Nevin's Data "Points"

   As Halloween approaches, a leading behavioral science academic has embraced a truly scary idea that involves your 401(k) account. That academic, as you might deduce from the title, is none other than Shlomo Benartzi, professor emeritus at UCLA Anderson School of Management — and more specifically a champion of the application of behavioral finance concepts to retirement plans, notably automatic enrollment and contribution acceleration. As for that scary recommendation, Benartzi has — in a Wall Street Journal op-ed — effectively backed the notion of creating big government-run pools of retirement savings — where ALL retirement savings would be put. “We no longer have jobs for life” he rationalizes, though employment tenure in the private sector has been pretty consistent going all the way back to the 1940s. What HAS changed is the predominance of defined contribution savings plans and — ironically — that system’s increasing reliance on the behavioral science designs that ...

Have you heard this one? “Only about half of working Americans are covered by a workplace retirement plan.” Sure you have. It’s a statistic that is widely cited and reported, both in the mainstream press and on Capitol Hill. It comes from a reliable, objective source (the U.S. Census Bureau’s Current Population Survey) and conjures up a compelling need for action by advisors (and others) hoping and working to expand the availability of workplace retirement plans. In reviewing the Census Bureau data, the Employee Benefit Research Institute (EBRI) recently noted that , in 2011, 78.5 million workers worked for an employer or union that did not sponsor a retirement plan. That is the “less than half” number cited, and reported, with such vigor. However, when you look at the data underlying that aggregate number, you find it includes: 8.9 million people who were self-employed (and thus arguably are prevented from being covered by their own inaction); 6.2 million who were under the...