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With inflation on a tear, 401(k) plans look vulnerable and BrightScope publishes a cheat sheet

Some experts are running scared from rising prices and others see this as another false alarm

Author Lisa Shidler
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Michael Alfred: If a plan doesn’t include [TIPS] then they need to explain why.

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Mentioned in this article:

BrightScope, Inc.
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Andrea

Andrea

June 3, 2011 — 2:36 PM

Where can I find the article from Brightscope with the less than 10% of 401(k) plans offerering a TIPS fund? Also, what date are these stats as of?

Dave

Dave

June 3, 2011 — 3:08 PM

Good discussion about TIPS but there is also a false sense of security as participants may not understand that they can receive a negative return if interest rates take off. For many participants, a stable value offering with a six-month (or twelve month) reset on all balances may be more appropriate if we believe that interest rates will increase along with inflation. They can also allocate some of their account balance to equity based funds to help mitigate inflation.

Lisa Shidler

Lisa Shidler

June 3, 2011 — 3:40 PM

Hey guys, I’m glad to see your comments.
Andrea, When Mike and I were chatting the other day he told me that less than 10% of 401(k) plans offer TIPS. That is based on current BrightScope analysis of the funds it reviews.
Dave, I think you have some good insight. There’s certainly an “education” that is needed on these products in the 401(k) space.

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