July 12, 2012
--- The defined contribution (DC) retirement plan
industry has a “self-esteem problem” that must be addressed, one industry
Brian Graff, executive director and chief
executive of the American Society of Pension Professionals & Actuaries,
told the audience at the ASPPA’s Northeast Area Benefits Conference that the
industry is constantly discussing the “crisis”: employees not saving enough for
retirement. It would be more productive to speak more positively and dispel the
myths that exist in the industry.
“There’s definitely a tendency to
attack the system,” he said.
Graff cited several common myths,
such as the misconception that fewer than half of American workers are covered
by a retirement plan. In reality, Graff said, there is an 80% retirement plan
take-up rate for full-time workers.
Another myth is that the average
account balances in 401(k) plans are minimal. But according to research from
the Employee Benefits Research Institute (EBRI), the estimated average account
balance for 401(k) participants (ages 55 to 64) with at least 30 years of
tenure was almost $300,000 as of March 2012, Graff noted.
EBRI’s research also indicates that
workers will not save for retirement without a workplace plan. The
participation rate for no employer plan (IRA only) was 4.6%, while the
participation rate for those covered by an employer plan was 71.5%.
This research underscores the effectiveness of 401(k)
plans, Graff said. “This is a great system,” he added.