Friday, December 7, 2012

A New "Trend" in ERISA Litigation?

Few would argue the point that we live in a society that has become somewhat “lawsuit prone”.  Sometimes it’s a matter of people or entities not wanting to accept responsibility for the decisions they make. At other times it’s greed, with the prospect of exploiting a deep pocket too tempting for some to resist.  And of course, there are plenty of legitimate, justifiable legal actions that complete the mix.

The world of ERISA is no exception to the phenomenon of intensified litigation.  The sum and substance of retirement saving is the accumulation of, if not wealth, at least adequate resources to support a reasonably comfortable lifestyle in retirement.  With retirement plan balances usually being one of the top two largest assets(along with their home) an individual has at retirement time, the stakes are high for all who save through an employer sponsored retirement plan.  As such, more litigation over wrongs or perceived wrongs are the result.      

The spectrum of ERISA lawsuits is as broad as litigation in commerce and society in general.  At times there is out-and-out thievery of workers’ assets, which obviously must be rectified.  At other times there is litigation in the wake of poor judgment, bad luck or just bad timing, typically in investment performance.  When a saver’s assets fail to grow as hoped, or worse yet, they “tank,” to use an unscientific term, more and more the matter ends up in court.

ERISA litigation is characterized by many layers of complexity, including employers, trustees, investment providers, third-party administrators, recordkeepers, accountants and actuaries.  These days, the real hot buttons in ERISA litigation are the fairness and disclosure of fees associated with plan administration and investments, and the propriety of investments offered to plan participants. 

A recent “push” of a hot button was the decision by the U.S. Supreme Court not to hear the case known as Santomenno v. John Hancock Life Insurance Co.  This action lets stand an April 2012 ruling by the 3rd U.S. Circuit Court of Appeals, and its effect will be to allow a lawsuit against John Hancock alleging excessive 401(k) plan fees to go forward.

What’s concerning to some about this particular suit is that the plaintiffs sued the service provider, John Hancock, directly, without having exhausted the customary remedies of demanding that the sponsoring employer and/or plan trustee take action, and adding these parties to the lawsuit first.  The Supreme Court in deciding not to hear this case, appears to have given tacit approval to this approach.    

It is probably small comfort that the 3rd Circuit ruled that the plaintiffs could not also sue under the Investment Company Act of 1940 (ICA), because during the course of this lawsuit the lead plaintiffs had divested the investment funds that gave rise to their lawsuit, and technically no longer had standing to sue under that law.  The Supreme Court had been asked to overrule the 3rd Circuit and allow the plaintiffs to sue under the ICA. 

While it is unclear whether John Hancock will ultimately be found to have charged excessive fees, it does seem clear that entities that provide services and investment products to retirement plans are likely to feel more vulnerable to such litigation; vulnerable at least to having to expend resources to defend themselves against direct litigation before the exhaustion of standard legal remedies.  And it’s hard to avoid the conclusion that their costs will ultimately become the costs of plans and their participants. 

Wednesday, November 21, 2012

New Proposed Fiduciary Definition Coming

As mentioned in my last blog, one of the things we felt would likely occur with an Obama re-election was that the Department of Labor would re-propose a new definition of fiduciary under ERISA.  Well, it has occurred or at least it appears it is going to.  Almost a week to the day after the election, Assistant Secretary of Labor Phyllis Borzi announced that a proposal to "modernize" this definition has been submitted to the administration for clearance and would be issued in early 2013.  This is definitely a priority item for Ms. Borzi and one she intends to try to sheperd through the regulatory process. 

We don't know yet what it says but Borzi did indicate that the proposal included a "robust" economic analysis related to the impact of the new fiduciary definition.  She went on to indicate that the benefits far outweighed any increased costs associated with the new definition.  If you recall, the DOL indicated that the lack of this economic impact study was what caused them to withdraw the proposed fiduciary definition the first time it was issued.  As I said in the blog issued prior to the election, the DOL had said that the lack of an economic impact study was the reason for the initial withdrawal but  many felt that the bipartisan opposition and political pressure placed on the DOL really was the primary reason the regulation wasn't pushed ahead.  It will be interesting to see what changes, if any, were made to this definition of fiduciary as compared to what was issued in 2010 and if there has been a movement towards alleviating some of the concerns that were raised with the prior proposal.  If what we see is similar to what the DOL did then, there is some concern over what advice, if any, plan participants and IRA accountholders would receive.  Many in the financial industry have indicated that they would not be able to economically provide advice to these individuals if they have to meet ERISA fiduciary standards as specified in that original proposal.   We are waiting to see, with great interest, what this proposal says and what the reaction of both the financial industry and the political establishment will be.  As you can tell, this is an extremely important issue and one that we will continue to follow and comment on.

Friday, October 26, 2012

November Elections Could Enable, or Disable, Retirement Readiness

One recurring theme in our national election system finds the challenger promising to lead the nation in a different direction than the one taken by the incumbent.  Whether this happens can depend on many things, not least of which is the inherent difficulty of “turning the ship” from the direction in which it’s sailing.  But that was the plan from the beginning of our nation.  For the sake of stability, the founding fathers created a governing system that—by its nature—is difficult to rapidly or radically change.  This has become even more evident in recent times, with a highly polarized Congress, which is a reflection of a very polarized electorate. 
Nevertheless, the coming presidential and congressional elections could put the retirement industry on any of several paths, each leading to a different place.  Some are predicting that the post-election period could resemble 1986, the year that the Tax Reform Act of 1986 brought about very significant changes to employer plans and IRAs.  Now, as then, one of the driving forces behind reform is a move towards balancing the federal budget.  In other words moving towards a place where tax revenues equal or outpace federal spending.
On a regulatory level, if president Obama wins another term as president, and we retain the same leaders in our regulatory agencies, many feel we will see a more aggressive regulatory approach than under Mitt Romney.   One of the regulatory issues that stands front-and-center is the Department of Labor, Employee Benefits Security Administration (EBSA) definition of fiduciary for retirement plan purposes.  EBSA proposed regulations defining fiduciary status were withdrawn in September, 2011, amid great industry and political opposition, to the great relief to many. 
Of special concern is defining fiduciary status and standards not only for employer plans, where fiduciary protocols are well-established, but for IRAs as well.  Applying the same definition to IRAs could, many fear, lead to an unwillingness of financial professionals to work with IRA owners in need of investment guidance, especially those with smaller balances.  Perhaps, in the opinion of some, the IRA owners who need it most.  If this proves to be the result, such savers would be less likely to receive the guidance they need to adequately prepare for retirement.  Some have asked why EBSA should even be considered to have regulatory authority over IRAs.
Few interpret EBSA’s withdrawal of proposed fiduciary definition regulations in 2011 as motivated by a desire to recast them as “kinder and gentler.”  Many feel that only a technicality caused them to be withdrawn, EBSA not having done an adequate job of estimating and disclosing the time and cost of compliance.  Still others interpreted the withdrawal as temporarily defusing opposition from an engaged and mobilized retirement industry and the related political pressure. 
If the present administration and EBSA leadership remain in place, without the same need to be concerned about the 2016 election, some feel there will be little inclination on the part of EBSA to show flexibility and forbearance.  Conversely, much of the political rhetoric during the Republican primary season, and from Republican candidates during the presidential and congressional campaigns, has advocated reduced regulatory burdens on business.  It is hard to imagine EBSA under a Romney administration being as aggressive in its regulation of retirement arrangements.  This is not an endorsement, but a carefully considered observation.
Potentially more game-changing than regulatory philosophy, is possible congressional action to reform the Internal Revenue Code.   There is strong sentiment that the Code is too complex, and needs to be simplified.  There is also a desire, chiefly on the part of fiscal conservatives, to reduce tax rates for individuals and businesses.  For this to be accomplished, it will be necessary to either curb federal expenditures, or to accomplish real economic growth that increases gross tax revenues, despite lower tax rates.  Or, some combination of both.
If reducing federal tax expenditures is pursued, some popular tax exemptions and deductions are likely to be prime candidates for limitation, potentially even outright elimination.  Some in Congress feel that the Tax Code should not favor certain kinds of behavior by providing tax breaks to encourage it.  Such popular tax deductions as home mortgage interest, charitable contributions, and retirement and education savings, fall into this category, as does the exemption for employer-provided health care benefits. 
Some in Congress would eliminate all such tax deductions and exemptions in favor of a “pure” Tax Code.  Others would preserve some of the more popular tax breaks; mortgage interest, charitable giving and retirement saving have all been mentioned as possible carve-outs that might be preserved in a reformed Tax Code. 
Interestingly, both presidential candidates have advocated positions that could limit tax-favored saving opportunities now available to American taxpayers.  President Obama, in a budget proposal released in February of this year, recommended setting an upper limit of 28 percent on the tax savings for deductions and exclusions, including those associated with retirement savings.  For example, a taxpayer whose marginal tax rate is 35%, would—under current law—recover 35 cents for every dollar of tax deductions or exclusions.  But under the president’s recapture principle, such tax benefits could not be greater than 28%, even for those in higher taxing brackets.
For his part, Republican presidential candidate Mitt Romney recently provided details on a tax cut plan that would cap annual itemized income tax deductions at $17,000, not including employer-provided health care benefits.  Depending on the mix of income tax deductions a taxpayer qualifies for, it is not difficult to imagine this $17,000 cap requiring a taxpayer to have to choose between a retirement savings contribution and an alternate tax deduction.
Still other economic policy "experts" have proposed such things as limiting annual retirement contributions to the lesser of $20,000, or 20% of income, which could greatly limit the contributions of savers attempting to maximize their retirement savings.  At the other end of the spectrum, there have also been proposals to establish automatic IRAs, as well as to create a mandatory auto-enrollment retirement plan with guaranteed payouts, something akin to a public/private partnership in a hybrid defined contribution/defined benefit plan.  We believe that a mandatory automatic IRA plan for employers who don't currently have a plan in place is very likely to be proposed under an Obama administration and something similar, but possibly without the "mandatory" aspect likely under Romney. 
Then, too, there are those in Congress and positions of influence who believe that America’s retirement saving mechanisms must be preserved despite federal budget woes, in order to avoid impoverishing millions of retirees in the future.  They contend that the present retirement system, particularly the 401(k) environment, is sound, needing at most fine-tuning, rather than a major overhaul. 
Preservation, limitation, elimination, all are words that could potentially have relevance in the post-election retirement savings world.  It’s up to the voices in our industry to make sure that elected officials and policymakers hear, in no uncertain terms, how critical it is that Americans continue to have meaningful opportunities to save for retirement; no matter which side of the political aisle those decision makers sit on.

Friday, September 28, 2012

Separate and Un-Equal Treatment for IRA and Employer Plan Documents

One of the core principles of retirement plan administration is that, wherever discretion is allowed, policies and procedures are to be applied “in a uniform and nondiscriminatory manner.”  Equal treatment is another way to put it; and you would be hard-put to find an IRS auditor or DOL examiner who would not echo this sentiment. 
We find it interesting, then, that there is such an obvious and perhaps illogical difference between the IRS’s approach to qualified retirement plan vs. IRA documents?  We have a tightly regulated, predictable, six-year cycle for the updating of documents and restatement of pre-approved qualified retirement plans.  We also may have numerous interim amendments during the normal six-year cycle.  The purpose of this regimen is to make sure that plan administrators, participants, and beneficiaries know the provisions under which a plan operates.   The last plan restatement cycle for EGTRRA began in 2006, and another for the PPA document is well underway.  Document compliance and consistency with the most up to date rules is not left to chance in the qualified plan world.
In contrast, it has been a decade since revised, up-to-date IRA model documents have been drafted and issued by the IRS.  During this time there have been seven significant pieces of legislation with IRA implications, and numerous items of interpretive guidance issued.  These changes affect such things as required minimum distributions (RMDs), Roth IRA conversions, rollovers from employer plans to IRAs, special options for military reservists and victims of natural disasters, transfers from IRAs to health savings accounts (HSAs), and more. 
In December of 2009, the IRS’s web site forms-release schedule targeted January, 2010, for issuance of updated model IRA forms.  At that time, statements from the IRS indicated that the actual redrafting of these model forms had been completed, and they were awaiting clearance from higher levels within the agency before being released.   Two and one-half years later, the model forms have not been issued, and the IRS has withdrawn the forms from its release schedule.
The IRA forms guidance that has been received arrived in June of 2010, when the IRS issued updated listing-of-required-modification (LRM) language for Traditional, Roth and SIMPLE IRAs.  LRM is a acronym for the “boilerplate” language that is used, either verbatim, or similar enough that it is identical in meaning, when forms drafters craft their own IRA documents.  These LRMs contain significant changes from the prior governing LRMs, two examples being requirements associated with beneficiary IRAs, and rollovers from employer plans to Roth IRAs.
Yet despite the numerous changes for law and guidance, and the new LRMs, the IRS surprisingly issued the ambiguous directive—in Revenue Procedure 2010-48—that prototype IRA documents DID NOT have to be revised in order for an IRA owner to take advantage of the law changes reflected in the new LRMs.  If IRA prototype drafters updated their documents only for the changes described therein, the IRS indicated that application for new opinion letters was not needed.
Finally, the IRS concluded Rev. Proc. 2010-48 ambiguously.  After stating that “The Service expects to issue revised model IRAs shortly,” it states that “use of the new models is not required,” but that “the Service recommends adoption of the latest model IRAs.”  With all the changes that have occurred in the decade since the last IRA model forms issuance, in 2002, it seems incomprehensible to advise that new and up-to-date IRA documents—whenever these finally do appear—would not be mandated, but merely recommended.
Some IRA document providers, like Ascensus, have during this past decade,  voluntarily redrafted their IRA prototype and model-based IRA agreements to better align them with current law and guidance, as well as providing amended “plain English” disclosure statements to reflect new requirements. 
The extremely long drought in release of new model IRA documents, combined with the lack of any IRS roadmap to IRA document consistency, has left the industry with a patchwork of IRA documents that varies greatly between custodians, trustees and issuers.  This approach to IRA document compliance isn’t accepted in the qualified plan world.  We wonder why the IRS not been equally concerned and diligent with IRAs?  Especially when we see the rapid growth in IRA deposits and increased regulatory scrutiny related to IRAs for things such as defining fiduciaries and providing investment advice.   It will be interesting to see where the IRS goes with the IRA amendment process.

Sunday, August 5, 2012

DOL FAB 2012-02 Q&A 30 Revised

It’s not every day that one finds solid evidence that protest and activism can make a difference.  But the Department of Labor, Employee Benefits Security Administration (EBSA), recently proved that protest and activism CAN be rewarded, when that agency modified a very controversial item of guidance for retirement plans.  Plan administrators and fiduciaries heaved a huge, collective sigh of relief on Monday, July 30th, when EBSA issued Field Assistance Bulletin (FAB) 2012-02R, which superseded FAB 2012-02—issued less than three months earlier.
 As I mentioned in my previous blog, FAB 2012-02’s Q&A 30 caused great concern as many believed it imposed on retirement plan sponsors a disclosure obligation both impractical and unsupported by any governing regulations.  One would have to look long and hard to recall another item of retirement plan guidance, issued by either the DOL or the IRS that has been so widely and uniformly questioned and that generated as much controversy in such a short span of time.  Questioned not only by those within the retirement industry itself, but also by congressmen and senators, collectively and individually, who have an understanding of the financial world of which retirement plans are an integral part.  
At the heart of the matter was a very unexpected FAB 2012-02 position on the investment option known in the industry as a “brokerage window,” which can open up an almost unlimited array of investments to participants.  Q&A #30 of FAB 2012-02 stipulated that under certain conditions a plan would be required to track the multitude of underlying investments that can be chosen within a brokerage windows option; if a certain number of participants and beneficiaries chose a particular investment, then the most comprehensive investment disclosure requirements of the regulations—requirements intended only for specific, designated investment alternatives within a plan—would be triggered. 
This disclosure includes such things as investment performance history, expense ratios, and risk-and-return characteristics.  These are easily available for specific, designated investment alternatives within a plan.  But EBSA seemed oblivious to the fact that brokerage window investment reports to plans do not provide the investment-by-investment detail necessary to determine how many participants or beneficiaries hold a particular investment.  And, perhaps more to the point, there are no provisions in the governing 404(a)(5) regulations that call for such tracking and disclosure for brokerage windows investments.  There is evidence that plans were being advised to steer clear of offering the potentially very desirable brokerage window investment option, for fear of running afoul of EBSA’s initial guidance.
Brokerage window disclosure compliance is now laid out in Q&A 39 of revised FAB 2012-02R (as opposed to Q&A 30 in FAB 2012-02).  No longer will the number of investments on a brokerage window investment platform, and the number participants and beneficiaries who choose a particular investment through this window, trigger a need for the disclosure detail necessary for designated investment alternatives (DIA) under a plan.  Instead, Q&A 39 of FAB 2012-02R reminds fiduciaries of plans offering brokerage investment windows of their “statutory duties of prudence and loyalty to participants and beneficiaries,” which includes, prudently selecting and monitoring the provider of the brokerage window. 
The industry response on this issue was not, in my opinion, inspired by self-interest or over-reaction to being regulated, but rather the concerns raised  were a healthy, justified response to the view that the DOL was changing the rules after the game was in progress.   While the DOL may, and in fact likely does view the self-directed brokerage option as an issue it needs to examine further, we see a great deal of evidence that plan administrators, fiduciaries, and service providers have conscientiously attempted to comply and conform their practices and business models to the two current sets of disclosure regulations now in force, those under 408(b)(2) and 404(a)(5).   We hope this becomes apparent as the process of disclosure continues to unfold, and that the DOL and the retirement industry can work together for the common purpose of enhancing the nation’s retirement security.

Friday, July 13, 2012

The View’s Not So Clear Through This (Brokerage) Window

Update as of 7/30/2012:   DOL Withdraws Controversial Investment Disclosure Position discussed in this blog. 

At the time of this writing, our industry finds itself between two weighty compliance responsibilities.  The deadline for retirement plan service providers to disclose fee and expense information to plan fiduciaries, which was July 1, has come and gone.  Ahead, with a deadline of August 30, is the required disclosure to participants and beneficiaries in participant-directed individual account retirement plans.  These twin duties have ushered in new levels of information sharing, and heightened responsibility for plan fiduciaries and service providers.   
The Department of Labor’s Employee Benefits Security Administration (EBSA) has given the industry some guidance for complying with these two disclosure obligations, which originate in separate final regulations.  Field Assistance Bulletin (FAB) 2012-02 was issued May 7, 2012, and contains 38 Questions-and-Answers on these disclosure obligations.  Many of them are directed toward disclosure to participants and beneficiaries, the disclosure obligation that lies ahead.    
As beneficial as this guidance has been in many respects, some feel it also contains regulatory overreaching, or legislating by regulation.  Perhaps the most troubling example in my opinion is some of the guidance on the use of brokerage windows for plan investing.  A brokerage window in a retirement plan might be described as a portal through which a participant can select from a much wider universe of investment choices than, for example, the typical selection of mutual fund investment options many plans use.  It is an option we see most commonly used by the more savvy investor, whereas a typical plan participant is more likely to split investments among several risk categories within a menu of mutual funds or other similar investment types. 
It wasn’t surprising that the fee disclosure regulations and the FAB require that plan fiduciaries provide adequate information on how a brokerage window investment arrangement works.  Information such as how to give investment instructions, any restrictions or limitations on trading, how a brokerage account differs from a plan designated investment alternative (DIA), and general fee and expense information, are certainly legitimate requirements. 
 Specifically at issue, however, is whether the same level of information gathering and sharing that is required for a plan’s DIAs – such things as investment performance history, expense ratios, risk-and-return characteristics – must also be provided for investments selected through a brokerage window arrangement.   The conditions set forth in FAB 2012-02, Q&A #30, make the answer a “maybe,” and as a result, will make compliance an uncertain moving target for plans offering a brokerage window arrangement.    
Q&A 30 begins innocently enough, acknowledging that under the final regulations a brokerage window generally need not be treated as a DIA, with all the disclosure that entails.  Q&A 30 further states that the regulations do not specify that a plan must have “a particular number of designated investment alternatives,” but then goes on to say that “the failure to designate a manageable number of investment alternatives raises questions as to whether a plan fiduciary has satisfied its obligations under section 404 of ERISA. “  
Further, Q&A states that “Unless participants and beneficiaries are financially sophisticated, many of them may need guidance when choosing their own investments from among a large number of alternatives.”  What is ironic is the fact that a brokerage window option is intended for, and primarily used by, the more experienced –  the “sophisticated” – investor.  It is typically made available in order to broaden an otherwise limited array of investments, and put control and decision making in the hands of the plan participant. 
Under the terms of Q&A 30, if a plan’s brokerage window includes more than 25 investment alternatives, the plan’s fiduciaries must
  • Provide DIA-level disclosures for at least three investments available through the window that meet the “broad range” requirements in the ERISA 404(c) regulations, and
  • Provide DIA-level disclosures for any investment available through the window that is selected by five (5) or more participants and beneficiaries (selected by 1% or more of participants in plans of more than 500).
The DOL indicated that their rationale for this requirement was their belief that plans might offer only a brokerage window option to  participants as a way to circumvent requirements to provide disclosures on any plan DIAs.  What is a bit concerning to many is what seems to be a lack of a demographic information that would indicate whether or not this type of practice actually occurs.  Our concern is that this DOL guidance casts a large net that will snare plans that offer a sufficient number of DIAs, as well as what we believe is a very small number of plans that choose to offer only a brokerage window.
The retirement industry has reacted to Q&A 30 with a wide variety of responses, most indicating some level of concern over this requirement, both from a timing and content perspective.    The DOL has stated that the industry is “over reading and overreacting ” to Q&A 30.    They have stated that a plan  fiduciary’s duty includes both the decision as to whether to offer a brokerage account,  and a duty to monitor what’s happening with it.  DOL further states  that the duty to monitor what is happening within the brokerage window has always existed.   Many in the industry were somewhat surprised by this, and take the position that this is really a new requirement they were not aware of. They argue that the FAB goes beyond the intended purpose of an FAB and is actually regulating, absent the normal regulatory process.       
An additional  concern many in the industry have is whether or not plans or their service providers can readily track when, or if, they reach the participation thresholds that will trigger the DIA disclosure requirements.  Many believe most plans do not have this capability, and obtaining it will be a laborious and expensive proposition.  Certainly at this early stage of the new disclosure process there doesn’t appear to us to be much evidence that plans are circumventing the spirit of the regulations by offering only brokerage window investing. 
It’s seems Q&A 30 may be a bit of a solution looking for a problem.  Perhaps most disconcerting to many is the release of a requirement that was not even hinted at in the final regulations, and very late in the fee disclosure implementation process.   Additionally, Q&A 30 may put plan fiduciaries in an untenable position.  Already we’re hearing of plans that have been advised not to offer a brokerage windows option, for this very reason.  In the end, it may be plan participants and beneficiaries who lose a potentially valued investment option for the sake of DOL preventing a problem that does not exist.

Thursday, May 24, 2012

Retirement Saving at a Crossroads

(Dear readers: this is the first of what I expect will be many entries in an online journal on the state of our retirement industry.  In today’s world of almost limitless communication and networking possibilities, we have an opportunity not only to better understand and react to our world and developments in our field, but to help shape them.  That is one of the reasons for this blog.  The “broth” of economic challenges, political divisiveness, and our aging population, seem to many to be a recipe for uncertainty; for some, even pessimism.  Remaining informed, and in turn informing others, is our best hope for a future in which Americans can be confident that their retirement years will be a blessing, rather than a burden.  As a retirement industry professional with a quarter century’s perspective and experience, surrounded by many associates in a company committed to that goal, I believe we can make a difference, and help shape a brighter future.  Todd Berghuis, Senior Vice President, Ascensus Retirement Services.)
It is certainly ironic that as American workers find themselves at a low point in confidence about a secure retirement, Congress is holding hearings to consider whether to preserve – or to radically alter – federal tax incentives that encourage retirement saving. 
On April 17, 2012, the House Ways and Means Committee held a hearing on the retirement saving incentives in the Internal Revenue Code.  Testimony was given on plan complexity, effects on the federal budget, and reasons why past Congresses enacted the saving incentives we now have.  While there are not currently bills being actively debated in Congress that would reduce or eliminate the tax preferences for IRAs and employer plans, there have been strong indications from lawmakers who want to cut federal expenditures – or greatly revamp the Tax Code – that retirement saving incentives will be “on the table” as they look for ways to balance the federal budget or restructure the Tax Code. 
At the same time as this discussion is occurring, Americans’ confidence in the likelihood they will have a secure retirement has declined markedly.  Evidence of this comes from the well-respected Employee Benefits Research Institute’s annual Retirement Confidence Survey (RCS), which polls Americans on their confidence in having a secure retirement.  This year the RCS registered a significant drop in confidence from just five years ago.  There has been a marked decline in both workers and retirees identifying themselves as “very confident” of “having enough money to live comfortably throughout … retirement.”  There has been a simultaneous increase in those “not at all confident.”    
Among active workers in 2007, which was prior to the current economic downturn, 27 percent identified themselves as being “very confident” of having a comfortable retirement.  Only 10 percent responded that they were “not-at-all confident.”  A striking reversal occurred in 2012.  Only 14 percent of active workers now responded that they were “very confident,” and 23 percent are now “not at all confident.”  For retirees, the numbers describe a similar loss of confidence.  The “very confident” dropped from 41 percent in 2007 to 21 percent in 2012.  The segment “not-at-all confident” rose from 11 percent in 2007, to 19 percent in 2012. 
This loss of confidence is also reflected in many of those who are now retired having worked longer than they expected, or wanted, and many who are still working today saying they are adjusting their expectations, believing they’ll not be able to retire when they hoped to.  Unfortunately, some factors that impact the timing of one’s retirement —like health and employability—may be beyond the worker’s control.  For this reason, too, having maximum retirement saving opportunities is crucial.
Some in Congress look at the tax preferences for IRAs and employer plans, and unfairly call them “tax expenditures,” suggesting that they represent lost tax revenues.  The reality is that taxation is merely delayed to the time of retirement for most such accumulations.  Nevertheless, some lawmakers believe that scaling back these tax preferences, or eliminating them altogether, would make available more revenues for the tax reforms they favor. 
But at what cost?  Confidence in a secure retirement is already diminishing, as the RCS survey shows.  What are the prospects for a secure retirement if Congress weakens or eliminates the current tax incentives to save for that final stage of life?  Hopefully, what is good for our citizens long term retirement needs will not be sacrificed for political advantage and change-for-change’s-sake in the short term.