Hello Will
I read your post and the comments you have received with great interest for a couple of reasons:
1. The change from DB to DC has shifted what was traditionally the obligation of the employer to the employee of looking after them (DB) for loyal services rendered whilst in employment, in their retirement years. You may argue that employee mobility has changed this paradigm. I would argue that the pressure of public listings and quarterly performance has increased the hire and fire mentality of companies (no, I am not a socialist, I am a conservative - in the US I think they are called Republicans, in Canada we have three parties, not just two - Conservatives, Liberals, and Socialists- (ok the Socialists are called NDP, or as a lovely lady recently told me - watch your language- that is a three letter word).
2. Being a conservative I am an advocate of keeping the involvement of big brother to a minimum, but I think the issue of not having funds to survive (note that I mean survive literally given increasing longevity and the very likely possibility of not having any money when you are in a nursing home, with little recourse of being able to make any money, and being totally dependent on this nebulous system we are talking about) will, if left unchecked and in the hands of the private sector, result in anarchy last seen in the French Revolution.
3. I am with you on points 1 & 2. Everyone I have spoken to agrees that there should be a sharing of risk between employer and employee. So we all contribute to these savings plans, which I have assumed are DC. What happens next? Fees that are independent of value added, risk of not being able to provide promised income in retirement because of a laissez faire approach to managing money - see Jason Voss' post on benchmarks to which I will add this quote from a person I have a lot of respect for his outspoken views on the need for change in the industry - David Fisher, Chairman, Capital Group International, Inc. - Reflections and Insights: Provocative Thinking on Investment Management (February 2005) “I think that, although it is important to know and even measure the degree to which your portfolio is different from the benchmark, when you call that deviation “risk”, you are sending (this) wrong message: It’s OK to lose money as long as we do it somewhat slower than the benchmark.”
4. In the last sentence of point 2, do the words future benefit mean a pre-determined payout that retirees can depend on as guaranteed income or is this amount dependent on market performance?
5. The investment consulting industry (Mercers, Towers, Watson Wyatt, etc is like the investment industry - the need for change in both industries is imperative in both. Over reliance on consultants (I am in admiration of CFA Institute partnering with Mercer, where I have a lot of respect for individuals in that organization) will not necessarily reflect the views of the individual dying in understaffed and under ventilated (because they do not want people escaping from windows) prisons they call state-run nursing homes, or those people who have just retired and have suffered what they call a sequence-of-risk returns - meaning there is little way they can recover from the loss of what they have saved over their employment years.
6. Point number 9 - do you know the saying about having a fox manage the chicken coop? Enough said. Too much government involvement and oversight will, in my humble opinion, be too little. This is one area that cannot be left to the private sector.
On that note there is much to be admired from, and many insights that have not yet been implemented, from the investment industry itself, in particular the series on The Future of Life Cycle Saving and Investing.
My two cents for the cause.
Savio