NEW YORK (TheStreet) -- America, we have a problem.With corporate pension plans going the way of the dinosaur and the Social Security system looking weaker every year, 401(k) plans have become the central component of most individuals' nest eggs. But these plans are peppered with flaws. It's well known that Americans don't save enough, and voluntary 401(k) plans do little to rectify this chronic problem. But even good savers may not know that when companies set up savings plans, many rely on outside advisers that are beholden to mutual-fund companies. And these fund companies may charge lofty fees that are completely hidden from plan participants. A lack of education among employers adds to the problem. "The 401(k) and retirement plan industry is on the brink of crisis," said Don Trone, president and founder of the Foundation for Fiduciary Studies, a nonprofit group that offers training for retirement plan sponsors and providers. "Baby boomers and generation X-ers are not going to be ready for retirement." Defined-contribution plans such as 401(k)s -- which were originally designed to be only supplemental retirement plans -- are on the rise. In 1990, defined-benefit plans, or pension plans that companies funded, represented 69% of assets of employer-sponsored retirement plans, compared with 31% for defined-contribution plans such as 401(k)s. In 2002, defined-benefit plans were down to 58%, while 401(k)s and other defined-contribution plans were up to 42%. By 2012, 401(k)s and defined-contribution plans are expected to jump to 59%, with pension plans falling to 41%, according to research and consulting firm Greenwich Associates.
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