Tuesday, October 28, 2008
From an Illinois press release:
Congress needs to reform flawed 401(k) laws that could push back retirement for millions of Americans whose savings have collapsed along with the stock market, a University of Illinois elder law expert says.
Law professor Richard L. Kaplan says 401(k) accounts were meant to supplement traditional defined-benefit pensions, but have evolved into the sole nest egg for the bulk of U.S. workers whose employers offer any kind of savings program. The shift, he says, has left workers with the illusion of a company-funded pension when in fact it’s largely their own money in investments that are generally tethered to the stock market, which has lost $8 trillion during an economic meltdown over the last year
“People mistakenly think they have an employer pension plan and don’t understand that their retirement income, other than Social Security, is in very serious jeopardy right now,” said Kaplan, who wrote a 2004 article on the risks of 401(k) plans [Enron, Pension Policy, and Social Security Privatization, 46 Ariz. L. Rev. 53 (2004)]. He argues that Congress should rewrite laws to allow 401(k) programs only in concert with defined-benefit pensions, even if it means more companies join the roughly half of U.S. employers that offer no retirement savings plan.