Issue Intro | Published in June 2017

Beyond Metrics

A re-enrollment may be one of the ultimate success formulas for participant outcomes

By Judy Faust Hartnett | June 2017
PS617_Cvr_300px.jpgArt by Valeria PetroneWhen it comes to plan design strategy, a re-enrollment may be one of the ultimate success formulas for participant outcomes, as I observed when reviewing this year’s Plan Sponsor of the Year applicants. Because of that potential for success, we decided to focus on this design element as our cover story this issue.
The concept of re-enrollment has become broad, offering many capabilities for bettering a plan. Whether the objective is to improve the asset allocations of plan participants, boost overall participation or bring nonparticipating employees into the plan, re-enrollment is a strategy that could easily become as common as new-employee automatic enrollment. “Shaking Things Up” drills down into the various types of re-enrollments a plan sponsor may implement and the myths that have held many back from using this strategy as a relatively quick route to plan success.
It’s most often target-date funds (TDFs) that are at the core of an asset-allocation re-enrollment, as these fund series are most often a plan’s qualified default investment alternative (QDIA). In fact, Strategic Insight’s TDF Analysis indicates that, over the last 10 years, through Q1 2017, TDF assets grew from $132.7 billion to $940.9 billion, reflecting their significance as an option on a plan sponsor’s menu.
As of late, plan sponsors have several ways to check a participant’s financial health based on savings in his employer retirement account—a relatively new phenomenon for administrators. These retirement readiness and plan health benchmarks are now a focal point for most recordkeeper offerings. But as participants’ scores are based on simply one data point, their retirement readiness scores (sometimes called income replacement scores) are relatively meaningless. Measuring readiness in this way does not take into account whether participants have, for example, other defined contribution (DC) plans, individual retirement plan (IRA) holdings, a pension plan and/or real estate. How effective is this score for participants other than those who have a very simple financial situation? John Manganaro discusses this topic in “The Flaws in a New Standard."
The industry-leading PLANSPONSOR Recordkeeping Survey—our 2017 edition—is part of this issue. The 55 providers that responded this year showcase a wide range of investment, technology and servicing options, and on the pages that follow are profiles of each. In addition, the article introducing the survey, “The State of Recordkeeping” offers the viewpoints of two industry experts on how that service is evolving. The survey, which is one of the most visited pages on our website year round, gives a view into the business at the core of the retirement plan industry.
Best wishes for a wonderful summer!

Judy Faust Hartnett, Managing Editor