Rich and Co.

A Call to Defend the Defined Contribution and 401k Systems

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Defending the Defined Contribution and 401k Systems

The Problem — Anti-401(k) and 401(k) “haters” are winning in the media and congress.


  • The anti-DC forces are winning the battle for the “hearts and minds” of the public and media – now the policy makers are following.
  • This is largely due to the DC community acting as “bystanders” and not professionally defending the system, plan sponsors and participants.
  • The goal of the anti-401k and DC system forces is nothing less than the disintermediation of employees life savings from the employees and the plan sponsors who now safeguard those asserts.
  • Let us take heed and remember what has happened to the lifetime equity in homes when that too was “disintermediated.”

False Claims and Media Bullying Work
 “401(k) plans have a bullseye painted on them”  So says David Wray head of the non-profit PSCA.  He should know.  PSCA has been one of the most effective participants in defending and creating the employer-based employee savings programs.

Let’s speak frankly; pretty much everyone wants to get at the money employees’ have accumulated in their employer’s payroll savings plans.  It may be the last pool of protected assets in the country.

We see what happened with individual’s home equity when the “Wizards of Wall St.” got access to that.  With the value of that individual assets – also somewhat related to retirement – trashed.  What’s left?  Employee’s 401(k) balances.  Many different parties and interest want to get at those assets.

The 401(k) system has been remarkably successful in helping employees save money from each paycheck.  Success bring envy, jealously, sneaky tactics and attacks – in business matters as well as personal relationships.

Many well financed, tough and tactically smart interests are so mad at the defined contribution system’s success they could spit.  They see the DC system’s success as a direct and immediate attack on their contra interests.  Since they feel attacked – they are attacking back.  Also, they want to get at the money.

The anti-DC forces include main types:

  • Some have undertaken a concerted effort to attack the system because they want access to the money contained in the system
  • Others see the 401(k) system as a threat to their own, non-defined contribution schemes or ideologies.

David Wray is worried about the political attacks and those in the press – all of us should be, especially plan sponsors and employees.

Anti-401k Forces Divide and Conquer
The anti-401(k) forces have two primary and immediate goals:

  1. Separate the employee’s life savings from the professional support, protection and oversight of the employers.
  2. The second step is to separate the employee from their life savings.  Just the same way it was done with home equity value.

Once the employers are separated from the employee’s savings, the savings can be separated from the employee thru taxes, investment schemes, or whatever other create schemes will be cooked up.

As we have seen with home equity values – isolating each individual and their assts is the first step in “disintermediation.”  Disintermediation of the individual from their home equity accumulated over decades or their life savings.

Without an employer, and their resources, involved employees and their life savings will be ready targets and open to exploitation and the most effective sales tactics.

Standing Up To the Interests Seeking to Unwind 401(k) Plans
Right now, on the defined contribution and 401(k) discussion – only one set of voices are being heard – the hostile-aggressive ones.

The 401(k) system for all it success and strength is being picked on and bullied.  Bullied in the press and in Congress.  The 401(k) haters have been very effective in playing on public fears about retirement which are legitimate and real for their own agenda.  They have also used that PR success to push congress on to their bandwagon.  “Say a lie enough and it becomes truth.”

Politics by media clippings and social media and Twitter trends is upon us – for good or ill.  The only reality that matters for impressing voters are hyperbolic claims and scary headlines.

The 401(k) haters have been effective at driving the media and public impressions and now truing that success into political attacks.  Fair enough.  That’s what opponents do.  That’s how pluralistic democracy “works” – or not.  The “loudest voices” usually win.

However, democracy and optimal decision-making depends on all the different voices being heard.  All parties telling their stories.  So like in most cases when someone is being pushed around, as the 401(k) system is now – you have to stand up to the bullying, misstatement and bring a balanced and fair “loud voice” into the debate also.

Fair, balanced and fact-based defense of the 401(k) system is missing.  Time to change that and be just as aggressive and the anti-401(k) forces.

Actively Defending the DC System
The new media communications ecosystem is upon us.  It’s here and it rules.  It also has it’s own, and new, rules.

The anti-401(k) forces will always use the most effective and newest tools for their propaganda.  They will bend the rules and “cross the line.”  They also are well funded to and purchase professional services and consultants.

In contrast, principled voices are always shy, demure, hesitant, behind the times, slow to react  and reluctant to “fight fire with fire” when being bullied unfairly and with misleading statements and tactics.

No one ever fights fair when they are on a crusade and have convinced themselves there is one “right” — and it’s them!  Human nature.

Elected officials become victims as well of these tactics.  Whatever get’s the attention of voters is “right” and a “win.”  The “Chicken Little” media strategy – “The sky is falling, the sky is falling!!” – is used so much because it works.  But now, “crying wolf” takes place real-time and 24/7.

It’s all about impression and management and capturing and keeping “top of mind” awareness.  This trend is only going to increase, so those of us who want evidence-based information and public awareness had better get with the social media and new media ecosystem program.  Stat!

Who’s on board?


Written by Rich and Co.

June 26, 2011 at 6:50 pm

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