Many spent considerable time fulfilling the Department of Labor’s (DOL’s) fee requirements, reacting to developments in the stable value environment, weighing the pros and cons of retirement income solutions, and evaluating the implications of peers’ DC lawsuits—all while handling the usual responsibilities associated with their DC plans. With the year drawing to a close, plan sponsors may wish to take a moment to review all they have accomplished over the past 12 months—then create a to-do list for 2013.
As we look forward to the next year, Callan offers eight action items that it believes should be on every DC plan sponsor’s list of priorities:
1. Benchmark plan fees and services. The DOL’s required fee disclosures resulted in an avalanche of information for plan sponsors. The onus is on fiduciaries to benchmark the fee and service data they now possess. In this evaluation process, plan sponsors may wish to consider not only the reasonableness of plan fees, but the manner in which they are paid. For example, is revenue sharing a well-considered approach to pay for plan administration? Would a flat, per-participant fee be more equitable? Some plan sponsors have even gone so far as to create a fee payment policy, either as part of their investment policy statement or as a separate document. At a minimum, plan sponsors would be wise to document their fee evaluation process. 2. Review the investment policy statement (IPS). According to Callan’s 2012 DC Trends Survey, while most plans have an IPS, nearly half failed to review it in the past 12 months. With some fee lawsuits focusing on plan sponsor adherence to the IPS, it is critical that the document be reviewed, made consistent with best practices, and be well understood by the Investment Committee. The ideal IPS gives clear guidelines, creates a reasonable process, provides a roadmap for making sound, long-term-oriented decisions, and outlines criteria to keep the Investment Committee on track.