Biased Analysis Maligns 401(k) Plans

| May 31, 2012 | 0 Comments

Demos Report Inflates Plan Fees & Suggests Government-run Retirement Accounts

ARLINGTON, VA, (May 31, 2012)— The following is a statement from Brian H. Graff, CEO and Executive Director of The American Society of Pension Professionals & Actuaries (ASPPA) in response to Demos report, “The Retirement Savings Drain: Hidden & Excessive Costs of 401(k)s.”

“A May 29 report by the liberal think tank Demos targets 401(k)s as a ‘retirement drain’ saying the fees associated with the plans outweigh any benefits associated with the popular savings vehicle. They claim an average couple will pay over $150,000 in 401(k) fees over their lifetime - costing them one third of their investment returns.

The report’s analysis is based on irresponsible and unrealistic assumptions including the assumption that the average fees for mutual funds in 401(k) plans are almost 200 basis points (2 percent). The only thing proven by this report is that if you use ridiculous and biased assumptions you can reach ridiculous and biased conclusions.

ASPPA has been a champion of fee disclosure and transparency for years. We believe that participants deserve to know the fees associated with their plan so they can choose options that are best for them. Beginning July 1 all retirement plan service providers will be required by the Department of Labor (DOL) to disclose all plan fees and services, to help participants make more informed choices. This increased fee transparency will generate even more competition among financial services companies —a definite benefit for 401k plan participants.

American workers shouldn’t trade in 401(k) plans for a government run account as Demos suggests. There are many reasonably priced 401(k) plan investments available right now, and competition and increased transparency will continue to improve the value of these investments. Using bad math and faulty assumptions to try to justify turning private retirement savings over to the government is just plain wrong.”

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About ASPPA: The American Society of Pension Professionals & Actuaries (ASPPA) is a national organization of more than 8,500 retirement plan and benefits professionals that serves as the educator, voice, and advocate for the employer-based retirement system. ASPPA members are administrators, actuaries, advisors, attorneys, accountants, and other financial services professionals who provide consulting and administrative services for qualified retirement plans.


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