MAKE THE DEFAULT HELPFUL, NOT HARMFUL:

Fidelity calls for automatic enrollment in 401(k)s (Andrew Caffrey, September 22, 2005, Boston Globe)

Fidelity Investments wants corporate America and its workers to do a better job saving for retirement, and it's starting with its own house.

Beginning Jan. 1, all Fidelity employees will automatically be enrolled in the company's 401(k) retirement plan, a move designed to prod the small percentage of the company's 32,500 employees who haven't yet started a nest egg at work.

''If you force that on people, make it part of what they do every pay period, it will become part of a very successful" retirement system, Fidelity chief operating officer Robert Reynolds said in a speech yesterday morning before the Greater Boston Chamber of Commerce.

Reynolds was making a pitch for new measures to increase retirement planning and savings -- ones that would benefit workers in the form of larger nest eggs, and Fidelity itself in the form of more money to manage, and the fees that come with that.

Also, Reynolds said 401(k) or other workplace retirement plans should be able to automatically increase employees' contributions as raises and bonuses increase their paychecks -- a feature Fidelity intends to offer its employees -- or raise their contributions each year until they're at least giving the maximum amount that the company would match with its own contribution.

Moreover, workers should be steered more aggressively into so-called life-cycle mutual funds, which automatically allocate retirement investments among stocks and bonds based on age and expected years to retirement, said Reynolds.

''We need a new generation" of workplace retirement plans, he said, to replace the pension plans that are vanishing from corporate America.

SS reform will need to do similar things to be most effective and should mandate such measures in the private sphere.

Posted by Orrin Judd at September 22, 2005 10:25 AM