SURVEY SAYS: Plan Sponsor Goals in 2014

Among the suggestions for defined contribution retirement plan sponsors, designing participant education to include overall financial wellness was ranked as most important by 41.4% of responding readers. Nearly one-quarter (24.1%) selected “develop a process/benchmark for measuring participant retirement readiness and monitor it,” and 10.3% each chose “try new methods of communicating with plan participants and employees, such as social media, gaming, etc.” and “conduct a self-audit of our retirement plans.”

Nearly 3.5% of readers each chose “revamp our defined contribution plan investment menu to reflect participant demographics and behavior,” “better understand our target-date fund offering and review whether it is appropriate for our plan/participants,” “reduce or eliminate revenue sharing among our investments, or allocate it back to participants” and “issue a request for information (RFI) or request for proposals (RFP) to benchmark our service and investment providers and plan fees.” Adding inflation protection or global exposure to defined contribution plan investments and switching to custom target-date funds were not selected as most important by an respondents.

Among the suggestions for defined benefit plan sponsors, “design participant education to include overall financial wellness” and ‘adopt a de-risking glide path for our defined benefit plan with certain ‘triggers’ for change” tied for most important, selected by 28% of responding readers. Twelve percent each chose “issue a request for information (RFI) or request for proposals (RFP) to benchmark our service and investment providers and plan fees,” “accelerate contributions to our defined benefit plan” and “pursue pension risk transfer for our defined benefit plan, such as lump sums to terminated participants or an annuity buy in or buy out.”

Four percent each selected “develop a process/benchmark for measuring participant retirement readiness and monitor it” and “add inflation protection or global exposure to our defined contribution or defined benefit plan investments.” Trying new methods of educating participants and conducting a self-audit of the plan were not selected as most important by any of the readers who responded.

When asked which suggested steps/goals their companies are implementing/adopting in 2014, 42.3% indicate they will design participant education to include overall financial wellness. Twenty-three percent will conduct a self-audit of their plans. More than 19% say they will reduce or eliminate revenue sharing among investments, and more than 15% report they are going to try new methods of communicating with employees. More than 11% will develop a process or benchmark for measuring retirement readiness of participants, and monitor it.

“Revamp our defined contribution plan investment menu to reflect participant demographics and behavior” and “pursue pension risk transfer for our defined benefit plan, such as lump sums to terminated participants or an annuity buy in or buy out” were each selected by 7.7% of respondents. “Add inflation protection or global exposure to our defined contribution or defined benefit plan investments,” “better understand our target-date fund offering and review whether it is appropriate for our plan/participants,” “issue a request for information (RFI) or request for proposals (RFP) to benchmark our service and investment providers and plan fees” and “adopt a de-risking glide path for our defined benefit plan with certain “triggers” for change” were each chosen by 3.8% of respondents. No one indicates they will switch to custom target-date funds in the new year.

Some “other” responses included “implementing auto enrollment and auto escalation,” “eliminate our DC plan and increase EE salaries,” “integrate education/communication around the DC plan with the HSA plan” and “adopting an indexed funds approach for the investment lineup.” 

Though only a handful of respondents chose to leave verbatim comments, the comments were strong, and a little discouraging.  Seems some plans do not have the resources—human or financial capital—to focus on many of the suggestions. Sorry, no Editor’s Choice this week.

Verbatim

It helps when we have a year like 2013.

 

Trying to get participants INTO the plan should be a goal. That's the first hurdle! They can learn about fees and investments later on if you can get them interested in signing up! Too many people just say "I can't afford it" and don't join. Those are your target employees.

 

Likely to the guffaws of my peers, IMHO, plans are merely a means to an end, neither a right nor obligation - except to boomers. So the next 'generation' of plans, I sense, will be to "make it mine." Funny how circles work, eh.

 

I have tried, as best I can, to respond to the above options. Honestly, the list looks to be drawn from the wish list(s) of providers, advisors and consultants. Like a resolution to lose 50 pounds (which will never happen) versus the 10 that is more realistic, these strike me as mostly "pie in the sky" - aspirations for those who have the time, money, and/or staff that I don't have (and won't get). My 2014 list looks more like just trying to keep the plan running smoothly, to keep our operations in compliance with the law, to deal with participant issues as best I can, to keep the match where it is, and to boost participation as much as I can with a budget that never quite seems to be enough. I know that sounds bleak, but for all its relatively "mundane" focus, it's making a difference in people's lives. And that's why I (still) come into work with a smile every day.

 

My brother is a carpenter, and a number of the projects he has started on his own home are unfinished. He is too busy doing work on other people's homes. The same is true for our plan, sadly. We receive the minimum information required, have just a 3% SH made on our behalf and no financial guidance with regard to investment elections. I don't see a change anytime in the near future.

 

 

NOTE: Responses reflect the opinions of individual readers and not the stance of Asset International or its affiliates.