I didn't quantify large percentage, so I made no claim to how large of a percentage.
I know - thats why I asked.
Looking at the percentage of assets is somewhat misleading, though, since people would probably tend to invest less in crappy plans and the number of participants at large companies would skew the asset numbers in favor of better plans.
Well - its tough all around with the numbers. Median ER of participants is 0.78% but those who choose not to participate are not represented. Average plan offering of a small business is 1.37% (methodology and definition varies) inclusive of fees like 12b-1 but who is to say that 99% of the employees didn't invest 99% of their assets in Fidelity Index funds while avoiding the 1.9% ER front loaded option?
Loosely based they can't be much worse than industry averages otherwise they might run afoul of ERISA
But I was basing my 'large percentage' claim on the total number of plans out there, not total number of accounts or assets.
That's a pretty biased metric. Your low fee plans tend to be inclusive of large areas of the market by their very nature. Plan providers offer only a few of those as thats all that needs to be offered to cover the market. Thus you skew your view in the favor of the higher cost 'sector bets' which have to be vastly more numerous to cover the same swath of options that a low cost plan would.
Of course all this aside we could discuss if the fee structure of a 401k even matters for the average American. The average American puts less than $3,000 into their 401k and only about 11 million people have an IRA account. If we are to assume that they are all of working age and currently employed (unlikely) thats around 10% of the workforce that participates in an IRA where they put in about the same $3,000.
Given the numbers - if you have a plan that you don't like at your company the chances are extremely high that you could instead open an IRA and invest in most of the plans offered by the big investment companies with 0 reduction in the amount you were saving per year.
The scam is the death of pensions in favor of 401k's. For the average person, a pension would have been a much better vehicle for retirement.
Highly debatable. Evaluating a pension plan has a bit of a bias at the moment as the unfunded bubble hasn't hit. Sure - those who got out early were better off but I think you'll find that the average American (who doesn't have a pension) that will get stuck paying for someone else's pension is
not better off nor is the pensioner who suddenly has no pension when it becomes insolvent or reduced by the PBGC.
That doesn't even touch on the 'years of service' requirements
The 'free' money of the match that you can see in 'your' account today entices a lot of people into thinking the 401k is better than a pension. But when you look at the realities of how most people utilize their 401k's you can quickly see a pension is a better choice for the vast majority of people.
A 401k also requires the every person know about investments, long-term planning, and understanding finance, which are all things everyone should know, but it is unrealistic to think every person in the US is going to take time to learn about these things and invest properly. Pensions had professionals handling the investments, and the average worker didn't have to be knowable and emotionless about the stock market to have a decent retirement.
These same professionals that have run many pensions into the ground and are ok with sky high unfunded liabilities, let alone the corruption involved? You say people would be better off with other people dictating what their money is invested in and I say there is plenty of evidence that shows that is a bad assumption to make. Sure there are laws about 'best interests' but they don't guarantee you won't get screwed when someone breaks those laws. I would much rather have control over where my money goes than someone decide it for me. In this day and age I think it would be a huge mistake to assume pensions were more likely than your 401k to be there when you retire.
And - honestly the rise of the lazy portfolios and the retirement age funds have greatly distilled the work for many down to checking somewhere between one and three boxes.
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