US - Legislation in the US prohibiting the use of 401(k) plans to prevent retirement saving 'leakage' has gained industry support.
In addition to outlawing debit cards, they want to limit the number of loans plan participants can take.
Beth Almeida, executive director at the National Institute on Retirement Security (NIRS), said the number of private sector workers in the US who could rely upon a modest but stable retirement income from a pension was falling, which left an increasing number with only 401(k) accounts.
She said: "We also know that further complicating the retirement crisis is the 'leakage' of retirement assets from these individual 401(k) savings accounts. And it appears that current economic conditions are exacerbating the leakage.
"Although workers probably have every intention of repaying their accounts, life gets in the way. Loans turn into withdrawals with high penalties and taxes - resulting in even less savings."
Almeida said addressing leakage was a step in the right direction. However, she added: "Restoring retirement readiness will come when all Americans have access to the basic three-legged retirement stool: individual savings, Social Security, and locked pension piggybanks."
Howard Yata, managing director, Wilshire Consulting, said while leakage from 401(k) plans was not currently a major problem, the state of the economy, widespread layoffs in the financial industry, and the fact people were having trouble with mortgage payments, meant some participants might make them an enticing pool of resource.
He said while current loan programmes from 401(k) were somewhat complicated, the introduction of debit cards could see usage become casual.
He said: "I agree with the proponents of legislation, in this case against casual use of 401(k) balances. As defined benefit plans have become the primary retirement vehicles in many instances, it is important to maintain long term perspective for retirement."
Roger S. Williams, managing director, investment consulting, Rogerscasey, said it wasn't wise to allow plan participants easy access to their 401(k) assets.
He said: "The whole concept of implying that people can get to these assets easily makes us uncomfortable. Access should be limited and controlled or employees will never be able to reach their retirement objectives."
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