More than eight in 10 U.S. households believe the current
tax incentives to encourage retirement saving should be preserved, according to
research from the Investment Company Institute (ICI).
Specifically, the study found 85% of the households
disagreed when asked whether the tax advantages of defined contribution (DC)
accounts should be eliminated. Eighty-three percent opposed any reduction in
workers’ account contribution limits.
Among households owning defined contribution accounts or
individual retirement accounts (IRAs), nearly nine in 10 were against
eliminating or reducing the tax incentives.
A vast majority of households agreed that preserving the
current retirement savings incentives should be a national priority.
Eighty-eight percent of households owning defined contribution accounts or IRAs
agreed with this policy priority, while 76% of households without these
The ICI study “America’s Commitment to Retirement Security:
Investor Attitudes and Actions” found that such agreement was consistently high
across various demographic and financial characteristics.
The results of ICI’s study also revealed a number of key
findings about U.S. households and defined-contribution-plan-owning households.
An overwhelming majority of the defined-contribution-owning households find
these plans promote retirement saving. Nine in 10 households with the accounts
agreed that these plans helped them think about the long term and made it
easier for them to save. More than 80% of the households said the immediate tax
savings from their retirement plans were a big incentive to contribute.
Households continue to appreciate the key features—such as
flexibility and participant control—of defined contribution plans. In addition,
households’ views on policy changes revealed a preference for preserving
retirement account features and flexibility. Eighty-seven percent of households
opposed the notion of not allowing individuals to make investment decisions for
their defined contribution accounts, and nearly eight in 10 disagreed with the
idea of replacing all retirement accounts with a government bond.
Investors greatly value the ability to choose and control
their investments. Nearly all households with defined contribution accounts
agreed on the importance to have choice in, and control of, the investment
options in their plans. Seventy-nine percent said their plan offers a good
lineup of investment options.
U.S. households generally continue to have positive
attitudes toward the 401(k) system: In 2011, 65% had favorable impressions of
401(k) and similar plan accounts, compared with 64% in 2010.
The research is based on data collected in a survey of 3,000