August 20, 2013 (PLANSPONSOR.com) – Defined contribution (DC) plans are becoming a stronger component of higher education institutions’ benefit offerings.
Consulting’s College & University Benefits Study (CUBS) found all private
institutions offer a DC plan, and 96% of public institutions offer one. Institutions’
median contribution to their DC retiree income plans was 10% of
compensation, which is more than three times greater than the median seen in
the corporate sector.
said since the Internal Revenue Service released final regulations for Section 403(b)
plans in 2007, there has been a shift toward including a “best-in-class” menu
of investment options as a replacement for, or in addition to, a broader
universe of funds. Additionally, there has been a significant movement to
consolidate vendors for administration.
vendors, institutions often add a brokerage account to give faculty and staff
access to almost any mutual fund in order to mitigate the misperception that
vendor consolidation is a reduction in choice. CUBS found nearly three-quarters
of institutions have only one or two DC plan vendors.