401k Reform

CBS Market Watch had an interesting article (requires registration) about how "if politicians truly want to fix the American retirement system, lock, stock and barrel, they should tack 401(k) reform on to their to-do list...they can address how that popular pension plan disadvantages women in ways that traditional pensions and even Social Security don't."

It goes on to say:

"Women tend to live longer than men, and so must make their nest egg produce income over a longer stretch of time. All things being equal, women will receive a smaller monthly benefit vs. a man should they choose to buy an annuity designed to produce lifelong income with all or a portion of the money in their 401(k) plan.

Moreover, women who rely principally on their husband's earnings and pension benefits may be adversely affected by a shift from traditional pension plans to 401(k)s.

Under traditional pensions, the government requires that workers receive what's called a joint-and-survivor annuity at retirement, unless the spouse waives the requirement. With a joint-and-survivor annuity, husband and wife receive a pension check over the course of their respective lifetimes.

In essence, the provision gives the wife a legal claim on her husband's pension benefit."

However, no such automatic claim exists with 401(k) plan. A husband could withdraw the money and "blow it on a trip round the world if he liked."

Only I don't know much about investment, but this sounds pretty bad. I would like to see Democrats embrace reform here. I mean, aside from just being good policy, but the political benefit is obvious. It makes you look like you care about retirement beyond SS as well as gender equality, and will help erase the "anti-investor" image Republicans have used against Democrats for awhile now.

You guys listening?