Some interesting articles on 401(k) plans:
Public policy could greatly improve 401(k) plans by leveraging this inertia and setting the defaults in 401(k) plans to "best practice." The plan would automatically enroll all eligible participants; it would set their contributions at the level that maximizes the employer match; diversify and rebalance their portfolios as they age; restrict investments in company stock; automatically roll over lump-sum distributions; and pay out retirement benefits in the form of a joint-and-survivor inflation-indexed annuity. . . The clear message from the 401(k) experience is that financial decisions are complicated and individuals with busy lives do not make good choices.
"I think it's an evolutionary process," says Ann Combs, assistant secretary of the Employee Benefits Security Administration at the U.S. Department of Labor.Comment: It is hard to believe that Ann Combs really said this. Perhaps she was misquoted. Can you imagine telling anyone to invest their money and then to learn about what fees they are paying, after they have already made the investment?"First you have to get employees to participate, then you need to get them to max their contributions so they get the employer match. Then you educate them about investment options, asset allocation and checking their quarterly statements. Fees are probably on a more sophisticated level that they learn as they go along."
"We'd have to look at it. There's a wide variety of misdeeds," Phillips says. "But we would definitely consider making a change. One of the few things you can do as a fund investor is vote with your feet. I think it's great that in the aggregate, money has continued to go into funds, but (fund assets) have been radically repositioned away from funds that have been implicated. There should be a penalty. You should lose assets if you violate the public's trust."
The outpouring of bad news about mutual funds has a silver lining, said Michael Scarborough, president of the Scarborough Group in Annapolis, which manages individuals' 401(k) accounts. Workers notorious for neglecting their accounts are taking time to review them and ask questions, he said. The last time workers had a renewed interest in their 401(k)s was during the corporate scandals. "I always said Enron was a pretty good thing to happen," Scarborough said, "as long as you didn't work at Enron."