That was a key conclusion of a survey of nearly 200 health care plan sponsors. At the same time, the poll found, the health care employers are looking to providers for support in employees’ efforts to save and invest wisely for retirement.
Among the survey’s key findings:
- In 2010, 79% of plan sponsors reported having an adviser, a three percentage point increase over 2009.
- Retirement plan advisers perform a variety of tasks especially those surrounding investment management decisions. Eighty-one percent of respondents said their advisers provide ongoing investment monitoring, 67% assist with investment selection, 54% help develop the investment policy statement, and 30% said they act as a plan fiduciary.
- Nearly half (48%) of plan sponsors are turning to their current accountants to conduct their plan audit. However, 13% will rely on their plan provider to arrange for an auditor, and 19% will hire a new auditor, a ten percentage point increase from one year ago.
- A majority (72%) of plan sponsors outsource some aspect of their DC plan management to their plan provider: 52% for loans, 50% for hardship withdrawals, 37% for Qualified Domestic Relations Orders, and 37% to handle enrollment.
- Of the 37% of health care plan sponsors that employ on-site representatives (a four percentage point increase over the previous year), 46% of reps are full-time, an 11% increase over two years ago.
- Onsite representatives perform a variety of services designed to improve plan utilization and enhance the participant experience by enrolling employees (90%), helping them understand the plan (90%), providing retirement income planning (89%), improving employee appreciation of the plan (81%), giving financial guidance (77%) and providing investment advice (51%).
- Vendor changes are on the rise as well. Respondents said they plan to change recordkeepers (11%), consolidate recordkeeping for multiple plans (9%), change advisers (8%), reduce the number of plan providers (4%), and consolidate investments for multiple plans (4%).
Brodie Wood, vice president and not-for-profit practice leader at Diversified noted that, in addition to increased regulations, another driving factor for these changes is the volume of mergers and acquisitions within the health care industry, which is expected to increase in 2011.
“When hospitals and hospital systems merge, there are usually multiple plan providers and scores of participants involved,” he said. “For a health care organization to take that task upon itself would require significant human and financial resources which is why outsourcing plan management and consolidating the number of providers, often to a single provider, is a continuing trend.”
According to the report, nearly 80% of health care employers cited employee education among their top priorities for the next 12 months and many are turning to technology to help get the word out quickly and effectively. The survey found that 52% of plan sponsors e-mail materials to participants’ work accounts, 30% more than the previous year. Sixty-nine percent of plan sponsors make information available on an Internet site and 54% provide retirement plan information on their intranet site.
To request a copy of the survey report, please visit www.aha-solutions.org or call 800-242-4677.
The survey was conducted by Diversified Investment Advisors, Inc. and the American Hospital Association (AHA) to provide health care plan sponsors and their advisers with comprehensive benchmarking information and to help set strategic direction for their retirement programs.