Christopher Carosa, CTFA, is chief contributing editor for, a leading provider of essential news and information, blunt commentary and practical examples for ERISA/401(k) fiduciaries, individual trustees and professional fiduciaries.

How many workers would perk up if you told them they might be forfeiting almost $30,000 a year in retirement income that they already have? It’s there, right now, and they don’t even know it; their own inaction is causing them to lose it. Why? Because plan sponsors aren’t telling them.

Here’s the crazy thing: The plan sponsors aren’t even aware they’re not telling their employees. It all comes down to semantics and philosophy. Most people think incentives are more attractive than penalties, that carrots are better than sticks, that you catch more flies with honey than vinegar. All this may be considered common sense, but in the real world of behavioral economics, loss aversion tells us the negative is more effective at influencing behavior than the positive.

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