Monday, June 12, 2006

401(k) Improvements

John Wasik points out some interesting statistics and ideas to improve retirement savings through universal 401(k)'s. Among these, better education, personal advice and auto-enrollment are getting attention cuurently. Separating 401(k) plans from employers is a more obscure idea that will become prominent if (when) 401(k) litigation grows.

401(k) plan fiduciaries have an affirmative responsibility under ERISA to act in the best interests of their participants and as “prudent experts”. Yet, empirical evidence strongly suggests that individual investors do not have the knowledge and may not all be provided with adequate investment opportunities to achieve their goals. Class action attorneys are taking notice of this misalignment. Inevitably, fiduciary conduct will become a focal point as a proximate cause for why employees may ultimately fail to meet their goals.

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