Plan sponsors are increasingly unaware they’re fiduciaries, according to new research from Alliance Bernstein.
According to a survey in which all respondents were fiduciaries, 37 percent said they weren’t — a disturbing upward trend, since in 2011, 30 percent of respondents to AB’s last survey on the topic gave that answer.
In addition, nearly half of plan sponsors said they didn’t use the Department of Labor’s qualified default investment alternative safe harbor protections.
That doesn’t mean they don’t believe in the importance of fiduciary matters. More than four out of five (82 percent) ranked them as “important” or “very important.” But if those sponsors’ plans offered target-date funds, they were more likely to rank fiduciary concerns as important or very important (87 percent).
Only 77 percent of sponsors of plans that intend to offer TDFs and 79 percent of sponsors whose plans didn’t intend to offer them ranked fiduciary concerns important or very important.
Training, unsurprisingly, makes a difference; sponsors who don’t consider themselves fiduciaries were more likely to say their organization doesn’t train them. In fact, 36 percent of sponsors don’t offer training to plan fiduciaries to ensure they understand their obligations.
When it comes to QDIAs, about half of respondents don’t have QDIAs—or the legal protections they offer to sponsors—and a fifth don’t even have a default investment. The deficiency was largest among small plans; 37 percent said they don’t have a default, while just 13 percent of the largest plans lacked one.
And a fifth of respondents don’t know whether their plan’s default is qualified or not. Among plans with stable value or money funds, two thirds said those were their defaults, despite the fact that they’re only valid for the first 120 days after a participant enrolls.
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