The national professional services firm CBIZ has acquired
Pension Resource Group Inc., adding to more than 100 offices across 34 states.
Woodstock, Georgia-based Pension Resource Group (PRG) provides
pension administration solutions including defined benefit administration, data
warehousing, benefit communication, compensation statement and human capital
services to clients ranging in size from 500 to over 60,000 participants. PRG
has 35 employees and reports that it recorded approximately $4.8 million in
revenue over the past 12 months. PRG’s co-founder, Michael Croyle, cited CBIZ’s
culture and service offerings as a perfect fit for PRG’s associates and
clients.
CBIZ provides professional business services—including
accounting, tax, financial advisory, government health care consulting, risk
advisory, real estate consulting, and valuation services—to help clients better
manage their finances and employees. Employee services include employee benefits
consulting, property and casualty insurance, retirement plan consulting,
payroll, life insurance, HR consulting, and executive recruitment. Services are
provided through more than 100 offices in 34 states.
“By combining PRG’s experienced pension consultants and
actuaries, along with their propriety IPASMaster pension software platform,
with our growing and nationally recognized CBIZ Retirement Plan Services
business we can provide a total retirement solution that will better serve our
clients,” Steve Gerard, chairman and chief executive of CBIZ, said in a
statement.
The acquisition was effective October 1. Terms of the deal
were not disclosed.
Not only do retirement participants in plans of all sizes expect their main source of future income to be defined contribution (DC)
plans, they also perceive it to be the most important source of income in
retirement, finds a survey from Guardian Retirement Solutions.
Respondents indicated that they expect
one-third (34%) of their retirement income to come from DC plans, 24% from
Social Security and 12% to come from personal savings, including individual
retirement accounts (IRAs). Seventy-seven percent ranked income from DC plans
as a very important income source in retirement, 62% ranked Social Security as
very important, and 61% ranked personal savings as such.
However, the survey found participants in
small plans do not have the same features and investment options available to
them as participants in larger plans. In terms of plan design, for example, a
match is much less prevalent at firms with fewer than 25 employees than with
employees of firms of all sizes. Other features which are also less prevalent in
small plans include retirement income planning tools, telephone service representatives,
automatic enrollment and deferral escalation, and managed account
programs.
In addition, smaller plans are less likely to
offer target-date and target-risk funds, company stock and fixed-rate accounts
in their investment lineups.
“Some things we point out are not necessarily
positive or negative, just things we noticed,” Douglas Dubitsky, vice president
at Guardian Retirement Solutions in New York City, tells PLANSPONSOR. “Small
plans don’t necessarily have bad options, but they don’t have the same options.
Participants are overwhelmed by too much choice, but they should have a good
selection.”
Dubitsky says Guardian is a firm believer in
diversification of funds offered inside DC plans; the investment lineup should
not be overly concentrated in one investment type. “Plans shouldn’t have a lot
of funds, but they need to include core sectors,” he adds.
NEXT: Need to focus on income
The survey also reveals a lack of
comprehension of terms by participants. Most participants, for example, have
heard the term “contribution rate” (82%) or “vesting” (77%), or have heard about
loans (75%) from their accounts. However, comprehension is lacking. For
example, among those who have heard of vesting, fewer than half assert that
they understand the term completely.
Only half or fewer have heard of target-date
funds (TDFs) (50%), dollar cost averaging (45%) or target-risk funds (39%). Two-thirds
of participants who have heard of target-date or target-risk funds assert they
do not understand the term.
Another troubling finding of the survey is
that participants are still focused on accumulated balance and not retirement
income. More than half (54%) say they pay a “great deal” of attention to their
account balance; only 29% pay a “great deal” of attention to how much income
their balance will generate.
“Participants may have what seems like a lot
of money, but they are not looking at what that translates into as income over
30 or 40 years,” Dubitsky says. He suggests that putting income projections on
participant statements is a good first step, but plan sponsors need to have
conversations with participants about how much income their balances will
generate. During meetings or during the open-enrollment period, plan sponsors
can remind participants to focus on income.
NEXT: Education is critical
“Education
is the key thing,” Dubitsky says, noting that in the small-plan world,
employees seem to have less opportunity for that. “People need to take this
seriously. The average person spends more time thinking about their next car purchase
or next vacation, but these things will impact folks for a shorter time frame
than the 401(k).”
Plan
sponsors can engage advisers for education, Dubitsky says, but providers also
offer many education resources. “When employers educate, they are doing a big
service to employees, and employees who take advantage of that education make
better choices. A little bit of education can change the way they manage their [defined contribution]
plan accounts.”
Guardian
Retirement Solutions has developed the RetirementConnect education program to
help engage and educate small-plan participants. This program is delivered by a
Guardian Relationship Manager, who provides enrollment meeting support and
helps plan sponsors develop programs to increase plan participation,
participant deferral rates and employee engagement. Participants also have
access to online tools, calculators, videos and articles through a newly
enhanced website.
To obtain a copy of the “Small Plan 401(k) RetireWell Study: What’s Working and Not Working for Small
Plan Participants” results, visit: http://www.guardianlife.com/401kRetireWell.