Solis Looks To New Retirement Saving System

11-05-2009 | Source: Fund Action

Labor Secretary Hilda Solis issued a call to change the retirement system Wednesday, saying new retirement arrangements should not put responsibility for investments solely on the workers, as the 401(k) approach does. “The fact is,” said Solis during at a talk at “Retirement USA,” “that even with reforms, 401(k) plans will never be universal, secure or adequate.”

Retirement USA is a coalition of groups seeking change in the retirement planning status quo. Solis talk, titled “Re-envisioning Retirement Security,” did not give many hints as to what kind of change the Labor Department might recommend to Congress or the president. Solis did seem to hint that whatever her preferred solution might be, employers would be part of it. “Some advocate giving up on the employment-based retirement system entirely” in favor of individual saving approaches, the secretary said, but added that she herself thought it was better to have a system that in which retirement saving was job-connected.

The speech ticked off measures on-going now to get better results from 401(k). Solis said that in the near future the department will be issuing a request for information on how best to encourage employers to offer workers a lifetime income stream rather than a lump sum. She said the department will be rooting out conflicts of interest. “We need to work short-term to improve the current system,” the secretary said.