Retirement Savings On Course? Depends Whom You Ask, Of Course

Benefits managers and their bosses constantly are dogged with the employee-retirement questions: How much should workers save for retirement? Are workers saving enough? Which workers are in the worst financial shape?

The answers often become the cornerstone for legislation, plan design, participant saving strategies and more. But it seems everyone in the retirement business has an opinion, and often the conclusions can be wildly different.

“The number of moving variables in these analyses makes it virtuallyimpossible to understand the results without a careful dissection of the data, assumptions and calculations,” wrote Gaobo Pang and Sylvester Schieber in a white paper titled “Why American Workers’ Retirement Income Security Prospects Look So Bleak: A Review of Recent Assessments.”

That reality sends employers in search of answers. But then the question becomes: Who can you trust for honest information?

'You have to wary, as a plan sponsor, of the information that's out there.'

—Ary Rosenbaum, ERISA retirement plan attorney

Since the U.S. Labor Department came out with regulations in 2012 requiring plan providers to shed light on fees for services, more studies and surveys are coming out from government, academic and industry sources, experts agree.

“As the public policy relevance of this topic increases, the number of individuals that provide quantitative analysis increases as well,” said Jack VanDerhei, research director of the Employee Benefit Research Institute, or EBRI.

“When there is so much information out there, it’s that much harder for plan sponsors to work out what is credible,” added Anthony Webb, senior research economist for the Center for Retirement Research at Boston College.

At a September Senate Finance Committee hearing on incentives for saving for retirement, Sen. Debbie Stabenow, D-Michigan, said she was surprised at how confident the panel was with the U.S. retirement system. While some panelists spewed data showing improvements in 401(k) savings rates overall, Stabenow pulled out several statistics showing the opposite.

“I’m a little surprised at what feels like an optimistic view that most people are saving and that people are going to have enough,” Stabenow said at the Sept. 16 hearing.

John Bogle, founder and former CEO of The Vanguard Group Inc., agreed during the session that it isn’t easy figuring out how to help someone in real financial trouble, but lawmakers should consider data from “reliable sources,” like the Federal Reserve, when addressing certain issues.

More information can be difficult to manage, but plan sponsors need to pay attention said Ary Rosenbaum, an Employee Retirement Income Security Act retirement plan lawyer based in Garden City, New York.

“There’s a lot of bias going around,” he said. “You have to be wary, as a plan sponsor, of the information that’s out there.”  

Patty Kujawa is a writer based in Milwaukee. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.