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Rating:Red Alert: Defined Contribution Bad Rap Not Rated 3.0 Email Routing List Email & Route  Print Print
Tuesday, December 04, 2001

Red Alert: Defined Contribution Bad Rap

Reported by InvestmentWires Staff, 

Now, the tide is beginning to shift. 401(k) plans are starting to get a bad rap in the mainstream media. The opening salvo was fired by The New York Times in an editorial (you will need membership with The Times to gain access) by Paul Krugman. He speaks about Enron and wonders if it is the tip of the iceberg. He opines that executives at the company "walked away from the debacle chastened but very, very rich", while their employees lost their life and/or retirement savings. While Krugman agrees that, theoretically, defined contribution plans offer employees more than defined benefit plans, he does not believe that practice meets the expectations of the theory. The writer, the chief economist for The New York Times, believes that too often workers are cajoled into adding company stock to their investment portfolios. He tends to feel that the old defined benefit system will be better for individuals than a defined contribution one.

* * *

Joe Beradino, a managing partner and ceo of Arthur Andersen, has penned an editorial (you will need a password for this site) for The Wall Street Journal. Arthur Andersen was the auditor for Enron and yesterday was named as a codefendant in one of the lawsuit's against Enron on behalf of its employees. In the article, he stresses that his firm works hard to "get it right".

* * *

Bisys and New York Life have renewed their 19-year-old alliance agreement together. Under the agreement Bisys provides New York Life's agents with a portfolio of insurance products and services. 

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