Congress Examines 401(k) retirement losses

[garyk]

Just in from the Wall Street Journal --
Amid Deep Losses, Congress Examines 401(k)s


Jennifer Levitz reports on Congress.
In the past 12 months, more than a half-trillion dollars have “evaporated” from 401(k) plans as a result of turmoil in the financial markets, said U.S. Rep. George Miller, chairman of the House Education and Labor Committee.

Miller made the statement at hearings he called to look at the impact of the financial crisis on U.S. workers’ retirement security.
Lawmakers have been suggesting they may look at policy changes to 401(k)s — the tax-advantaged plans that are the most widely used retirement vehicle — in coming months.

Miller made it clear he sees flaws in the 401(k) model. About $3 trilion is invested in the plans, the majority of it placed in equity mutual funds that track the stock market.

Miller said the 401(k) approach is a policy “not well devised” for changes in the market. He said the plans were meant to be savings vehicles, not primary retirement plans.

Also at the hearing Tuesday, Paul Orszag, director of the Congressional Budget Office, said while traditional pension plans lost 15% over the past 12 months, losses in 401 (k) plans were worse. Orszag said “exposure to broad market risk is unavoidable,” even for 401 (k) participants who have diversified portfolios.

[Paid4]

Originally Posted by garyk

Just in from the Wall Street Journal --
Amid Deep Losses, Congress Examines 401(k)s


Jennifer Levitz reports on Congress.
In the past 12 months, more than a half-trillion dollars have “evaporated” from 401(k) plans as a result of turmoil in the financial markets, said U.S. Rep. George Miller, chairman of the House Education and Labor Committee.

Miller made the statement at hearings he called to look at the impact of the financial crisis on U.S. workers’ retirement security.
Lawmakers have been suggesting they may look at policy changes to 401(k)s — the tax-advantaged plans that are the most widely used retirement vehicle — in coming months.

Miller made it clear he sees flaws in the 401(k) model. About $3 trilion is invested in the plans, the majority of it placed in equity mutual funds that track the stock market.

Miller said the 401(k) approach is a policy “not well devised” for changes in the market. He said the plans were meant to be savings vehicles, not primary retirement plans.

Also at the hearing Tuesday, Paul Orszag, director of the Congressional Budget Office, said while traditional pension plans lost 15% over the past 12 months, losses in 401 (k) plans were worse. Orszag said “exposure to broad market risk is unavoidable,” even for 401 (k) participants who have diversified portfolios.

Hasn't the government done enough already to "fix" things? It's the gov't that got us into this financial mess to begin with, and now they're supposedly getting us out by committing $700B or more of taxpayers money. Sorry, I don't want the gov't to come anywhere near my 401k. It's done pretty well up until this year. You have to take the good with the bad. If anything, we need LESS government right now, not more.

[Rank Amateur]

I agree, I would think all 401K investers understand the risks (well ordinary risks) of the market. The only problem I would have is the money market funds that lost money, there needs to be a safe haven for your money while in the plan. You can not take it out of the plan once in, but some times you need to have it out of the market (thank god I was out) and have a safe spot, for only 4% a year interest, I would expect NO risk.

[maniacmikey]

They keep this up and it's going to be pitch fork and torch time.





(disclaimer)This is a non partisan statement as I believe both parties are to blame.

[jfa686]

just imagine if they got there way with your SS

[Tar Heel]

Short sellers and Inverse ETF traders are adding to the slide and making a killing off of those of us who don't have acces to day trding our 401k's, but Congress hasn't a clue. SKF up 18% today, SCC up 15%, SRS 12%, DOG up 5%. It's crazy. By they time they realize what happened, it's too late, as usual. This is uncontrolled and unfettered greed dictating "market forces," just as they did sub prtime loans. We can add a little preventive medicine on the front end in the form of common sense rules, or come in with socialistic "bailouts" after the fact. For my part, I'll take some regulation ahead of the game rather than socialism after the fact.

[Paid4]

Originally Posted by jfa686

just imagine if they got there way with your SS

They were talking about you having the option to invest only 2%(if I recall correctly) of your total SS benefits. Given the amount of those benefits, that's really not that much, at least for me. That certainly is a hot button for the politico's but you have to look at the facts that pols and media seem to ignore and then spin to their liking.

[Reelentless]

Originally Posted by Paid4

Hasn't the government done enough already to "fix" things? It's the gov't that got us into this financial mess to begin with, and now they're supposedly getting us out by committing $700B or more of taxpayers money. Sorry, I don't want the gov't to come anywhere near my 401k. It's done pretty well up until this year. You have to take the good with the bad. If anything, we need LESS government right now, not more.

Well said! I couldn't agree more.