Americans overwhelmingly support enhancing 401k retirement plans with guaranteed income solution
Nationwide Financial poll shows three-out-of-four adults support plan that earmarks employer match to generate guaranteed lifelong income
FOR IMMEDIATE RELEASE
June 29, 2010
Erica Lewis (614) 249-0184
Jeff Whetzel (614) 249-6354
Columbus, Ohio — A new survey shows three-out-of-four (77 percent) U.S. adults support the concept of modifying the 401k retirement plan system to specify that employer contributions be used to provide a guaranteed stream of income. That change is part of a new public policy proposal made by Nationwide Financial Services, Inc. to government officials and members of Congress. The telephone survey was commissioned by Nationwide Financial and conducted by Harris Interactive in April.
“The recession has shown the devastating effects market volatility can have on retirement readiness,” said Anne Arvia, senior vice president of Retirement Plans for Nationwide Financial. “Adding income guarantees into the defined-contribution system can help Americans meet their retirement income needs, while working to strengthen our current retirement system.”
On May 3 Nationwide introduced the 401KIncome proposal in response to a Request for Information from the Department of Labor and Department of Treasury to obtain ideas on the subject of lifetime income options in retirement plans. Nationwide’s proposal provides a strong incentive for employers with defined contribution plans to purchase a guaranteed stream of income by using fixed income deferred annuities as the investment option for the employer match.
Employees would still have control over and access to their own contributions, but the employer match would not be accessible for loans or early withdrawals. Employees could also choose to put their own deferrals in the defined benefit option.
The survey found that more than three-quarters (77 percent) of U.S. adults would support a 401k retirement plan where the employer match is designated solely to generate guaranteed income for retirement. Younger adults (defined as 18 – 44 years of age) were even more likely (85 percent) to say they supported such a retirement plan.
In addition, the survey revealed that 72 percent of U.S. adults said they agree that the 401k system should be adapted to include features that offer guaranteed income at the point of retirement.
Nationwide’s proposal would also promote greater use of 401k plans by giving employers a tax credit instead of a tax deduction for any employer match used to fund a guaranteed stream of income payments to participants, which could potentially increase the number of employees who have access to a retirement plan.
According to the survey, only 38 percent of adults currently have a 401k account and of those that don’t have a 401k account, 41 percent say it’s because their employer doesn’t offer one.
“The 401KIncome proposal would not only ensure matching contributions would be designated solely for retirement income, but also potentially help the millions of Americans who currently don’t have access to an employer-sponsored retirement plan gain access to one,” said Arvia.
A copy of Nationwide’s 401KIncome proposal is available here.
This 401k Legislative Research was conducted by telephone within the United States by Harris Interactive on behalf of Nationwide between April 7-11, 2010 among 1,007 U.S. adults aged 18 or older. Figures for age, sex, race/ethnicity, education, region, number of adults in the household, number of phone lines in the household were weighted where necessary to bring them into line with their actual proportions in the population.
Nationwide, based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by A.M. Best. The company provides a full range of personalized insurance and financial services, including auto insurance, motorcycle, boat, homeowners, life insurance, farm, commercial insurance, administrative services, annuities, mortgages, mutual funds, pensions, long-term savings plans and health and productivity services. For more information, visit www.nationwide.com.
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