Study Finds Employers Oppose State-run Retirement Plans For Private Employers
EAST GRANBY, Conn., April 1, 2013 /PRNewswire/ -- A report of "Legislative and Regulatory Developments Plan Sponsors Need to Follow in 2013" published by the Retirement Advisor Council reveals strong employer objections to state-run plans such as those recently proposed by legislatures in California and Massachusetts. Specifically, employers in focus groups voice concern about the lack of transparency, lack of customization, risk that assets will be siphoned off for other purposes, lack of participant faith in the system, and lack of Advisor involvement.
The report also cautions that plans sponsors may not be as wary as they should about the prospect of federal roll-backs of maximum contributions to 401(k) plans, formulated in Internal Revenue Code section 402(g). Many expect a regular increase to help their participants enhance retirement preparedness and would be taken by surprise by a rollback of contribution limits. The Retirement Advisor Council supports the "Protect My Piggy – Save My 401(k)" initiative launched by NAPA, The National Association of Plan Advisors, an industry organization representing advisors with policymakers urging retirement plan participants to stop Congress from cutting back on maximum 401(k) plan contributions.
The study confirms that plan sponsors devote considerable time and energy to their fiduciary duties and rely on Professional Retirement Plan Advisors to keep them informed of legislative and regulatory developments. Plan sponsor concerns over their inability to control either the government or the direction of financial markets strengthens the demand for Professional Retirement Plan Advisors. A qualified Advisor can be relied upon to influence and shape the regulatory agenda, to guide plan sponsors in the exercise of duties, and to place plan participants on the proper path to retirement readiness.
"In the pursuit of successful participant outcomes, employers rely on their Retirement Plan Advisors to keep them abreast of legislative and regulatory issues. In 2013, Plan Advisors will monitor and provide guidance on a number of issues that impact their Plan Sponsor clients and participants. These will range from the budget-related discussion of contribution limits to the definition of fiduciary to the potential formation of state-run retirement plan alternatives for the private sector," says Steven Dimitriou, AIF®, AAMS, PRP® Managing Partner, Mayflower Advisors LLC.The report is based on focus group discussions with employers from across the U.S. Research conducted by EACH Enterprise, LLC and commissioned by John Hancock Mutual Funds, MFS Investment Management, MassMutual Retirement Services, and Transamerica Retirement Solutions.
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