In a household opinion survey, the ICI said it found that Americans want to preserve the current features and flexibility of retirement plans and want Washington to emphasize strengthening Social Security.
The group said the poll of 3,000 households, conducted from late October to early December, found that:
- Seventy-two percent of all households reject the notion of reducing tax advantages for defined contribution retirement plans and Individual Retirement Accounts. Even among households that currently do not own such accounts, 62% oppose reducing these tax incentives.
- Americans don’t want the government directing investments for retirement savers–87% reject a proposal that the government not allow individuals to make their own investment decisions in retirement accounts.
- Participants in 401(k) and similar plans say the plan features help them save and invest. Nine in 10 of the 1,575 households owning such plans agree that their plan “helps me think about the long term, not just my current needs.” Some 88% say that “payroll deduction makes it easier for me to save.” And 81% say that “the immediate tax savings from my retirement plan are a big incentive to contribute.”
- Strengthening Social Security is a much higher priority for Americans than replacing 401(k) plans with a government-run retirement system.
401(k) Plan Participants Still Staying on Course
A separate ICI study of records on 22.5 million participant accounts found that, despite the decline in account balances caused by the 40% decline in stock market values, the vast majority of savers are not transferring their assets.
ICI said the records, which cover the first 10 months of 2008, show:
- Only 3% of plan participants stopped contributing to their retirement plan;
- Just 3.7% of participants took any withdrawals from their accounts, including 1.2% taking hardship withdrawals; and
- Fifteen percent of participants had loans outstanding, in line with the 13% to 17% figures reported since 1996 in annual studies conducted by ICI and the Employee Benefit Research Institute (EBRI).
“Workers want to keep the basic strengths of 401(k)s–tax-favored savings, individual choice in investing, and personal control of these retirement assets,” Paul Schott Stevens, ICI president and CEO, told a Newsmakers forum at the National Press Club in Washington. “Can 401(k) do even better? Yes.”
ICI released the two surveys in a white paper, “Retirement Saving in the Wake of Market Volatility,” that is available at http://www.ici.org/pdf/ppr_08_ret_saving.pdf.