Magazine

Issue Intro | Published in February 2017

Being Vigilant

Forgoing benchmarking can lead to potential trouble

By Judy Faust Hartnett | February 2017
PS217_Cvr_300px.jpgArt by Chris BuzelliI’m often reminded of a former boss’s wisdom. He said people whose work contributes to something larger than themselves are more apt to find their careers fulfilling—they’re not simply spending many hours in a workaday world. Preparing this issue reminded me of the passion he was describing and how gratified I am to work in an industry that makes a difference for employees. I guess many plan sponsors feel the same way.
 
For instance, in “Aiming High,” the article preceding this year’s 2016 PLANSPONSOR DC Survey: Plan Benchmarking, I discovered a unique method for measuring plan success, in my conversation with Cory Clark, director of Dalbar Inc. He explained various nuances of benchmarking—the due diligence and subtle requirements of Section 408(b)(2) of the Employee Retirement Income Security Act (ERISA) that ensure plan service arrangements are reasonable.
 
For almost 20 years, our annual DC Survey has offered you plan design data from plans of all sizes and industries, making it a major source of benchmarking trend data for the industry. The charts and tables we present can help you understand how your plan compares with others.
 
Forgoing benchmarking can lead to potential trouble. Like clockwork, just about every week coming across our desks are notices of new lawsuits filed against recordkeepers, investment managers and plan sponsors. What issues about fees do these recent court cases raise, and what specifically should sponsors monitor and document defensively? We’ve found five common themes that have arisen in recent fee lawsuits, which we summarize for you in our cover story “On Guard.”
 
Recently, settlements have ranged from $15 million to upwards of $60 million. Understanding these issues and adjusting your processes and documentation will likely be worth your time.
 
We begin a new section of the magazine, this issue. In PS Profile, we follow up with plan sponsors that have participated in either the PLANSPONSOR of the Year or Best in Class 401(k) Plan program to see how their plan is faring. For our premier article, I had the pleasure of speaking with The Hearst Corporation’s plan sponsor Roger Paschke, who is vice president and chief investment officer and his colleague Karen Alsup, managing director of institutional investing. They discussed how their investment menu update with white label funds—leveraging the defined benefit (DB) and foundation fund managers for the corporation’s defined contribution (DC) plan—could add roughly $250,000 to a career-long employee’s retirement account.
 
We hope the content in this issue and online at plansponsor.com brings value to your plan.

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