401(k) Specialist Issue 2 - 2016 - 33

''While private pensions are all but extinct,
public pensions at every level-local, state and federal-
run the gamut of solvency.
''
on income replacement needs rather than
asset building needs. "
Carosa argues that, again, Congress-or
more specifically the Senate-is focused on
the wrong things. He says the proposals he's
heard about are either centered on propping
up Social Security, an antiquated push back
toward pensions and creating benefits out of
thin air vs. building incentives.
The real problem, Carosa contends, echoing
Dunne's point, is saving. That's the real
retirement crisis.
" People just aren't saving enough, " Carosa
says. " The savings rate is still too low. The
idea of saving is really hard to teach. People
are predisposed not to save. We need to
address financial literacy - in terms of both
savings and long-term investing. "
Sure, financial literacy is on the verge of
surpassing buzzword status and threatens to
become a cliché, but Carosa's point is valid, if
lacking in political sex appeal. But encouraging
better savings benefits everyone from the
feds all the way down to the employee.
" Anything that encourages more savings
is good for the industry because there are
more assets to invest, " Carosa points out.
PENSIONS AND SOCIAL SECURITY
Congress, meanwhile, continues to revisit
pensions, which have long since proved to
be less reliable than the romantic narrative
built around them. While private pensions
are all but extinct, public pensions at every
level-local, state and federal-run the
gamut of solvency. Chicago and New Jersey,
to name a couple, are textbook cautionary
tales of public pensions gone bad.
" I don't know a lot of financial professionals
today who would say they would
rather their clients be in a pension plan than
in a defined contribution plan, " Carosa says.
Social Security, on the other hand, remains
a political football. On the (far) left, U.S.
Sen. Elizabeth Warren continues to push for
greater benefits-ignoring the fiscal fantasy
that entails. On the right, arguments for
some form of privatization persists. And the
numbers bear that out, with market returns
that would easily best returns on a lifetime
investment in Uncle Sam.
" Polls show younger workers don't
expect it to be there, " Carosa says. " The
time is right to tweak it. Are state-sponsored
IRAs the next age of Social Security? "
Oddly enough, it's that massive group
of younger employees-millennials-who
now make up the largest single working
demographic, which will no doubt boost
Social Security's fortunes temporarily,
much like the Boomers did for the " glorified
Ponzi scheme " back in the 1980s. So
whatever Social Security reforms Congress
decides to pass will appear to be working,
at least for a while.
OTHER OPTIONS?
Multiemployer 401(k) plans show promise,
according to Carosa, if the feds don't
screw it up.
" MEP 401(k) plans, " Carosa said, " represent
the best way for small businesses to
offer retirement plans. "
He'd like to see Congress bolster the plans
so more people are able to save for retirement.
Again, it circles back to incentives. He
also expressed concern Congress might go
the other way and clamp down on MEPs.
So where does this leave plan advisors?
As far as Menickella is concerned, they
could " Quit and go home. "
But better yet, he suggested, " They have
to change the way they do business, how
they disclose who they work with. "
Dunne, however, sees these regulations-
particularly the DOL rule-as opportunities
for advisors rather than threats.
" Advisors need to be more proactive in
not only communicating to plan sponsors
but ensuring that information is properly
conveyed to plan participants, " Dunne
explained. " It's in their own best interest.
Advisors stand to benefit from the DOL
conversation, because it shines a light on the
value advisors provide. It will offer more
training opportunities with plan sponsors,
who will no doubt be more open to advisor
input because of the extra attention regulators
have brought to this issue. "
For Carosa, the solution is even simpler.
" Good relationships will trump bad regulation
every time. Just keep doing what
you're doing. "
Denis Storey is a veteran digital and print journalist
with more than 20 years of experience, covering
a vast array of topics. For the last decade, Storey
has covered the employee benefits business as
editor-in-chief of Benefits Selling and BenefitsPro,
including landmark Supreme Court rulings and the
creation and evolution of PPACA.
ISSUE 2 2015 | 401kSpecialistmag.com 33
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401(k) Specialist Issue 2 - 2016

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