A study by Chatham Partners, “2011 Trends in DB Bundling and Total Retirement Outsourcing: Evaluating the Opportunity in a Recovering Economy,” found that most semi-bundled sponsors agree that time and resource savings and lower administrative fees are likely outcomes of bundling. However, along with unbundled providers, they are unwilling to sacrifice investment flexibility to achieve these outcomes. Further, unbundled providers do not believe that the promised outcomes of bundling are achievable.
PLANSPONSOR spoke with Peter Starr, Chatham Partners’ CEO, who said some plan sponsors just don’t believe they can achieve more by bundling their plan packages. “They don’t believe it saves time and resources, their costs, they don’t believe the benefits outweigh the risks,” he said.
“If you track those historically you see the same results, less than 20% have a strong belief in those outcomes. If you don’t believe in those outcomes, you are less likely to consolidate your program to a single provider. So if you look at the constituency that are truly unbundled, they don’t because of lack of belief in the outcome of bundling,” Starr added.
According to Starr, some of the benefits of bundling for a plan sponsor include time and resource savings. There are lower costs involved in administrating the program, and lower costs in investment-related fees.