Half of Plan Sponsors Offer Auto Enrollment
April 17, 2012 (PLANSPONSOR.com) - Plan automation solutions
play a key role in the plan design process, according to a survey.
The second annual Retirement Plan Survey by Mesirow
Financial Retirement Plan Advisory found that 50% of plan sponsors surveyed
offer automatic enrollment features, and one-third include a step-by-step
deferral rate option.
to the survey, plan sponsors are hopeful that positive strides continue in
educating participants on the merits of participating in their retirement
plans. The lack of participant understanding and appreciation of the retirement
plan benefit is a major concern, yet satisfaction levels seem positive. In many
circumstances, the provider community has offered multiple options in trying to
meet the educational requirements and needs of both the plan sponsor and
asked how they would characterize overall participant satisfaction with
different planning tools and, options available through the participant website
materials and meetings to help reach saving goals, 14.4% of respondents said
they were very satisfied; 75.6% were satisfied; 5.6% were not satisfied; and
4.4% do not use these options.
the finalization of the Pension Protection Act, target-date funds (TDFs) have
grown exponentially both in usage and in assets. The trend continues in Mesirow’s
latest findings as plan sponsors use TDFs for double duty as a plan’s QDIA and
also as a managed account strategy. The majority (72.4%) of respondents do
offer TDFs, while 27.6% responded they do not.
Implementing fee disclosure is at the forefront for 2012. Mesirow’s research suggests that plan sponsors allocate the right amount of time and resources to ensure all regulations are addressed to the satisfaction of the Department of Labor (DOL), and that employee communications are effective. Plan sponsors, along with their providers, should maintain a careful watch as fee disclosure rolls out in 2012. Respondents were asked, “Is your outsourcing provider communicating all fee disclosure regulations to your satisfaction [e.g., 408(b)(2), 404(a)(5)]? The majority (90.5%) said yes, while 9.5% stated no.
A surprising find is that 34.4% of plan sponsors said they do not know if their adviser or consultant is acting as an investment co-fiduciary. Only 36.1% said yes, as a 3(21) fiduciary; 1.6% said yes, as a 3(38) fiduciary; and 27.9% said no.
When asked if highly compensated employees (HCEs) limited their voluntary contributions to the retirement plan due to non-discrimination testing results, 13.1% said yes, all HCEs are limited to a set percentage contribution limit each year, which is less than the maximum percentage allowed under the plan; 29.8% stated yes, some HCEs receive a portion of their deferrals back to them taxably after testing results are known; and 57.1% said no, all employees, whether highly compensated or not, are eligible to contribute to the retirement plan up to the maximum allowed by the IRS.
In regard to the types of non-qualified plans employers offered, 25% offer voluntary employee deferral plans; 17.9% offer employer matching/profit sharing plans; 7.1% offer employer-provideddefined benefit (DB) plans, commonly referred to as a SERP (Supplemental Executive Retirement Plan), and 67.9% do not offer non-qualified plans.
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