Mandatory 401(k) Participation. Trending? (I hope not.) Blog Feature {% if subscribeProperty|lower == "yes" %} {% else %} {% endif %}
Greg Carpenter

By: Greg Carpenter on November 6th, 2013

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Mandatory 401(k) Participation. Trending? (I hope not.)

Thought Leadership

In the last two days I’ve read two separate blogs proposing that 401k participation be made mandatory for all employees. I am flabbergasted!

One blog is from Meir Statman, a professor of finance on the Wall Street Journal blog. He thinks “people should be “shoved’ into 401ks rather than “nudged” into them. Nudging leaves behind the people most in need of a structured retirement savings program.”

The other blog is from Tom Gonnella, an industry veteran with Lincoln Trust Company, posted on PlanSponsor.com. Mr. Gonnella writes:

401ks for all. “It's time to make the 401(k) mandatory, with every employer offering a plan, and both employer and employee required to contribute.” These are not the words of a radical politician, but of Knight Kiplinger, editor in chief of Kiplinger's Personal Finance magazine. Kiplinger’s call for action should be taken up by leaders of all stripes and rules put in place to require businesses to offer a retirement plan.

I get it. People aren’t saving enough for retirement. If you force people to participate, people will save more with their small business 401k plan. But taking this kind of position in the media is irresponsible – neither offers a plan for implementing his proposal. Are both bloggers saying that they are in favor of sweeping new Federal legislation and unprecedented governmental intrusion in the workplace?

It’s provocative, but easily dismissed.

I’m all for the goal of providing employees with better retirement security, but these kind of proposals don’t help.

 

About Greg Carpenter

Greg Carpenter founded Employee Fiduciary in 2004. With 29 years of experience in accounting and finance, Greg has brought his expertise to a variety of advisory, senior and executive management roles. Greg has worked for a national accounting firm, a Fortune 500 plan sponsor, a major brokerage firm, and he served as the CEO of a major 401k TPA firm. He is a CPA and earned his BA from Yale and his MBA from The University of Chicago Booth School of Business.