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'Forced' retirement savings plan preferred.

In saving for retirement, nearly 68 percent of Americans would prefer that employers contribute a percentage of salary to a retirement savings plan on their behalf rather than receive the money as pay, according to a survey conducted by the Employee Benefit Research Institute and the Gallup Organization Inc. Respondents preferred to save for retirement through tax-favored employer-sponsored pension and savings plans. In addition, 59 percent of respondents said that if they left their jobs today and received a cash retirement benefit equal to three months' pay, they would save the money for retirement. That percentage grew to 82 percent if the employer transferred the benefit into an individual retirement account where individuals could not access the money before retirement without paying a penalty. Recent public policy proposals, such as the Employee Benefits Simplification Act introduced during the 101st Congress by Sen. David Pryor, D-AR, and Rep. Rod Chandler, R-WA, have tried to restrict the distribution of funds to workers prior to retirement by requiring that preretirement distributions be rolled over into other qualified plans or IRAs. Other proposals would require employers to offer simplified employee pensions on an employee's request. The survey found that 79 percent of respondents would contribute part of their pay to an employer-sponsored retirement savings plan on a pretax basis even if the money could not be accessed until retirement. The average amount of pay that these respondents would be willing to contribute was 1 0 percent.

Seventy percent of respondents said companies should be legally required to provide retirement benefits for all employees. When these respondents were asked if this should be required even if it meant lowering salaries for all employees, 66 percent of them agreed. By comparison, only 25 percent of all respondents said that individuals should be legally required to save for retirement.

The survey also found that 60 percent of respondents said they would accept an initial reduction in the size of their monthly retirement benefit in exchange for future cost-of-living increases. Respondents were divided as to whether they would pass up an attractive job offer to remain with an employer long enough to qualify for retirement benefits: 41 percent would, 44 percent would not and 13 percent were unsure.
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Author:Johnson, Tom
Publication:Risk Management
Date:Mar 1, 1991
Words:370
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