While we have seen Negative ESOP Coverage in the media from time to time, we are also starting to see more negative 401(k) coverage, like this 12-minute 60 Minutes segment:
IMHO: Famous Last Words highlighted some of the complex issues discussed in the segment.
If you haven't watched it yet, you should. Forewarned is forearmed, as they say.
No, it wasn't very long (less than 15 minutes), but it was certainly enough to fuel the fires of those who are anxious to put the 401(k) out of our misery. Short as it was, you could basically cleave the segment into two propositions: that retirement savings shouldn't be invested in stocks (or least not so much in stocks), and that fees—and hidden fees at that—are at least as much to blame for the decline in balances as the markets. Oh, and the real culprits—the ones that created the 401(k) and convinced employers to shed their commitment to pensions—are the same ones that have been fleecing all of us for decades. Well, at least we know who to sue.
The realities are, of course, more complicated than you'll get in a 12-minute TV segment— particularly one that spends most of that time hanging out in a job fair with a long line of the unemployed who, for reasons I have yet to discern, showed up at that job fair with their 401(k) statements in hand.
Investment advice regulations have been in the works since The Pension Protection Act of 2006 (PPA) (August 17, 2006). DOL Field Assistance Bulletin 2007-01 (February 2, 2007) and DOL Proposed Regulation – Investment Advice – Participants and Beneficiaries (August 22, 2008) provided guidance until DOL Final Regulation – Investment Advice – Participants and Beneficiaries was finalized in January. The final regulations were subsequently put on hold by the new Obama Administration as part of a Memorandum Concerning Regulatory Review. The DOL granted a 60-day extension to the effective date of the final rules, moving the effective date from March 23, 2009 to May 22, 2009.
The Benefits Blog discusses how Congressman George Miller (House Education and Labor Committee Chairman), who was interviewed in the 60 Minutes segment and has commented on the final regulations, believes the 401(k) system has failed and needs replacing.
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