Against the drumbeat of warnings about a retirement crisis, private pensions are strong, said Gregory Johnson, chairman of the Investment Company Institute, speaking at the opening session of the trade group’s annual meeting Wednesday in Washington, D.C.
“Let me spell that out for the skeptics in the audience: The share of retirees receiving private-sector pension income has increased by more than 50 percent since 1975, and the median amount of pension income they receive is up by almost 40 percent after inflation,” Johnson told the gathering.
Johnson is not only chairman of the mutual fund industry’s principal trade group, but also the president and chief executive officer of Franklin Resources.
He said eight out of 10 households with members approaching retirement have some kind of plan, including a defined benefit pension, a defined contribution plan, an IRA or a mix of those accounts. Retirement assets were nearly six times higher in 2012 than they were in 1975, when adjusted for inflation, offering greater wealth and better prospects for retirees and near retirees.
“In short, America’s retirement system is working,” Johnson claimed. “Millions of Americans have tools [for retirement savings] and, for the most part, they are using them effectively.”
The Treasury Department’s Under Secretary for Domestic Finance, Mary John Miller, sounded a more somber note at the session: “We have major issues on retirement security in this country.”
She defended President Obama’s proposal in his 2014 budget to put a $3 million cap on IRAs by saying it would affect only one-half of one percent of people holding 401(k)s.
She noted that these relatively wealthy individuals also save outside of tax-deferred investment vehicles.