Saturday, November 18, 2006

Thanks Giving

Like many of you perhaps, I suddenly realized this past week that this week is Thanksgiving.

For me, 2006 has been an extraordinary year on fronts both personal and professional: turning 50, the death of my father, my 20th wedding anniversary, sending our first kid off to college, #2 turning 16, PLANSPONSOR’s first industry conference, a new adviser magazine…oh, and a little piece of legislation called the Pension Protection Act.

Still, as I sit here today preparing to pick my mother up at the airport for her first Thanksgiving visit with us in the northeast – and look ahead to picking up my eldest at college next week – I’m struck by just how much there is to be thankful for.

First and foremost, I’m thankful for a loving and patient family – who must all too frequently endure the intrusions of my career-long passion for this field into our daily lives.

I’m thankful for the home I have found at PLANSPONSOR, and the warmth with which its loyal readers have embraced me, as well as the many who have “discovered” us during the past seven years, and for all of you who have supported – and I hope benefited from – our various programs and communications throughout the year.

I’m thankful for the ability to make a positive contribution to the efforts of plan sponsors, advisers, and others who share my passion for the important work we do in helping provide for the retirement security of others. I’m thankful that so many gifted professionals have committed themselves to being part of the solution to these issues.

I’m also thankful for having found – so early in my working life – an area about which I could care so deeply, and which provides so much fulfillment, personally and professionally.

Finally, I’m thankful for the protections our democratic form of government affords us all; for the courage and selflessness of those, past and present, who have been willing to make the ultimate sacrifice to preserve those freedoms; and for the grace of a benevolent God in giving us all so much for which to be thankful at this special time of year.

- Nevin Adams

Saturday, November 11, 2006

"Wonder" Land

However you feel about the results of last week’s elections, there’s little disputing that things are going to be different in Washington. Amazingly, though perhaps not surprisingly, I’m already getting invitations to presentations, or offers to send me assessments, on what all this change will mean for benefit programs generally, and retirement savings specifically.

My initial reaction was a bit like when I walked into the mall last weekend and was confronted with Christmas displays – it’s too soon for this!

I doubt that many went to the polls with pensions on their minds (even those of us who make our living supporting them), and with the ink on the Pension Protection Act of 2006 still damp, one is tempted to think that we have all the regulatory help we’ll need until after the next election – at least.

Personally, I’m not expecting much out of this Congress, certainly not on pensions (does anyone really think that the momentary comity displayed for the television cameras will last?). We can probably “thank” the airline industry’s pension funding crisis for forcing the issue this past term, but higher interest rates and new pension accounting regulations from the Financial Accounting Standards Board (FASB) will likely grease the skids with no further legislative impetus. For defined contribution plans, there’s little question that the PPA sets a lot of interesting trends in motion – and much of that can proceed without the assistance of Congress. Moreover, if the removal of EGTRRA’s sunset dates doesn’t actually create true “permanence,” it nonetheless, for the time being, removes the ability of Congress to simply allow distasteful (to some) tax breaks to expire. Advice? Well, that was one of the more controversial aspects of the PPA legislatively – and it’s pretty clear that that is one area in which controversy, and just a bit of confusion, remains. I’m not at all sure that that will be resolved in the near term, but one never knows.

Not that a little inaction from Congress would be a bad thing. Most of us will have our hands full assimilating, explaining, and implementing the new provisions of the PPA until well past the 2008 elections. In addition to the Department of Labor’s newly minted proposals on Qualified Default Investment Alternatives, we have yet to see some of the details that will be required to fulfill some new reporting obligations, including quarterly benefit statements, and things like the Roth 401(k) may have a broader appeal now that the EGTRRA sunset has been removed.

But, as we lumber toward our next Presidential election, I wouldn’t be surprised if some began to wonder aloud if automatic enrollment might not be better deployed as a mandatory enrollment – after all, why leave “bad” behaviors to chance? Nor would I be surprised to hear legislators beginning to talk not about the disappointing participation rates of the 44% of working Americans who have the chance to participate, but about why the other 56% don’t have the same opportunity. After all, all taxpayers are, in a sense, subsidizing the programs of the 44% (similar arguments have been made about employer-sponsored health-care programs already, by the way). Could you envision a sort of uber-Social Security program that mandated worker (and perhaps employer) contributions that go into a private account? Maybe not in that particular format today – but there are elements in that design that could garner bipartisan support, IMHO. What might that mean for retirement security? For your retirement business security?

It’s not too early to start wondering – after all, 2008 is just around the corner.

- Nevin E. Adams

Saturday, November 04, 2006

Election Nearing

If you have turned on a TV, walked by a radio, or driven down a residential street in the past month, you will, of course, be aware that our nation will go to the polls tomorrow. Certainly, politics has never been a pretty business, but I doubt that I would get much argument in stating that this particular political season has been as nasty, vitriolic, and personal as any in recent memory—including not a few of those ads where the candidate’s visage appears to say that he or she “approved this message.”

Like a couple of bickering siblings, both sides protest either that they didn’t start it, or that it is the other side’s fault. Lowered to levels of political discourse that once would have gotten your mouth washed out with soap, the verbal free-for-all threatens to obfuscate not only the real issues in this election, but the truth itself. We’re all sick and tired of it—even when they’re dishing the dirt on the candidate we’re hoping is forced to slink off the public stage in disgrace come Tuesday.

Ultimately, of course, these strident pleas represent attempts not only to persuade, but to overcome the historic inertia of the American citizenry, particularly in one of these so-called “off-year” elections. Those of us who struggle to get workers to properly prepare for their own personal retirement security can surely appreciate the challenge, if not the consequences.

However ill we may be of the discourse, there is little argument that this election, more than most, will have a dramatic impact not only on the next two years, but on the 2008 presidential election campaign that is already underway. The political pundits have it all figured out, of course—but they’ve been wrong before. Political punditry spends a lot of time looking back over its shoulders at the past, but as any mutual fund investor knows (or should know), “past performance is no guarantee of future results.” Indeed, whether it is because, or in spite, of the current level of vitriol, the American public’s interest in expressing its opinion by actually taking the time to go to the polls – or in pursuing an absentee ballot—appears to be on the upswing. And, if the last several elections have taught us nothing else, we now know that votes—even a single vote—can matter.

The nation is not so cleanly demarcated into “blue” and “red” as pundits would have us believe, though we surely have our differences, IMHO. I suspect at most levels the voting public is not as polarized in their opinions as those running for political office seem to think. Frequently, that means that we must indeed opt for “the lesser of two evils,” but at least we have a choice—and unlike the brave Iraqis who walked to the polls last December to exercise a right to which they were long-deprived, we can do so without fear of assassination or retribution.

Here’s hoping that—whatever your position on the issues - you take the time to vote this election. It is not only a right, after all, it is also a privilege—and a responsibility.

- Nevin Adams