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Besides dealing with lockdowns, economic hardships, labor disruptions and ensuring the health and safety of employees, employers are also faced with myriad new regulations and issues surrounding defined contribution (DC) plans.
They might seem daunting on top of everything else; however, Russell Investments has created a "top 10″ list of tasks and considerations to help sponsors and their investment committees navigate the changing retirement landscape. Here are three of their 10:
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Review and update plan governance
Reviewing the plan will lead to improved governance and the establishment of formal investment beliefs and objectives for the plan. According to Russell Investments, establishing beliefs "saves time and allows committees to focus more on managing fiduciary risks, along with strategies to improve retirement outcomes for participants."
Rethink core menu design and portfolio structure
Clear design and core investments help improve the likelihood of successful retirement outcomes. According to Russell Investments, "including both an active and passive investing tier in a DC plan, in an effort to accommodate the needs of a majority of employees, is a reasonable approach." Communication, however, is very important to avoid overwhelming participants with too many investment choices.
Mitigate cybersecurity risk
Because the Department of Labor has issued new cybersecurity guidance as of April 2021, plan sponsors have "an obligation to ensure proper mitigation of cybersecurity risks." Therefore in order to mitigate any risks and potential litigation, fiduciaries should ask their providers about security standard practices, review their providers' security track records, and find out if they have relevant insurance policies.
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