PSCA Says Inadequate Regulation, Reckless Conduct and Unethical Behavior Are The Problem, Not 401(k), Its Sponsors and Providers

CHICAGO – (Business Wire – January 12, 2009) – The drop in 401(k) account balances in 2008 was not caused by a defect in the retirement plan system or ignorant workers, according to The Profit Sharing/401(k) Council of America (PSCA).  It was caused by a catastrophic failure in the operation of capital markets.  “It is hardly surprising that 401(k) plans did not escape a collapse that has stricken almost every financial system or arrangement in the world,” says David Wray, PSCA President.

Many who invested in equity mutual funds saw a similar reduction in value, yet there is no clamoring for a wholesale revision of the mutual fund system. “Everyone gets soaked in a cloud burst, regardless of the kind of shirt they wear,” says Wray. “Policymakers should direct their efforts to ensuring that a similar market collapse never happens again.”

According to PSCA, to restore confidence in financial markets, the regulatory system must be fixed, poor decision-making by financial services professionals must be penalized so there is no “heads I win, tails you lose behavior” and those who have acted improperly should be prosecuted to the full extent of the law. Then 401(k) participants, as well as all other investors, will be able to move confidently forward knowing that saving and investing for the long term continues to be the right thing to do.

PSCA believes that distracting the public from the real reasons and the real culprits for the current market collapse by attacking the 401(k) system is harmful misdirection and must stop.  

The Profit Sharing/401k Council of America (PSCA), a national non-profit association of 1,200 companies and their 6 million employees, advocates increased retirement security through profit sharing, 401(k) and related defined contribution programs to federal policymakers and makes practical assistance with profit sharing and 401(k) plan design, administration, investment, compliance and communication available to its members. PSCA, established in 1947, is based on the principle that “defined contribution partnership in the workplace fits today’s reality.” PSCA's services are tailored to meet the needs of both large and small companies with members ranging in size from Fortune 100 firms to small, entrepreneurial businesses.