No. of Recommendations: 3
Having been involved on these message boards for more than 2 years I think this is one of the more interesting topics brought to discussion. There seems to be alot of passion on both sides of the issue. Deservedly so, There are many benefits DB plans have over DC and vice versa. The DBs offer the guarantee and gives the individual security in knowing it will be there. The DC gives the employee freedom to change jobs and advance in a career through mobility without sacrificing their retirement.
Some main points worth remembering, The tools are out there for individuals to have an effective DC plan. If most DC plans target an annual growth rate of 6-7%, then this should be attainable for most individuals provided they are provided with an effective plan and execute it properly. The problem is neither the individual worker or the Plan Sponsor fails to implement them. There is a regulation in ERISA called 404c. It is supposed to ensure the employees have a wide range of investment options and have the means to make informed decisions about their investments. The problem is, it is a voluntary regulation, there is no penalty for failing to comply. It just adds a measure of protection should an employee lose money in a DC plan, the employer can take cover under 404c.
The burden should not be on the employer to provide for their worker's retirement, in order to attract and retain high quality employees, the employer should offer a means to achieve that end. It is important to remember that offering a retirement plan to the employees is not a requriement. It has always been and will always be up to the individual to prepare for retirement on their own.
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