In a draft working paper entitled “The Separation of Intelligence and Control: The Retirement Savings Crisis and the Limits of Soft Paternalism”, Jacob Hale Russell, an academic fellow at the Rock Center for Corporate Governance at Stanford Law School, argues that the migration of American retirement savings from centralized, risk-pooling structures (Social Security and pensions) toward individual retirement plans (401(k) plans and other tax-favored, individually managed accounts) has had collateral consequences.

Under the current retirement model, Americans are being asked to make the same kinds of decisions and perform the same sort of complicated tasks that an investment management committee composed of experienced, well-compensated professionals at a large endowment fund or pension plan would make. Predictably, the results are disastrous.

You can read the entire Marketwatch article summarizing Russell’s paper here.