Retire Rich

April 30, 2010

Milestones

In 2011, 401(k) plans will turn 30, but the milestones the mutual fund industry has reached in this time are but a nanosecond in the history of U.S. retirement policy.

Executives we interviewed for this special edition of Money Management Executive for the Investment Company Institute meeting in Washington, speak to important milestones of the recent past and into the future.

Ted Benna, often referred to as the "Father of the 401(k)," recommends new regulations to improve individuals' retirement preparedness, including excluding up to $12,000 a year of a retiree's annuity income from taxes.

Putnam Investments President and Chief Executive Officer Robert L. Reynolds, who has testified before Congress over the past year on retirement policies, makes the case for three ways President Obama and Congress can bolster Americans' retirement security: Social Security, workplace savings and retirement income.

David C. John, deputy director of The Retirement Security Project, an offshoot of conservative think-tanks Brookings Institution and Heritage Foundation, explains why current policy governing defined contribution plans has tied the mutual fund industry's hands from reaching the 78 million Americans, roughly half the labor force, who have no workplace retirement savings plan.

John has a plan, the Automatic IRA, to make it not only economically feasible but enormously profitable for the industry to essentially double its 401(k) customer base and possibly continue to serve these people and their sizeable portfolios well into their retirement.

"If the mutual funds don't choose to get involved with this market now," John warns, "they will miss out. We are already seeing, for instance, some of the back-office providers starting to put together groups that make money a new way."

Dan Fuss, vice chairman of Loomis Sayles, weighs in on international and interest-rate opportunities-and how they will impact individual investors and competition among fund complexes.

The past 10 years have been eventful for our industry: the dot-com crash, the late trading scandal, the credit crisis and the near-run on money market funds. Looking forward to the next 10 years and beyond, Baby Boomers will certainly rule. And as Reynolds says, new regulations and policies have the potential to make our industry even more integral to the well-being of investors and the strength of our nation.

(c) Copyright 2010 Money Management Executive and SourceMedia Inc. All rights reserved.

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