Magazine

Published in June 2012

A Vital Role

By Alison Cooke Mintzer | June 2012

A retirement plan without a recordkeeper, well, isn’t much of a retirement plan at all.

The recordkeeper is essential to the health and happiness of every defined contribution (DC) plan sponsor in the U.S. As a plan fiduciary, the plan sponsor has an obligation to review and assess the performance of the plan’s recordkeeper. To properly achieve that task, plan sponsors must know a plan’s needs and determine the right plan design for its corporate and/or employee demographics.

The cover article and feature story in this month’s issue revolve around that important decision. Every plan is different, every plan sponsor unique, and—let’s face it—every recordkeeper has its own special qualities and characteristics, as well. Our cover story, beginning on page 30, is PLANSPONSOR’s 2012 Recordkeeping Survey, which once again provides insight into 70-plus recordkeepers from across the country. It gives employers the chance to see exactly which products and services each provider offers, as well as lists information about total assets and overall client demographics. It also offers an opportunity to see how far the industry has come. Consider this year’s statistics against those of the recordkeepers participating in our first Recordkeeping Survey in 1999: The 72 recordkeepers profiled this year service nearly three-quarters of a million plans (+148% from 1999), $4.183 trillion in plan assets (+144% from 1999) and just shy of 85 million individual participants (+63% from 1999)—that’s more than one-quarter of the entire U.S. population!

Outside of selecting a provider, plan sponsors also have to ensure that the plan design structure is the correct fit for their company’s needs. “Build a Better 401(k)” (page 62) offers best practices and considerations for putting together a retirement plan that best serves a company and its employees. For example, sources say, instead of focusing solely on administrative details, such as fees and funds, when designing a 401(k) plan, sponsors also should consider details about the sponsoring company: its demographics, culture and benefits philosophy.

We also tackle some other hot topics plan sponsors will be discussing this summer.
As the industry prepares for the implementation of 408(b)(2) in July, some in the industry have questioned whether the focus on the plan sponsor disclosure regulations has come
at the expense of the new U.S. Department of Labor (DOL) participant fee disclosure regulations,­ which must be in participants’ hands by August 30. “Preventing a Fee Backlash” (page 72) addresses how plan sponsors can take proactive steps to help the new participant fee disclosure go more smoothly.

Perhaps the most watched hearings by the Supreme Court this year were those that dealt with health care reform. In our Second Opinions section (page 76), Christy Tinnes and Brigen Winters from Washington-based Groom Law Group provide answers to some questions about the court’s possible decision (which may be handed down this month) and, in particular, which specific provisions are vulnerable under various decision scenarios.   

Also in this issue, as part of our monthly Head of the Class series (page 70), we bring you an article discussing U.S. equity investing, and our columnists weigh in: Mike Barry asks whether defined benefit plans (DB) are a dead end (page 78), Steve Saxon takes on the non-monetary compensation disclosures required by the 408(b)(2) regulation (page 79), and Fred Reish discusses how to improve participant investing (page 80).

As always, I know you will find valuable insights to improve your retirement programs and I look forward to your feedback. Enjoy!