Have Doubts about the 401(k)? So Does Your Boss

(MoneyWatch)  One of the more chilling revelations on the sorry state of the U.S retirement system is this survey of employer attitudes towards 401(k)s from Mercer, the benefits consulting firm. Half of employers offering 401(k) plans believe that the plans are not up to the job that's been thrust upon them--that of being American workers' main source of retirement security, after Social Security.

Let me repeat that. Half of the entities that sponsor 401(k)s for their employees don't think the plans work.

The main problems with the 401(k), say the employers, are not that employees can't handle the investment decisions, which is the classic complaint of the 401(k)'s longstanding critics. It's that a) too many employees don't participate;and b) those who do participate don't save enough. This is only common sense. If you're 50 years old and you only have $79,000 in your 401(k) (the size of the average account) and you're only saving 3% of your income, it doesn't matter whether you invest that pittance in supposedly ultra-safe stable value funds or in risky hedge-fund equivalents. You're not going to have enough money to retire.

One supposed 401(k) failing that was not mentioned in the survey is the inadequate disclosure of 401(k) fees. Congress and some in the mainstream media seem obsessed by the topic, but the survey didn't even raise the issue. My guess is that it just never occurred to Mercer. You need a particular succeptibility to anti-business conspiracy theories--and a healthy case of innumeracy--to believe that an undisclosed 0.15 percentage points of fees lies behind the impending social disaster known as the baby boomers' retirement.

Nevertheless, the House Committee on Education and Labor last week approved what it is calling the 401(k) Fair Disclosure and Pension Security Act of 2009. The bill would keep the world safe from the sliver of excessive 401(k) fees not already outlawed under previous regulations. Maybe that's some consolation. It shouldn't be.

Meanwhile, the majority of baby boomers are rumbling towards retirement without remotely enough money to afford it. And the savings plans that are the main hope for fixing that shortfall just got a big vote of no confidence from the very people who sponsor them. Is everyone okay with that?