Bernstein analyst Inigo Fraser-Jenkins says 401(k) plans are decreasingly meeting retirees' needs, and says pension managers need to change.
, and he also says there's a larger issue at work. He argues defined contributions plans are based on the idea that markets are democratic, meaning they were supposed to give the working public a fair shot at long-term growth and returns that would meet their needs in retirement.One is that the market itself is getting smaller as companies"The US stock market is getting smaller at a rate of 2.5% per year," Fraser-Jenkins says."The US market has been shrinking for 14 years.
"These returns are now only available to those lucky enough to be able to access the best private investment vehicles," he says.Fraser-Jenkins says the dynamic of a shrinking stock market, smaller gains for a few wealthy retirees and a more uncertain future for others threatens to make inequality far worse. That could add to the populist frustration that's affected national governments and world trade in recent years.
"We are already at a point where the intergenerational wealth gap appears large compared to history," he says."It only requires an election where enough voters regard this as unacceptable for the paradigm of individual saving for pensions to be overturned."
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