The SPARK Institute Defends 401(k) Plans, Recommends Changes to Increase Coverage...

The SPARK Institute Defends 401(k) Plans, Recommends Changes to Increase
Coverage and Participation

SIMSBURY, Conn., May 18 /PRNewswire/ -- The SPARK Institute today issued a
white paper, "The Case for Employer-Sponsored Retirement Plans - Coverage,
Participation and Retirement Security," that defends 401(k) and similar
workplace retirement plans that have been criticized recently based on
misunderstandings and misconceptions. "401(k) plans are the best vehicles for
saving for retirement, however, improvements can be made and our paper makes a
number of recommendations," said Larry Goldbrum, General Counsel of The SPARK
Institute. The white paper is available at
www.sparkinstitute.org/comments-and-materials.php.

Nearly 700,000 401(k) and other workplace retirement plans currently provide
savings accounts for almost 92 million workers, said Goldbrum. The average
participation rate today is approximately 77% and is increasing with the
adoption of automatic enrollment programs. "We believe that the current
voluntary retirement program system should be maintained, but if policy makers
decide that a mandatory system is necessary to force more people to save and
to save more, we recommend that employers offer 401(k) plans as the primary
savings vehicle," Goldbrum said. "Some workers are always likely to refrain
from saving for reasons that have more to do with personal circumstances, such
as the inability to put money aside for retirement when current financial
needs appear more pressing, than with the type of plans being offered."

The SPARK Institute opposes a mandatory automatic IRA requirement that gives
preferred status to IRAs as a substitute for 401(k) and similar workplace
plans. "Ironically, an underlying basis for mandatory IRAs appears to be the
success of the automatic enrollment feature that was developed by, and first
used in, 401(k) plans," said Goldbrum. "We are also concerned that mandatory
IRAs may create an environment similar to the '403(b) plan system' prior to
the IRS and Treasury adopting new regulations requiring greater employer
involvement in the operation of those plans. They would likely result in the
next unsupervised, loosely managed and hard-to-regulate retirement system, and
mimic the concept that was just fixed in the 403(b) world."

The SPARK Institute is the leading voice in Washington for the retirement
services industry. Through the combined expertise of its member companies,
The SPARK Institute provides research, education, testimony and comments on
pending legislative and regulatory issues to members of Congress and relevant
government agency officials. Collectively, its members serve over 62 million
defined contribution plan participants.

SOURCE The SPARK Institute

Jeff Close of The SPARK Institute, +1-860-658-5058