He cited institute survey information indicating that solely 8% of shoppers perceive {that a} $100,000 nest egg may produce about $3,000 to $4,999 in annual lifetime earnings, and that 19% assume it might produce $25,000 or extra in annual lifetime earnings.
Stevenson agreed that increasing monetary literacy applications shouldn’t be sufficient. “On the whole,” he mentioned, “we all know that monetary literacy doesn’t work.”
Packages that push staff towards saving extra for retirement, whereas presumably letting them choose out, work a lot better, Stevenson mentioned.
Unintended penalties: Witnesses and curiosity teams not included within the listening to emphasised that poorly designed retirement safety payments could backfire.
The American Retirement Affiliation identified that the government-provided matching contribution characteristic in S. 3102 would give employers, and particularly small employers, a powerful incentive to close down their retirement plans.
Teresa Ghilarducci, an economics professor from the New College for Social Safety, identified in her written testimony that one particular person retirement account invoice would encourage staff to take part in auto-IRA applications that might function automobiles for paying for properties and kids’s school payments in addition to for retirement bills.
She mentioned the “auto-IRA” payments are actually “automated particular person liquidity account” payments.
“Liquidity is nice,” Ghilarducci mentioned. “Everybody wants emergency financial savings and financial savings to purchase a home and fund a baby’s life course, however, if retirement financial savings is used for all these functions, there is no such thing as a cash left for retirement.”
Business teams: Wayne Chopus, the president of the Insured Retirement Institute, and Paul Richman, IRI’s chief authorities and political affairs officer, despatched in a letter opposing the DOL fiduciary definition effort.
“The proposed rule will make it tougher, costlier, and in lots of instances unattainable for people to entry skilled monetary steering and lifelong earnings options,” Chopus and Richman wrote within the letter.
Susan Neely, president of the American Council of Life Insurers, wrote in protection of employers utilizing group annuities to switch pension obligation danger to insurers.
“Because the 2008 monetary disaster, no insurance coverage firm has did not make a life annuity fee to a plan participant following a pension danger switch,” Neely wrote. “That observe document is a operate of the strong reserving and capital requirements utilized to insurers. Any further Division of Labor steering ought to acknowledge this robust solvency regime and never hinder employers’ efforts to buy annuities to guard personal pensions for his or her plan contributors and beneficiaries.”
Eric Stevenson. Credit score: Nationwide