DALBAR has released the results of its 2003 study of methods to improve retirement income security through increased saving rates. The study, whose findings are based on the 45-year history of inflation rates, interest rates and investment returns of stocks and bonds, identifies hurdles to adequate savings and recommends actions to increase these rates. Among its findings is the method for employees to painlessly increase retirement savings and leapfrog over the restrictions of qualified plans.
The 2003 Quality Versus Quantity study highlights the colossal failure of ERISA to achieve retirement income security. Instead of provisions to increase savings, ERISA has created disincentives for employers to help employees to save adequately. Nothing in current ERISA legislation explains or encourages after tax savings to overcome the hurdles of qualified plans.
Key findings of the Quality Versus Quantity study include that ERISA diligently protects the retirement nest egg that does not even exist for millions of workers; a disproportionate share of resources is dedicated to assure the quality of investment decisions and hardly any is expended on achieving a greater quantity of saving; any one or more of a number of entities can independently act to correct the quantity of retirement saving, including Congress, State Governments, regulators, retirement plan providers, employers, and technology providers; after tax saving plans are an ideal adjunct to qualified plans, since they avoid restrictions and constraints inherent in tax deferred saving; and painless saving, funded solely by a portion of future salary increases, produces as much retirement income as qualified plans.