Some Sponsors Still Hazy on PPA, Fiduciary Issues

January 20, 2010 ( – Some 29% of defined contribution plan sponsors at plans with less than $1 million in assets up to $10 million in assets said in a recent poll that they were familiar or very familiar with how the Pension Protection Act (PPA) could help their participants.

An AllianceBernstein news release about its study of 1,000 plan sponsors, Inside the Minds of Plan Sponsors, said large-retirement savings program officials did better on the PPA issue; 61% of plans with more than $250 million in assets said they know their way around the key pension reform law.  

The AllianceBernstein research also found that fiduciary understanding is still a significant challenge for many of the sponsors polled. Some 45% of micro-plan (less than $1 million in assets) or small-plan sponsors (between $1 million and $10 million in assets) do not see themselves as fiduciaries. 

“It’s not surprising to see a significant disparity between plan sponsors from larger plans and those from smaller plans in terms of their understanding of fiduciary issues, as responsible executives at large companies usually have more focused roles and additional resources,” said Richard A. Davies, Head of Product Strategy for AllianceBernstein Defined Contribution Investments (ABDC), in the news release. “This research demonstrates that there is a real opportunity for financial advisers and consultants to help the smaller plan sponsors who have limited time and resources to spend on their plans.” 


Meanwhile, according to the research, 38% of micro and small plan sponsors are using a qualified default investment option (QDIA), such as a target-date or risk-based fund. In contrast, 56% of mega plans are currently doing so.

Commented AllianceBernstein researchers: “While there is certainly room for more mega plans to adopt default options that are QDIA-compliant, these findings highlight the implications for smaller plans whose sponsors may not grasp the benefits – to them or their participants – of implementing a QDIA.” 

Getting Participants Through Retirement 

The news release said other findings of the Inside the Minds of Plan Sponsors AllianceBernstein study included:

  • Plan sponsors across all plan sizes want to help employees—not just to retirement, but through retirement. Helping employees make better investment decisions (86%) and generate a retirement income stream (85%) are the two most important issues for plan sponsors, regardless of plan size. Plan sponsors’ single biggest worry is that participants will not accumulate enough to retire (46%).
  • The large majority of plan sponsors (72% micro/small and 83% mega) feel that reviewing fiduciary responsibilities is an important service to receive from their provider, demonstrating their concern about fiduciary issues. Some 55% are comfortable or very comfortable that all relevant individuals at their organization are aware of their fiduciary status.
  • Plan sponsors of all sizes are looking to their service providers for more help with fiduciary-related services. As compared to the last time this survey was done in 2005, plan sponsors now want more help with ongoing monitoring and reviews of investment options (89% in 2009 vs. 46% in 2005), plan design or compliance updates (79% vs. 30%), and reviewing fiduciary responsibilities (78% vs. 24%).

The study is available here.