Nevin's Data "Points"

That’s the premise behind a recent column by Morningstar’s John Rekenthaler, who writes that “the plans are as good as they can be under the current framework – and that's not good enough.” I had the pleasure of meeting John a number of years back – and I’ve been keeping up with his writing ever since. His columns are thoughtful and thought-provoking, his perspectives rational and well-reasoned, his commentary nearly always not only interesting, but entertaining. But on this one  – well, let’s just say we disagree. John acknowledges that his views on the 401(k) have “evolved,” and that while he has long been in the camp that called for improvements in the current system, a “defender” of the 401(k) – but now, apparently, he’s calling for an “overhaul.” ‘Leaky’ Assumptions He doesn’t fault the current system for its perceived shortcomings; he notes that the 401(k) wasn’t designed to be a solution for the general public’s retirement, saw the growth in the 1980s...

Most people view automatic enrollment in a 401(k) as a good thing 1  – but apparently it has a heretofore unappreciated “dark” side. At least that was the focus of a headline in a recent Wall Street Journal article  (subscription required) that asked (and answered) the provocative question: “401(k) or ATM? Automated Retirement Savings Prove Easy to Pluck Prematurely.” That is at least how the Journal chose to position its coverage of a study based on a single firm’s experience with automatic enrollment. That study , according to the Journal , serves to “answer a question that has long concerned employers that put workers into 401(k) plans and give them the option to drop out, rather than requiring them to sign up on their own: Will auto-enrolled workers treat their 401(k)s like automated-teller machines?” Now, I’ve heard a lot of questions over the years from plan sponsors about automatic enrollment – but never that one. Regardless, the Journal says ...