Some companies are making 401(k) investments for workers

[question everything]

Some companies are making 401(k) investments for workers

Monday, August 08, 2005
By Len Boselovic, Pittsburgh Post-Gazette

There has been ample warning in recent years that workers need to be saving more -- and more wisely -- for their retirement. The omens include the carnage wreaked by the three-year bear market and corporate scandals, the shrinking number of companies offering traditional pension plans and the continuing debate over Social Security's finances.

But the dire headlines haven't motivated many workers. Nearly 30 percent of eligible employees still don't participate in their company's 401(k) retirement plan, according to a recent survey by Hewitt Associates, a human resources consulting firm. So, more companies are taking matters into their own hands.

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Here's how it works. Companies notify employees that a fixed amount will be deducted from their paycheck and directed to a 401(k) account. Unless employees opt out or make investment choices of their own, the money usually is invested in a money market fund, guaranteed investment contracts or some stable account that preserves principal.

(snip)

Studies indicate automatic enrollment increases participation rates in retirement savings plans but generates very few complaints from workers left with smaller paychecks. According to Lori Lucas, Hewitt's director of participant research, most employees say they meant to enroll themselves but never got around to it. Many didn't because they weren't comfortable making their own investment decisions.

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http://www.post-gazette.com/pg/05220/549596.stm

(Len Boselovic can be reached at [e-mail] or 412-263-1941.)

[EC]

1. On my last job, we had no choice where the 401k was

invested...It was always invested back into the company we worked for...it was just a scam to boost their stock rating...

[question everything]

2. I don't think that they can do this any more

Not after Enron. And, at least, there are now addresses to complain about this.

What scares me are reports about business owners deducting the amount from employees' paycheck but "borrow" them for a while and never get around to pay back. This is why it is important to check one's account regularly. Most of them can be checked online... we do ours weekly.