(Bloomberg) — Ted Benna, the man widely regarded as the father of the 401(k) plan, recently reflected on his creation — and he wasn't happy.
Benna laments that 401(k)s have become so complicated and so expensive and so rife with opportunities for mistakes.
As we know, 401(k)s and other defined contribution plans have become the go-to retirement plans for private sector workers. According to the Employee Benefit Research Institute, 84 percent of private sector workers who participated in an employment-based retirement plan were enrolled in a traditional pension in 1979. By 2011, 93 percent were enrolled in a 401(k) or other defined contribution plan. (401(k)s are the largest and most common type of defined contribution plan).
Amid such heady growth, we should also acknowledge that 401(k)s aren't serving their beneficiaries well and start thinking seriously about how to fix their many problems.
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