Nevin's Data "Points"

By now you have perhaps read – or at least been told about – the recent cover story in Time magazine titled “The Broken Promise.” The promise - one of retirement benefits and health coverage – has been broken by employers, with the complicity of government, according to the story’s authors. And, in fairness, if one is looking for trouble in the nation’s private pension system, there is trouble to find. Some of those “troublemakers” have been taken to task in this very column. It isn’t just workers who have had “promises” reneged on, of course. Lawmakers have made significant changes to the laws regarding these programs over the years and, unlike the portrait painted by Time, they have frequently served to discourage both the funding of existing programs as well as the formation of new defined benefit programs. Generally, as in the current wave of “reform” legislation, they are targeted at the bad behaviors of a few – but come into effect well after those targets have skipped town....

One of the most valuable skills in my profession - and perhaps in any profession – is an ability to discern trends early. Just as valuable is the ability to discern the sometimes fine line of distinction between what may be a trend, and what may, in fact, be nothing more than a fad. Most plan sponsors have a functional aversion to the latter, and the vast majority have no real passion for being too early in the adoption of the former. After all, nowhere in the fiduciary directive to do only things that are in the best interests of participants and beneficiaries can there be found an admonition to be first. Notwithstanding those natural disinclinations, ours is a business in which trends – and fads – constantly emerge. Whether it is simply a function of the incessant "arms race" deemed necessary to cement a provider's position in the market, or a genuine pursuit of excellence, it seems as if there is always some new idea or product coming to market. That’s a good thi...

I don't get the Roth 401(k). More accurately, I don't get the need for the Roth 401(k). I understand that there is an emerging common wisdom that tax rates in the future will be higher than they are at present. I also understand that some may well believe that they are in a better position to pay taxes now than they may be in the future. Bottom line, I understand the appeal of the Roth IRA. I just don’t get why we need to clutter up the 401(k). Let’s be honest here. The folks most likely to benefit from the Roth 401(k) (other than a myriad of personal finance columnists) are, quite simply, those who are better-off financially. Not that I am against benefits for this group (I am, and hope to remain, among this constituency). However, given how many arcane rules and strictures exist in qualified plans to prevent them from benefiting unduly at the expense of the plan, the Roth 401(k) strikes me as peculiarly targeted. It’s not exactly a "giveaway" for the rich, who won’t...

Last week, in Washington, DC, a couple of senators that most of you may never have heard of brought a rush to pension “reform” to a screeching halt – and may have killed it for this session. Senator Mike DeWine (R-Ohio), along with Senator Barbara Mikulski (D-Maryland), used a procedure that allows individual senators to stop legislation from advancing to the full Senate. The bill, co-sponsored by Senator Charles Grassley (R-Iowa), contains a number of pension reform provisions, including increasing the insurance premiums paid by defined benefit plans, expanding and enhancing funding level disclosures, changing some of the rules on how funding levels are determined, making it easier for companies to contribute more to those plans, and imposing tighter requirements on underfunded plans to address the situation. Senators DeWine and Mikulski took issue with a particular provision in the bill – one that would have assessed higher funding requirements on pension plans based on the credit ...

There are few things more unseemly than watching an elected official pander to his or her constituency – unless it’s an elected official who has made a political misstep trying desperately to get back on the right side of the issue. Far be it from me to disparage the motivations of all the political responses to the devastation of Hurricane Katrina – but surely some were of dubious origins. There were, of course, many well-intentioned and truly helpful responses, and surely Katrina – and more significantly, the flooding that followed – was a disaster of historic proportions, at least on an aggregate level. Still, I was stunned to watch the Internal Revenue Service and Department of Labor jump into assistance mode, dramatically lowering barriers to the withdrawal of retirement savings in response. With the stroke of a pen, they qualified distributions in the impacted area as hardships, waived the 10% early withdrawal penalty, waived the 20% withholding requirement (but not the eventu...