Industry Voices

Objectively, How Good Is Your Retirement Plan?

September 26, 2014 ( - Objectively, how good is your retirement plan? Without some comparative analysis, how would you know?

By PS | September 26, 2014
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Doing a comparative analysis can be a daunting task, and if there is no clear need, it’s human nature to snooze it. In Part 1 of this two-part article we hope to show you that over-using  the “snooze button” is risky, and in Part 2 we will provide a roadmap for performing comparative analysis on your plan.

The “If it ain’t broken…” approach is unacceptable, for two main reasons:

1.       Your plan may very-well be “broken”, and you simply don’t have the perspective to see that.  Having a broken plan increases your financial risk. Under the employee Retirement Income Security Act (ERISA), plan-level decision makers [you and any other committee members] owe the plan a duty of loyalty and a duty of care. If your plan management style is more on the reactive side, you may not be fulfilling these two duties. This could lead to fines, legal costs and settlement payments.

2.     A broken retirement plan squanders dollars and potential.  Would you tolerate a habitually overpaid or underperforming employee? Why should your retirement plan be held to a lower standard of efficiency or performance? We have seen plans paying tens (and even hundreds) of thousands of dollars more annually than the prevailing market level, simply because the fiduciaries had never bothered to check. Further, an underperforming plan can leave your employees far short of the savings they will need to retire with dignity at an appropriate age.

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