SURVEY SAYS: DC Plan Success Measures

And, “What measures are looked at?”

All respondents work in a plan sponsor role. The majority (91.7%) reported they benchmark the success of their DC plans once per year, while the rest (8.3%) do so every five years.

When the plan is benchmarked, 91.7% measure average participation rate, and the same percentage measure administrative expenses compared to peer plans. More than 83% measure average deferral percent, and 100% measure investment expenses compared to peer plans. More than 58% measure the percentage of participants properly diversified in investments, and 41.7% measure the percentage of participants getting the full match. Nearly 42% measure participants’ use of educational materials/website, and one-quarter measure the percentage of participants on track to replace a certain income level in retirement.

In “other” responses, readers indicated they measure fund performance over time.

Asked to measure the importance of each of these metrics to assessing the success of their DC plans, respondents indicated as follows:

• Average participation rate – 18.2% somewhat important, 81.8% very important;
• Average deferral percent – 9.1% somewhat important, 81.8% very important, 9.1% don’t know;
• Percentage of participants getting the full match – 18.2% not important, 9.1% somewhat important, 63.6% very important, 9.1% don’t know;
• Percentage of participants properly diversified in investments – 41.7% somewhat important, 58.3% very important;
• Percentage of participants on track to replace a certain income level in retirement – 18.2% not important, 27.3% somewhat important, 36.4% very important, 18.2% don’t know;
• Investment expenses compared to peer plans – 100% very important;
• Administrative expenses compared to peer plans – 8.3% somewhat important, 91.7% very important;
• Participant use of educational materials/website – 8.3% not important, 58.3% somewhat important, 25% very important, 8.3% don’t know.

Very few respondents had their own comments to add to the survey. There is no Editor’s Choice this week.

A big thank you to everyone who participated!

Verbatim

We actually evalutate our plan once per quarter with our Retirement Committee. More than once per year was not on the selections.

We are a multi employer plan as we are a PEO organization. We do monitor the participation per each of our clients, but do not aggregate over the whole Plan, bc that would be a metric without meaning...

Survey assumes the Defined Contribution Plan provides matching which ours does not; State plan mandates the EE and ER contribution rates.

Overall we (sponsors) have done a good job in presenting the product. We're now at the stage where participants are needing to "de-cumulate". Here, I feel, is the next best practices measure of success.