Gallagher notes that some providers dedicated to the DB administration business are looking at online features. “Participants have always been able to go online and run retirement scenarios, but some providers have expanded that to allow participants to retire online,” she says. “They can fill out paperwork online, upload documentation, choose their tax election and method of payment. It’s a recent innovation that helps participants and is efficient for plan administrators.”
Another innovation is providing DB plan sponsors with self-service, Gallagher adds. They can access call notes and case management notes to confirm correct answers are being given or where the participant is in the process.
According to Ryor, with larger providers focusing on larger clients, Hooker & Holcombe has developed a platform for interactive capabilities. Participants can do projections online and calculate benefits. He says these types of services vary in the market.
Gallagher says with the Pension Protection Act (PPA) giving cash balance plans the opportunity to tie interest credits with market returns, plan design innovation is something new in the DB market. She sees cash balance plans will become more popular as plan sponsors question whether defined contribution (DC) plans can do the job like DBs. Plan sponsors can provide a pension without the same volatility, and participants will be able to see an account value just like in DC plans.
Ryor also says some of the innovation for ongoing, active plans relates to plan design. “A lot of new DB plan generations are cash balance plans. They tend to be smaller plans or for larger plans, they tend to be more for professional services firms, such as attorney firms. Cash balance plans allow for greater tax-deferred savings, and are in part inspired by DC plans not having good returns and not offering enough benefits,” he states. NEXT: What to look for in a DB plan provider