Did AIG Just Endorse Single Vendor K-12 403(b) Plans
November 16, 2021
One of my all time favorite sports calls was Jack Buck’s “I don’t believe what I just saw” description of hobbled Kirk Gibson’s World Series walk-off home run in 1988.
We Don’t Believe What Our Eyes Just Saw
My podcast partner Scott Dauenhauer, CFP and I had a similar reaction upon reading Rebbecca Moore’s PlanSponsor story on the results of an AIG survey (in conjunction with Greenwald Research) about meeting the retirement needs of K-12 employees. The key takeaway from th survey? "Public school employees in the United States face more complexity than other workers when planning for a financially secure retirement."
We have been saying this for years. The simple fact is that teachers aren’t taught about the 403(b) in their teacher training programs and school districts don’t provide unbiased education on the topic. Worse, employer’s leave employees at the mercy of a sales force pitching high-cost, often high-surrender charge products that would lead to lawsuits in the highly regulated 401(k) world.
Multi-Vendor Mayhem
At the top of page 4 of the report it says: “While many employees at private companies are offered only one choice for their retirement plan, it is not uncommon for public K–12 employees to be offered a choice of multiple retirement plan vendors. And this choice appears to be another source of confusion. In fact, 4 in 10 employees offered a choice of vendor say they are overwhelmed by the number of plan vendors available and just 43% agree that it is easy to navigate these choices.”
You know how you end this confusion? Moving to a bidded, low-cost single vendor plan. Is that what AIG is endorsing by releasing this study?
Pigs Flying?
We spoke to several industry insiders about the report and AIG’s possible shifting attitude toward single vendor 403(b) plans. They were split. One pointed out that AIG just won the bid to become the single vendor provider for Chicago Public Schools. The other said the firm would endorse the single vendor approach when pigs fly.
Morgan Housel points out in his excellent The Psychology of Money, on January 5th, 1889, that The Detroit Free Press expressed doubts about human flight. Airplanes, the paper wrote, “appear impossible.”
Stay wise and well (and keep your eyes in the sky).
Related Podcast:
Did AIG Just Get Single Vendor Religion? We discuss 2022 403(b) and 457(b) contribution limit increase and an article and report that seem to suggest AIG may be getting behind single vendor push. Or maybe we are just crazy. Listen Now »