Most investors dont want to see employer-sponsored retirement plans replaced with government bonds, according to a white paper issued Thursday by The Spark Institute, a retirement services industry organization.
The institute released the paper at the same time that lawmakers on Capitol Hill were debating structural and regulatory changes to employer-sponsored 401(k) retirement plans.
Employer-sponsored retirement programs, particularly 401(k) plans, have been under attack for the last two years, based on many myths, misperceptions and misunderstandings, Larry Goldbrum, general counsel of the institute, said in a statement.
In a survey of 3,000 households, conducted in the fourth quarter of last year by the Investment Company Institute, 75% of participants said they dont want to see existing retirement accounts replaced with government bonds. Also, 85% said they didnt want the tax advantages of retirement accounts taken away.
The 401(k) plan system is successful in encouraging people to save for retirement and is fundamentally sound, he added.
Since 1997, the number of employers that offer a 401(k) plan grew to nearly 493,000. There were nearly 73 million plan participants as of Dec. 31, according to Spark.
In addition, a 2008 survey by Boston Research Group Inc., a market research consulting firm, found that the average participation rate in 401(k) plans was 77% and participants contributed an average of 6% of their pay.
And despite the recession, just 3% of participants stopped contributing last year, ICI reported.
Spark recommended that policymakers focus on making the retirement system stronger. Changes can be readily made without abandoning the current system, the report said.
Sue Asci is a reporter at InvestmentNews, a sister publication of Pensions & Investments.