Unions want to kill 401(k)

Bloomberg:

March 16 (Bloomberg) — U.S. lawmakers should reform retirement plans after 401(k) and Individual Retirement Accounts lost more than $2 trillion in value since October 2007, a group of consumer and labor groups said.

The new consumer-labor group, “Retirement USA,” backed by the Pension Rights Center, the Service Employees International Union and the Economic Policy Institute, said the flagging economy has highlighted the inadequacies of 401(k) plans and increased the need for alternatives such as government-managed funds run with professional oversight.

Retirement account balances plummeted over the past year, as the Standard & Poor’s 500 Index declined 38 percent. The average 401(k) balance fell to $50,200 in 2008 from $69,200 the previous year, according to a January study by Fidelity Investments.

“We may not be able to help the people hurting right now, but we should set up something for the future that will make people more secure,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. “It’s been shown clearly that individuals make a lot of mistakes.”

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