A new Investment Company Institute (ICI) study said 77 percent of Americans are confident that their employer-sponsored retirement plans can help them meet their retirement goals and 90 percent reject legislative changes to the savings vehicles.
The study, “American Views on Defined Contribution Plan Saving, 2017,” found that confidence was highest, 84 percent, among households that hold defined contribution accounts or individual retirement accounts (IRAs).
“The key features of 401(k)s, 403(b)s, and other DC plans really drive their popularity among Americans,” ICI Senior Director of Retirement and Investor Research Sarah Holden said. “DC plan participants appreciate the convenience of payroll deduction and the incentive of the tax treatment of these plans to encourage savings. Further, most DC account–owning households said that their employer-sponsored retirement accounts help them think about the long term, not just their current needs.”
About 90 percent of households with DC accounts said these plans encouraged them to plan for their retirement. Further, almost half indicated they probably would not be saving for retirement at all if not for their DC plans. In addition, 80 percent said the tax treatment of their retirement plans was a big incentive to contribute.
“Households with DC plan accounts indicated they like to be in control of their own investments, and they generally think that their plans have a good investment lineup,” Holden said. “Saving paycheck-by-paycheck eases these households into investing and makes them less worried about short-term performance.”
The survey also found nine out 10 American households disagreed with potential policy changes that would change individual investment control in DC accounts. Also, nine out of 10 U.S. households opposed reducing the amount individuals can contribute or reducing the amount that employers can contribute. In addition, 90 percent rejected the idea that the tax advantages of DC plan accounts should be taken away.