What didn't happen Congress did not act to limit or cap retirement savings incentives - an idea that emerged in recent budget and debt debates. Maintaining the tax deferral status on contributions to qualified plans is important because it influences participation and contribution rates. Changing this provision could result in a reduction in 401(k) balances for many workers.
Lifetime income illustration progressed A significant regulatory action, however, did start to take shape in 2013. The Department of Labor sought comment on its proposal to require plan sponsors to provide an estimate of lifetime income for defined contribution plan participants.
Putnam's work in this area has found that viewing saving through the lens of generating income in retirement may help participants make better savings decisions.
Investor risk appetite shifted For the first time since 2007, the mix of industry flows favors equities. Mutual fund industry equity flows reached $332 billion in the first three quarters of 2013, exceeding all prior records.
Participation was strong A collaborative study found that more than 80% of workers with access to defined contribution plans are participating. Retirement plan withdrawal activity in the first half of 2013 remained low - only 2.1% took hardship withdrawals in this time period, unchanged from 2012.
Commitment to saving made a difference Assets nearly doubled in the accounts of consistent participants. For those committed to saving, the average 401(k) balance nearly doubled in 2011 from 2008.
Businesses affirm retirement savings is a priority It is important to note that retirement savings continue to be a priority among business leaders. Improving retirement preparedness was the focus of an important conference this year with the U.S. Chamber of Commerce and AARP. These leading voices joined in a call for action to expand access to tax-deferred payroll deferrals to help workers save for retirement, keep and enhance tax incentives to save, and increase education efforts for workers.
Related post: Excerpted remarks delivered by Robert L. Reynolds to the U.S. Chamber of Commerce/AARP Conference, Rethinking Retirement: Moving Ahead Without Leaving Anyone Behind.