Saturday, April 22, 2006


Retirement Blame Game Survey

As retirement plan losses mount, the inevitable finger pointing ensues. In a recent survey of visitors to this blog, an overwhelming 96 percent of people agree that a pension crisis looms large. What's interesting is that multiple parties are getting the blame, with the lion's share going to U.S. Congress, plan fiduciaries, pension consultants, governors, regulators and board members.

Here are the results so far.

"Assuming you think there is a pension crisis, who do you think is responsible?" (Respondents were allowed to pick more than one answer.)

Attorneys: 10 percent
Auditors: 14 percent
Board Members: 31 percent
Chief Executive Officers: 24 percent
Employees: 17 percent
Governors and Other State Officials: 31 percent
Money Managers: 10 percent
Pension Consultants: 34 percent
Plan Fiduciaries: 45 percent
Regulators: 38 percent
Retirees: 7 percent
Shareholders: 3 percent
Taxpayers: 7 percent
U.S. Congress: 41 percent
Honorable Mention: IRS, Unions, Actuaries

When asked who can fix things, U.S. Congress, board members, plan fiduciaries and regulators took the lead. Interestingly, while pension consultants and state legislators are cited as part of the problem, they are not given much credit for being part of the solution. Only 21 (18) percent of respondents pick pension consultants (state politicians) as likely rescuers. Perhaps this stems from a feeling that the "pension crisis" must be addressed at the top in terms of tax, financial and accounting incentives and constraints.

Regarding Social Security, 76 percent worry about a current crisis.

An eye-popping 96 percent of respondents agree that "most people are ill-equipped to invest their own money for retirement planning purposes". The sorry state of financial literacy has been discussed in several posts and countless articles elsewhere by investment pundits. Regulators are clearly concerned too. On April 11, IMF Director Hausler emphasized the exposure of retail investors to a wide array of complex risks, adding that a "low level of financial literacy, combined with extensive risk taking, is politically an explosive brew."
posted by Susan Mangiero at 4/22/2006 11:35:00 AM