Company Institute president and CEO Paul Schott Stevens is taking up the 401k industry flag in responding to Jason Zweig’s attack on the retirement savings vehicle earlier this month.
Zweig had ripped the 401k in its current form, decrying a lack of guarantees like those inherent in its DB counterpart.
He also appealed to 401k “founder” Ted Benna’s authority in making his case for higher worker coverage overall, noting Benna “remains frustrated by the glacial pace at which access to retirement plans has widened.”
Letter to the editor
In a letter to the editor of The Wall Street Journal sent by the ICI Tuesday, Stevens specifically takes issue with portability criticisms raised by Zweig.
“American workers have many options to ensure that their retirement savings follow them throughout their careers,” Stevens writes. “Each year, millions of job changers roll their assets from employer plans into individual retirement accounts (IRAs). Millions of self-employed individuals save through Simplified Employee Pensions (SEPs), SIMPLE IRAs, Solo 401ks, or other plans. And millions of workers who lack employer plans fund their own tax-favored traditional or Roth IRAs.”
In short, he adds, “we already have a system in which your retirement savings can follow you wherever you go or however you work.”
It’s a system that actively engages employers in promoting and facilitating workers’ retirement saving; features vigorous competition among investment providers; and has fostered such private-sector innovations as auto-enrollment, auto-escalation, target date funds, employer matches, and participant education and empowerment.
“Our system also preserves individual choice and control of investments—prized by 94 percent of savers with 401(k)s and similar plans. All of those features would be at risk under proposals, like those in your article, that would reduce employers’ role and create new bureaucracies.”
Working together, Stevens concludes, “America’s workers, employers, and financial institutions have constructed a sound retirement system, amassing $29.2 trillion in savings. Let’s build on that strength—not tear it down.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
