SURVEY SAYS: What’s Your Take on Retirement Trends?

August 11, 2011 ( - Yesterday my IMHO column outlined five trends I thought would play out over the next few years


For this week’s bonus survey, I asked readers for their take on those things (if you missed them, check out IMHO: Fifth “Avenues) – and give readers a chance to make a prediction (or two) themselves!

For the very most part respondents said they “mostly” agreed with the trends I outlined – though there were some interesting points of “divergence.

Let’s take each in turn…



What I “predicted”:

Participant fee disclosure won’t matter.


How readers responded to that position:

48.1% - mostly agree

40.3% - completely agree

2.6% - haven’t a clue

7.8% - mostly disagree

1.3% - completely disagree




What I “predicted”:

Plan sponsor fee disclosure will matter.


How readers responded to that position:

31.6% - completely agree

46.1% - mostly agree

3.9% - haven’t a clue

15.8% - mostly disagree

 2.6% - completely disagree





What I “predicted”:

Advisers that work with ERISA plans will need to be ERISA fiduciaries.


How readers responded to that position:

31.6% - completely agree

39.5% - mostly agree

22.4% - haven’t a clue

6.6% - mostly disagree

 0.0% - completely disagree

I found it interesting that so many went with the “haven’t a clue” option – but NO ONE completely disagreed with the proposition.





What I “predicted”:

We’ll come to regret our complacency about target-date fund designs.


How readers responded to that position:

14.1% - completely agree

37.2% - mostly agree

38.5% - haven’t a clue

10.3% - mostly disagree

 1.3% - completely disagree

I found it interesting that the “completely agree” group dropped by half – and, apparently lent their support to the “haven’t a clue” group.





What I “predicted”:

Retirement income will (still) be the big thing we all say needs to be solved that (still) isn’t.


How readers responded to that position:

65.8% - completely agree

27.8% - mostly agree

2.5% - haven’t a clue

2.5% - mostly disagree

1.3% - completely disagree

Considering all the focus on this topic by our industry, even I was a bit surprised at the extraordinarily strong voice that the retirement income issue wouldn’t be solved…at least not in the shortish term…



I also gave readers a chance to offer their own predictions – these were interesting:

Once the economy improves (if ever), companies will be in a state of panic from  talent flying out the door to their competitors due to a complete disregard for focus on a participant's future. Companies "offer" a $.50 match on contributions and want a pat on the back for it. Without a pension plan in place, nobody has any incentive to stay.

Guaranteed accounts (or money markets or the like) will see more action.  People will see that the gravy train of the market going up, up, up is a thing of the past, and will give up potential high earnings for modest, safe earnings.   'One in the hand is worth two in the bush'  (or is my age showing?)

Not the industry per se, but economically, I think we're in for a disaster when all the ill-prepared, delusional baby boomers are forced into retirement prior to Medicare eligibility, and they attempt to purchase health insurance while living on their pathetic DC account balances. It will not be pretty.

Everything that we believe today will change.

Local governments will finally have to face the music with respect to their DB plans and stop allowing artificial service credits  and fake salary increases for those select few who get to retire at 50 and receive more in retirement than they earned while working.


I believe with the dearth of (and elimination of most) DB plans, concerned participants in DC plans will take a good look at and will likely decide to invest a portion of their account balance in some form of guaranteed retirement income vehicle

In next five years I expect there will be some sort of mandatory annuitization in 401(k).  The powers that be will decide they've got to protect people from themselves.  Therefore they will create rules requiring some portion of the account will be unaccessible until retirement when it will pay out as annuity.

Increased demand for return to DB plans - public much more aware of the difference and acknowledges they do not have the individual leverage or knowledge to manage money over a 40-50 year working career to ensure liveable retirement income.

The number of small employer plans will decrease significantly after Congress lowers the deferral and annual additions limits as part of the effort to close "loopholes" and raise revenues. The owners won't endure the increasing hassle involved in operating qualified plans if they can't sock enough away for themselves to make it worth the effort.

Mandatory employee contributions to a Retirement Savings Account through payroll deductions by all Employers into large fund with supposedly low fees and admin costs for employers. Depending on government may mandate Employer match at some level. See UK, Canada, Australia and other countries and this has already been part of Obama studies.



Longevity risk (i.e., outliving DC plan funds) will come center stage.  It may be enough to allow a change in the law that permits the formation of DB tail plans, which would provide an annuity starting at an older age (say 80 or 85) so that DC plan participants would only have to make their accounts last until a given age because after that, DB tail plan would step in an provide the lifetime benefit.

I am 100% invested in a target retirement date fund.  My financial advisor said that was the way to go, and now I am worried.  Don't know what I can do about it though.

As more baby boomers retire and start to draw on balances, it will be interesting to see the effect on A) the market itself and B) what new problems are identified with retirement investing in general that haven's surfaced to day.

"for participants: in plan guarantee retirement income solutions will be prevalent, DOL will provide safe harbor for such options, income replacement values will be shown on DC statements

for plan sponsors & advisors: fee benchmarking will be a critical fiduciary protection/documentation annual report

for Broker Dealers: will identify all retirement plan business, benchmark it to reduce fiduciary risk and reduce liability"



There will be a lot of upheaval on investment advisors and rules will be complicated for advising on 401k money (ERISA) vs. non 401k money. We'll be stuck with some inconsistencies that will be troubling for all involved.

Health care reform is leading the way. Pension re-reform won't happen until the lawsuits on health reform are old(er) news. Then, the pension suits will start as someone will bring a case of being forced into a DC plan when a DB plan would have been better (or vice-versa). Their life was ruined cuz the employer didn't have the right plan. When the last suit is settled there will be no one left to pay. Then pension reform will begin. Follow the lawyers they smell money.

thanks to everyone who participated in our survey!