An interesting article appeared this week close to our Denver-area home, shining a little extra light on the clearly mixed feelings that some state-level bureaucrats have about the embattled nature of their public pension plans.
Meredith Williams, executive director of the Colorado Public Employees' Retirement Association, and a former administrator of Kansas' public plans, will be leaving his job in a few months to tackle what we are sure is not going to be a challenging post, whatsoever – the National Council on Teacher Retirement, located in teacher retirement plan-friendly Sacramento, Calif.
Williams told Stateline.Org, part of the Pew Center on the States, a non-partisan thinktank, that his experiences with Colorado's own attempts to control its public pension costs through lower cost-of-living increases (a measure unsuccessfully fought by state retirees in court) and a lower assumed rate of return on investments, were just part of the increasingly difficult nature of taking care of retirement needs for the future.
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Most importantly, while most civil servants at least still have some form of pension, for the larger working American public, the future is not so bright. And for those relying on the 401(k), even worse, he says.
"The real story is that Americans in general are unprepared for retirement," he told Stateline. "They typically have no resources to support them if they should become unable to work, let alone sustain them in retirement. The 401(k) experiment is a failure. The social service cost implication of this situation is not being acknowleged and will become a huge burden in the future."
The message seems to be that those still clinging to their state-run DB programs, many of which are now subbing in hybrid, 401(k)-styled offerings to new employees rather than the traditional suite of benefits offered to old-timers, may not have it so bad.
The rest of us, left to fend for ourselves through 401(k)s only, really need to emphasize the "fend" part of the equation.
It was nice, as a result, to see tools appearing this week that offer a concrete method of turning our industry's incessantly discussed fee disclosures into tangible talking points for plan sponsors to impart to participants – with those disclosure deadlines still looming on the horizon.
The Principal's Assessing Retirement Plan Value tool takes those numbers, ratios and fees that you all know and love to discuss and helps to quantify and benchmark them for your own, plan-sponsor-specific edification, as you know that you're going to be getting loads and loads of questions when the disclosures begin to unfold.
Principal, like many other carriers, also has a more direct 404(a) participant-level disclosure website up and says it will be rolling out more participant-friendly tools as those deadlines get closer this summer. And that's going to be great for participants who – if they're like most Americans – know (and care) more about Simon Cowell than they do about their self-directed retirement savings plan.
It's not a panacea by any means but it's the first thing I've seen that pre-addresses the potential (call this a hunch) that many plan participants will not be entirely happy when they see their 401(k) fees laid out for them in plain view. Context, it seems, is everything.
Can advisors and plan sponsors help participants see that doing something, anything, is better than writing the entire process off as a failed experiment and simply accepting the fact that you'll be working until you drop dead? That remains to be seen.
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