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Can It Really Be as Simple as 1-2-3?

Last Updated: September 30, 2020

3 Key Drivers Every Fiduciary Committee Should Be Measuring to Provide a Rewarding Retirement

Overseeing a retirement plan can be intimidating and seemingly complicated, especially for new fiduciary committee members. There are many “to dos” – regulation standards, liabilities, risks, decisions to be made, paperwork to be filed, etc. It may seem the list never ends. More important than these, though, is your fiduciary duty to your participants. You must make decisions based on what is in their best interest, above all else.


So, what is in your participants’ best interest? It’s simple. The number one goal for a fiduciary committee member should be to provide a Rewarding Retirement. That means a plan that helps participants retire on time with dignity.


With that goal in mind, there are three key drivers you should measure. These determine if a person is on track for retirement: 1) the right amount being contributed, 2) strong investment returns, and 3) low fees. Let’s take a brief look at each of these drivers:

  1. Total Contributions Lifts Income Replacement

What if you threw a retirement plan and no one came? If your employees aren’t participating AND contributing, then there is no retirement plan, or at least not one that is meeting the primary goal of preparing participants to retire on time with dignity.

It’s commonly accepted with financial planners that the typical American will need to replace 70-80% of their current income to maintain a similar standard of living in retirement.1  Total contributions are the driving force to help your participants achieve that standard. The more that is contributed, the better prepared they will be.


  1. Investment Lineup Captures Compounding

Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” A small gain in investment performance compounded over a plan participant’s working career will exponentially impact what’s available in retirement. Even small increases or decreases in performance can dramatically influence a participant’s retirement assets.

Now, fiduciary, your role is to provide a lineup of funds that participants can use. A bad lineup equals bad performance. An investment lineup that outperforms an objective benchmark over time, net of investment-related fees, will grow your participant’s ability to retire.


  1. Low Fees Keep Money in the Plan

We all know that high fees eat away at the amount participants have available in retirement. Just as compounding can be very powerful, high expenses can drain all of that power away in excessive fees and erode participants’ ability to retire on time.

The reality is that you’re going to have to make decisions that spend the plan’s and participant’s money. After all, a plan without service providers is a plan that will suffer. But it’s critical to account for and measure all service providers, what they cost, and who pays. Then compare that TOTAL against a meaningful, objective benchmark.

Total Contributions + Investment Lineup Returns – Plan Fees = Rewarding Retirement

Session 2

1 Social Security Administration. “Alternate Measures of Replacement Rates for Social Security Benefits and Retirement Income.” https://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p1.html

Allen CFP®, Brian. “Rewarding Retirement: How Fiduciary Committees Can Elevate Workers, Companies, and



PCI’s archived blog entries are dated, the rules and statutes referenced may have changed. The analysis or guidance within these blog entries may have become stale, dated, or no longer accurate. PCI will not update or change these entries to reflect the latest analysis or development.



Pension Consultants, Inc.



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A good plan measures
three key elements:
investments, and fees.


A good plan serves
employees and


Fiduciaries have a
responsibility to make
reasonable decisions
with their employees’
best interests in mind.

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