Government Report Calls for National Retirement Dashboard

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(TNS) — Managing your 401k accounts — even at multiple workplaces — could be about as simple as ordering takeout food if a federal government recommendation gets the green light.

The Government Accountability Office (GAO) has proposed the creation of a nationwide 401k dashboard, which will give users a single location for all their 401k accounts and even organize the plans for people with multiple accounts.

“Participants continue to encounter challenges in managing and tracking their accounts as they move from one job to another,” read the GAO report. “However, federal action could mitigate these challenges.”

In its report, the GAO said Congress should grant the authority for a federal agency to create the dashboard, but it’s unclear when those wheels will go in motion.

And while it could be a one-stop solution for retirement planning, a former Carnegie Mellon University professor is not sure a dashboard will give 401k plan participants enough information to evaluate performance.

“Dashboards are better suited for cars and other items to make sure systems are working,” said Raul Valdes-Perez, CEO and co-founder of Benchmine, a tool that allows users to search 60,000 401k plans and compare them by industry, geography and asset size.

Stress and anxiety

The federal government and 401k plan holders could benefit from a tool that allows for comparisons and navigation, Mr. Valdes-Perez said.

Such a tool would also answer questions such as: Where can things improve? What performance level can the 401k plan reasonably achieve?

“We’re bringing a new technology that makes it easy to evaluate your comparative performance,” Mr. Valdes-Perez said of the Squirrel Hill-based company.

Employer-sponsored 401k plans have become the most common way for American workers to save for retirement. But each time a worker switches jobs, they could end up with a new account if they don’t combine them along the way.

According to the GAO’s survey, released in February, two-thirds of 401k participants would find a comprehensive pension dashboard — where they can see all their current and former plan savings in one place — a useful resource.

More than 92 million Americans participate in, and have saved, more than $7 trillion in 401k plans, according to the GAO.

Employees and former employees usually don’t have much say in how companies operate the 401k plans they sponsor when it comes to fees, expenses and choosing vendors to provide services. But many plans do allow employees to pick the investments in their own 401k from a basket of investment options, if participant-directed brokerage accounts are an investment option.

According to Benchmine, 405 out of 828 401k plans with $1 billion or more in assets provide the option of participant-directed brokerage accounts, according to federal data for 2022.

Transferring retirement funds from one plan to another causes stress and anxiety for some participants, the GAO said.

“401k participants who recently completed a plan-to-plan rollover faced challenges understanding and complying with their plan’s requirements,” the GAO said. The report didn’t specify which parts of the rollover process was most problematic for plan participants, but a high percentage of people had complaints.

‘Beneficial for participants’

For example, 25% of participants indicated that there were too many steps to follow in the process; and 22% said they were unclear about questions or information in the rollover form.

“Allowing plans to automatically rollover after they change jobs can be beneficial for participants — particularly those unengaged with their plan because they can benefit from account consolidation without navigating a challenging manual process,” said the GAO.

The idea stems from a study of six countries the GAO examined that have adopted pension dashboards — Australia, Belgium, Denmark, the Netherlands, Norway and Sweden. All six countries established a centralized pension dashboard that allows participants to view their retirement savings securely online and at no charge.

Although Benchmine provides more insights on 401k plans, it requires more steps to access information than a simple dashboard would.

The Benchmine search engine is a free online tool with public access to data that all companies offering 401ks to their employees are required to report annually to the U.S. Department of Labor. Users can see how their own 401k balances and annual contributions compare with the average balances of workers in their particular company; or make comparisons with workers’ average balances at any other company nationwide.

The Benchmine search engine also pinpoints where a company’s 401k stands when stacked up against other companies in various ways, and offers advice on how to improve.

Mr. Valdes-Perez said the search engine can be useful to job seekers, too, because a poorly performing 401k plan could be a warning sign.

“A 401k plan is just another operating aspect of the company,” Mr. Valdes-Perez said. “Just like a high employee turnover, a 401k plan that’s not performing well, raises a red flag.”

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