SURVEY SAYS: What's Your Preferred Retirement Initiative?

January 28, 2010 ( - The Obama Administration this week renewed its support for a variety of initiatives designed to improve/enhance retirement programs.

Among those are more fee disclosure, encouraging unbiased advice availability, expanding retirement income options, more target-date fund disclosures, and – well, you get the idea (if not, check out .  This week, I asked readers which one they would MOST prefer to see enacted – and which, if any, would they would just as soon prefer got lost in the “shuffle?”      

As you might expect, there was a variety of opinions among this week’s responses about the best alternative, and a very narrow margin for the “favorite.”  But the “loser” stuck out like the proverbial sore thumb.      

The Least Popular

The least popular initiative – and the most popular to get lost – was the “establishment of a system of workplace automatic IRAs”.  Just 9.1% chose it as their favorite, while more than a third (35.5%) said they hoped it would get lost in the shuffle.

That said, the most popular initiative for enactment was “encouraging plan sponsors to make unbiased investment advice available to workers,” cited by 31.3% of this week’s respondents, though that barely edged out the 29.3% who favored a “push for annuities and other guaranteed lifetime income products.”

Among the remaining options, 18.2% backed “more fee disclosure” as their most preferred initiative, just ahead of the 17.2% that supported streamlining of the automatic enrollment process, while 13.1% each were (most) in favor of more target-date fund disclosures and expanding/simplifying the Saver’s Credit. 

Of course a full one-in-five (20.2%) were most in favor of something not on the Obama Administration’s list – though for a variety of reasons, ranging from all of the above, to none of the above, to all of the above applied to more employers (or fewer), as well as some items that did not, in fact, appear on the list.     

Here’s a sampling:      

Increase the annual limit -- for the majority of people in the private sector under 45 years old 401K is not "supplemental".

More Safe Harbors for employers;

Simplify compliance testing.

A Plan to encourage people to take action to secure a comfortable retirement.  Seems to me most of these are geared at regulating the industry and not "improving or enhancing retirement programs".  Where is the overall strategy for providing retirement security in this country?

streamlining of regulation, to encourage DB plans

"(1) Perhaps some public applause for the Supreme Court not touching the Deere decision.

(2) Some softening on the compliance testing.  (I really need that time back in my life)"

"Use fiscal rather than regulatory policy to drive more participation, higher deferral rates. For instance, if everyone (not just NHCE) received a tax CREDIT for contributions, rather merely pre-tax, don't you think we would have higher participation and more money going in to retirement savings?

Obamanomics uses regulation to drive their agenda. Their intrusive policies will burden business with the extra overhead of compliance, while adding to the government bureaucracy and general overhead that we sapped with right now."

If I must pick from the list I'll do the "GhostBusters" thing and think of the least scary alternative.

Encouraging plan sponsors to take over the investment process for most employees, i.e., de-emphasize employee investment direction in DC plans.

Eliminate the income cap on contributions to Social Security. All income derived from employment should be subject to Social Security taxes.

How about leaving us along while we get our arms around everything they have done to us already?  While noble in the intent from a practical standpoint none of the above will help people to save - if anything it will reduce the number of workplace plans as employers have enough to do keeping the doors open.

Through a process of elimination, none of the above.  Last thing we need is more disclosure; I don't think investment advice can be unbiased, since money is involved; income products are backed by a company which may not be able to fulfill the obligation; automatic IRAs would strain small businesses; and the remaining two would be handled in DC (auto-enrollment process and Saver's Credit), and I have no faith in their ability to "streamline" or "simplify" anything.

More fee disclosure but not just for the reason listed - it will make a more fair playing field; bundled providers will no longer be able to promote "free" recordkeeping.

Holding anyone calling themselves an "adviser" to a fiduciary standard.  If they are a broker, i.e., primarily selling a product, they should be identified as such.

I'd like to see more access to professional investment advice for workers--my problem is that what the Obama Administration calls "unbiased" I call "unaccessible."  Plans have been able to provide "unbiased" advice from the very beginning, but very few plans do.  We need advice as part of a bundle of services (with reasonable safeguards to mitigate bias, yes) or it won't get to workers.  The perfect should not be the enemy of the good here.

Fee information that anyone can understand plus advice that combines investing education with basic advice.

None, because when the government intervenes at all, the net outcome is worse.

Repeal the 401(a)(4) regs regarding cross-testing and bring in something a bit more fair.

Really, all of the ideas are good, but they should be made mandatory for all employers not just the so called large employers. Too many small employers do nothing.

The “Buck It” List?      

Now, as for the “get lost” list, once we got past the apparent (though perhaps relative) distaste for the workplace IRA option, readers were most anxious to see less of “more fee disclosure” (cited by 23.7%),  and not so much push for “annuities and other guaranteed lifetime income products” (cited by 21.5%), or target-date fund disclosures (17.2%).  Only about one-in-eight each put encouraging unbiased advice or expanding and simplifying the Saver’s Credit at the top of their “lost” list, and a mere 8.6% were most anxious for that to be the fate of streamlining the automatic enrollment process.      

I would be remiss in my duties as survey summarizer if I did not note that 16.7% opted to put none of these choices on the “lost” list, noting that they “all looked good,” while 7.5% wanted an answer that was not on the list (a.k.a. “other”).  In that group were, as you might expect, a variety of perspectives, including this sampling:      

Any time something is "pushed" or encouraged, it opens up the possibility of misuse!

Establishment of a system of workplace automatic IRAs - should be voluntary.

Also - annuities - I am not fully convinced that they are completely kosher. They definitely should not be pushed on people who are not retired yet. Perhaps for folks who are already retired...but they still have many problems and costs associated with them. There are other options for retirees that are more practical.

Bipartisan B.S. Work together to accomplish something for the people they are supposed to support, not based upon their party line.

Streamline government intervention. Gov't has already killed the DB golden goose and is looking to 'change' the DC arena and make it just as good.

While I think more fee disclosure (a.k.a. Transparency) is generally a good thing, understanding the real cost of providing this disclosure must also be factored into the discussion.

But this week’s Editor’s Choice comes from the reader who hit on something that has always been a key element in my mind – and one not on the Administration’s current list; “I would like to see financial literacy taught in schools.  The other options are good, but won't help if people don't read/understand them.”     

Thanks to everyone who participated in our survey!