First, we need to recognize that our current retirement programs, based on individual accounts such as 401(k) plans, are a failed experiment. Enacted during the late 1970s and early 1980s, we now have the experience of a generation to clearly demonstrate that individual investors do not have the skills, time or interest to properly mange their retirement investment portfolios. Indeed, a study by the National Institute on Retirement Security found that professionally managed pensions can deliver the same level of retirement benefits at half the cost of a 401(k)-style plan. This means we must investigate policy options that combine the portability features of 401(k) plans with the professional investment management, long terms asset growth strategies, shared risk and guaranteed income streams that make traditional pension plans so efficient.
http://www.afscme.or...d-401k-experiment
401K's didn't work for Nebraska.
Emphasis Mine.
HEDRICK SMITH: But in my travels, i had found evidence that it may not be just a question of time. Back at that workshop in Nebraska, I had learned that Nebraska had 40 years of experience with a 401(k)-style defined contribution plan for state employees.
Nebraska is a unique laboratory. For 40 years, it has run two different kinds of retirement plans side by side, some employees,covered by the traditional lifetime pensions, others by a 401(k)-style defined contribution plan. Both were top-notch plans, with mandatory participation and contribution levels, and a 7 percent employer match. But the state was still concerned.
ANNA SULLIVAN, Dir., Neb. Retirement System: The state legislature commissioned what is called a benefit adequacy study. They wanted to have a consultant look at all of the plans and determine the adequacy of the benefit that the state was providing.
HEDRICK SMITH: The study showed that lifetime pension plans, with professionally managed investments, did far better for employees than the 401(k)-style defined contribution plan.
ANNA SULLIVAN: We've had experience since the mid-60s, and the people retiring from our defined contribution plan do not have the kind of an account balance which is basically what a defined contribution plan gives them, an account balance it isn't sufficient for them to live on in retirement. It's just not adequate.
HEDRICK SMITH: [on camera] Forty years hasn't done the trick. It's not a matter of time.
ANNA SULLIVAN: I don't believe it's a matter of time. I believe it's a matter of understanding what it takes for the employee to take a hold of this and utilize it and earn the kind of return that they need to have. You're talking people who are not investment professionals.
HEDRICK SMITH: [voice-over] After the study, Nebraska ended its 401(k)-style plan for new employees and allowed old 401(k) participants to shift to the lifetime pension plan.
http://www.pbs.org/w...t/etc/script.html
Lucky them.