Most people who have self-directed [retirement] plans need to look at the long term, says Jan Grude, president and executive managing director at Buck Consultants. "The current state of financial markets is no indication of the future state of the financial markets."
Markets have shown themselves extremely resilient. They rise and they fall - and rise and fall again, Grude explains. You don't want some company leader somehow communicating that they are responsible for ensuring the returns and financial health of their employees' portable retirement plan.
The employer has chosen portability, and the employees have elected portability, which means essentially employees end up shouldering the risk, Grude asserts. Comforting words are useful, but employers should be careful about assuming responsibility for market declines, in the same way they shouldn't take credit for market booms.
If defined contribution plans have in fact been subjected to the downturn in the market, and a large portion of people's net worth on retirement assets has been wiped out, then we will see an increased demand for retirement benefits that provide a higher level of security, Grude adds. "We are also going to have greater demand for employers to provide financial education for their staff as part of a total reward strategy."