All in Favor

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 accounts agreed.   

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 U.S. households.