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401(k) Vital Signs Revisited By Mutual Fund Pundits
January 8, 2010 1:18 p.m. EST
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Topics: Business, United States
Tejinder Singh - AHN Correspondent
Washington, D.C., United States (AHN) - Three mutual fund industry leaders joined forces Friday at the National Press Club, launching new research to show how 401(k) participants are behaving and faring one year after the market calamity of 2008 and outlining ways to improve the nation's retirement system.
Investment Company Institute (ICI) President Paul Stevens unveiled new household survey data on investor sentiment.
Vanguard Group Chairman Jack Brennan discussed his firm's data showing 401(k) investor account activity, as well as the policy discussion around 401(k)s.
With extensive experience in providing investor education and investment opportunities to minorities, Ariel Investments President Mellody Hobson outlined her company's efforts to increase the reach of retirement savings programs.
Addressing a select audience of journalists, academics and sector pundits at the Newsmaker event at the NPC, Stevens noted that the market downturn of late 2007 brought the balances in 401(k) and other defined contribution accounts down by almost one-quarter in 2008, adding that "it has caused some in the press and policy communities to question the value of 401(k) and other defined contribution plans."
During that time, American workers still supported their 401(k) plans and stayed the course-and those who did so are now being rewarded, according to ICI survey data released by Stevens.
Stevens strongly advocated against the idea of a government mandate to turn 401(k)s into annuities. "Almost unanimously the household in our survey agreed that 'retirees should be able to make their own decisions' about how to manage their assets," Stevens said.
Brennan addressed the audience "refuting the collapse of retirement plans," adding, "savers are sticking with 401(k)." He noted that "target date funds" did better than "non-target date funds."
Hobson asserted that differences in the way African-Americans contribute varies across the income brackets and called for an urgent need for "financial literacy" as it is "lacking in our education system."
For the average man on the street, Brennan urged, "if your employer does not provide education (on 401k) then ask for it."
Hobson was more precise. listing three points: "First, you are all you have got; second, know what you own," adding a Chicago saying as the third point, "you got to play to win."
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