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Press release:

The SPARK Institute Makes The Case For Employer-Sponsored Retirement Plans

Issued by: The SPARK Institute

Date: Apr. 23, 2009

SIMSBURY, CT, April 23 – The SPARK Institute today issued a white paper that explains why employer-sponsored retirement plans are the most effective, secure and viable way for American workers to save and invest to reach their retirement goals.  The paper, “The Case for Employer-Sponsored Retirement Plans -- Benefits and Accomplishments,” outlines the contributions employer-sponsored plans have made in helping American workers save for retirement, said Larry Goldbrum, General Counsel of the SPARK Institute.
      “Employer-sponsored retirement plans, particularly 401(k) plans, have been under attack for the last two years based on many misperceptions and misunderstandings,” said Goldbrum.  “As a result, we felt it was necessary to set the record straight with facts about the accomplishments of the employer-based system and its advantages over other types of retirement savings vehicles.”
      Goldbrum noted that “since their inception, 401(k) plans have helped tens of millions of American workers save and increase their retirement savings for their post-work years.”  For example, the paper notes that
in just over 25 years, the number of employers offering a 401(k) plan grew dramatically from zero to nearly 493,000.  During the same period, the number of employees participating in 401(k) plans grew from zero to almost 73 million at the end of 2008.  
     “The employer-sponsored retirement plan system is a successful, fundamentally sound, competitive and innovative system that (1) provides the best way for American workers to invest and build savings to reach their retirement goals, and (2) provides helpful services and good value for the cost, including more affordable investment options than retail investment products,” Goldbrum said  He noted that employer-sponsored retirement plans include a number of features not available through other savings vehicles that encourage participation and deliver education and advice that help American workers build retirement savings.
      Goldbrum cited a recent household survey that sought to understand what features workers valued in their employer-sponsored retirement savings plans.  “Responses showed that 90% of workers agreed that their employer-sponsored retirement plan helped them ‘think about the long-term, not just my current needs.’  Another 88% agreed that payroll deductions make it easier to save,” he said.
     “Just as the employer-sponsored retirement system has incorporated innovations and improvements in the past to bolster its mission and to adapt to changes in the financial environment, it has the capacity to accommodate future innovations and improvements,” Goldbrum said. “Improvements can be readily made without abandoning the current system.  We urge policy makers to focus their attention on making the employer-sponsored retirement plan system stronger and to encourage employers to adopt and maintain retirement plans so that all workers have the opportunity to enjoy a financially secure retirement.”
     Goldbrum said that this is the first in a series of white papers that examine misperceptions about employer sponsored plans and demonstrate their value, benefits and effectiveness as the best way for American workers to save and invest to reach their retirement goals.  The second and third installments examine “Coverage, Participation and Retirement Security” and “Fees and Expenses,” respectively, and will be released shortly, he said.
        A copy of the white paper is available on The SPARK Institute website at www.sparkinstitute.org/comments-and-materials.php.   
     The SPARK Institute is the leading voice in Washington for the retirement services industry.  Through the combined expertise of its member companies, The SPARK Institute provides research, education, testimony and comments on pending legislative and regulatory issues to members of Congress and relevant government agency officials. Collectively, its members serve over 62 million defined contribution plan participants.
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