Fidelity Investment Head Calls Congressmen's Abilities into Question... She Has the Answer.

In a rare February public appearance at the East Coast Defined Contribution Conference in Palm Beach Gardens, Florida, Abigail Johnson, president of Fidelity Investments’ Employer Services Co., said "It will take years before our political leaders figure out how to reform health care and fix Social Security."

"But there is a great deal that financial service providers and plan sponsors can do right now."

Citing Fidelity statistics, Johnson said that one-third of eligible employees do not participate in their 401(k) plans at all. One-fifth of participants don’t diversify and only invest in one investment option. Eighty-three percent do not seek out investment advice.

And once employees choose investments for their plans, they fail to reallocate as they grow older. The study finds that 401(k) plan participants are more likely than not to leave their retirement plan accounts unchanged over a 10-year period.

In an interview with Workforce Management following her presentation, Johnson emphasized the need to address low-income workers’ needs, since they seem to be the ones who are most at risk of not having enough money for retirement. Managed accounts, while often a good solution for some 401(k) participants, may not make sense for this group because they are expensive, she said.

By automatically enrolling employees in a lifecycle fund, companies could help low-income workers increase their retirement savings by 29 percent, she said.
If employers do this, "inertia will work in (employees’) favor in most cases," she said.

Would she apply Fidelity's approach to Employee Health Care too?

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