Anyone who doubts how important defined contribution plans have become should read this quote from Dallas Salisbury, president and CEO of the Employee Benefit Research Institute:
“DC has the promise of doing far more than the DB system I know and love,” Mr. Salisbury said during his keynote address that opened Pensions & Investments' 18th annual East Coast Defined Contribution Conference March 7-9 in Miami.
EBRI's and Mr. Salisbury's connection to the defined benefit world dates to 1978, when the organization was launched and Mr. Salisbury's tenure there began. That was years before the creation of the 401(k) plan.
Now, however, EBRI focuses just as easily on DC plans as DB plans, as Mr. Salisbury's keynote speech demonstrates. Among the points he made:
• Employer matches go up with automatic enrollment;
• Fewer than 5% of retirees had retirement income of more than $42,000 last year;
• At age 65. a retiree needs $500,000 in the bank to cover retiree medical expenses that Medicare doesn't now cover; and
• One-third of people entering retirement still owe money on their homes, in part because of home equity lines of credit. Historically, Mr. Salisbury said, that percentage has been lower. — Nancy Webman