Dudley Hyde featured in Oklahoman article on retirement plans
McAfee & Taft shareholder Dudley Hyde was interviewed for the feature story in The Oklahoman’s Sunday Business Section that examined how retirement plans have changed in the last couple of decades and the impact on employees.
With the debut of the 401(k) retirement savings plan in the early 1980s, which allow employees to direct the investments and allow portability while reducing the responsibility on employers, traditional “defined benefit” plans have dramatically declined in favor of “defined contribution” plans, Hyde told The Oklahoman.
“Employers have frozen those plans, they have terminated those plans and they have said ‘we are shifting the retirement risk to the employee, we are out of that business,'” he said.
Hyde explains in the feature that the downside to 401(k) plans is the risk that employees take in controlling their own retirement accounts.
“The irony of this is that during good times like in the late ’90s when the stock market was going through the roof, everybody wanted to be in a defined contribution plan because their account was their account and would run up with the market,” he said.
“When the market goes south and times are difficult, everybody wants to have that promised benefit of a defined benefit plan. ‘I don’t have to worry about the investment outcome.’ So, employees, understandably, want the best of both worlds.”
Hyde said he doesn’t foresee the return of traditional retirement plans. Instead, some plans are taking the requirement to direct the investment out of the employee’s hands by creating accounts that automatically rebalance and reallocate the fund as the employee ages from ages 30 to 65.
“It is on auto-pilot,” Hyde said. “I think that is going to be very helpful because it is professionally managed. I’ve just (seen) too many situations where people have mismanaged their own account.”