Retirement plan administrators are making progress in some areas but still have work to do to adequately preparing participants for the big day, in both the financial and educational arenas.
That's according to a survey from Strategic Benefit Services that found plan administrators were all over the map in their understanding and adoption of best practices, with 18 percent saying they weren't sure how their plan advisors were compensated and 25 percent indicating that they weren't sure how many times their plans went out to bid.
About 80 percent said that they weren't sure whether their advisor was acting in a fiduciary capacity — a big red flag for administrators, who may otherwise find themselves on the hook for something they thought their advisors would be liable for.
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One area that stood out as a positive was administrators' understanding of 408(b)(2) fee disclosures, with almost 83 percent saying that they were comfortable or very comfortable with their understanding of those disclosures.
That's a good thing, considering that the report pointed out that "as part of their general fiduciary duty under ERISA, sponsors should ensure that a plan's fees and expenses are reasonable in light of the services that are received."
Most respondents indicated a regular schedule for review of fees, with about 20 percent saying they did so quarterly, 11 percent twice a year, and 49 percent yearly.
But when it came to features of their plans that could improve employee participation and retirement preparedness, things weren't so rosy.
Fifty percent said their plans did not have an automatic enrollment feature — something that can at least get employees into a plan, although for an effective rate of savings, combining auto enrollment with auto escalation to combat employee inertia is widely viewed as better.
Investment committees also varied widely from respondent to respondent, with committee diversity, responsibilities and scheduled meetings differing in degree, depth and frequency.
The report also highlighted the use of qualified default investment alternatives (QDIAs) as protection for plan sponsors — 80 percent of respondents indicated that their plans used them — and the use of an outside advisor (73 percent use an independent advisor for at least one of their plans).
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