Respondents to the Towers Watson 2011 survey on qualified retirement plan governance expect the top governance challenges organizations face in the next two years to be retirement benefit costs (77%) and regulatory complexity (73%). The greatest risks expected are regulatory compliance, investment volatility and vendor service quality.
However, the research finds while most employers are concerned with compliance, many are not taking all the steps available to manage the financial, organizational and other risks created by ineffective plan governance.
Only one in four plan sponsors (26%) conduct regular compliance reviews. The most common reasons for a review are anticipated new risks and a pending Internal Revenue Service or Department of Labor audit.
Less than half of respondents regularly measure the effectiveness of retirement plan decisions with specific metrics. Many employers do not use any metrics to measure the effectiveness of their decision making regarding their defined benefit (DB) plans (39%) and defined contribution (DC) plans (45%).
Nearly half (51%) of respondents use a single committee for all retirement plan governance. The chief HR position (73%) and CFO (67%) are the most common governance committee members.
The survey report, The New Governance Landscape, analyzes the retirement benefit plan governance practices (both DB and DC plans) of over 245 employers, representing a broad range of industries and sizes.The survey report is available at http://www.towerswatson.com/assets/pdf/6080/Towers-Watson-US-Pension-Governance-Survey-2011-Implications.pdf.