NAPA-net.org
Original post date: 2/11/16

Most Americans seem to like their 401(k)s — even if they don’t have a 401(k) — and they’re not very keen on government proposals to change them, according to a new survey.

In fall 2015, a whopping 88% of households disagreed that the government should take away the tax advantages of DC accounts, and even more (90%) disagreed with reducing the amount that individuals can contribute to those accounts. And while it’s understandable that those with access to such accounts might prize them, support for DC account tax treatment also was widespread even among households not owning DC accounts or IRAs. According to the survey by the Investment Company Institute, 81% of households without DC accounts or IRAs rejected the idea of taking away the tax treatment of DC accounts.

Tax Incentives

Though some academic studies have suggested otherwise, 81% of DC-owning households agreed that “the tax treatment of my retirement plan is a big incentive to contribute.” Not surprisingly, agreement tended to increase with age, and was somewhat higher among households with incomes of $50,000 or more (84% versus 73% among those with household income below $50,000) — but it was high across all age and income groups.

Moreover, nearly half (48%) of households with DC accounts agreed with this statement: “I probably wouldn’t save for retirement if I didn’t have a retirement plan at work.” Significantly, agreement was the highest (61%) among households with incomes of less than $30,000, slipped to 55% for households with incomes between $30,000 and $49,999, and was the weakest (38%) among households with incomes of $100,000 or more.

Government Mandate

As for those notions of a government-mandated savings program, beginning in 2014, ICI asked a new question on the survey that investigated household sentiment regarding a policy proposal requiring workers to participate in a new government-sponsored pension plan. In the new question, respondents were asked to react to this statement:

There is a proposal to require workers to participate in a new pension plan. Under this plan, retirees’ benefits could be reduced or increased depending on investment returns. In addition, current workers’ contributions could be used to pay benefits for current retirees. All investment decisions and payouts from the plan would be determined by an investment professional appointed by the government.

In fall 2015, 78% of respondents either “strongly” or “somewhat” disagreed that the government should require that workers take part in this plan. Opposition was the strongest among households with DC accounts or IRAs (79%), but that number wasn’t much greater the 76% of households without DC accounts or IRAs that were opposed to requiring workers to participate in the new pension plan.

read the original article here