If you’ve been following along with our Top-Performing Plan blog series, or you viewed our three-part webinar series, you know that we believe that it’s essential for the retirement planning industry to hold itself to objective performance standards. They’re essential to help you, the fiduciary, understand exactly how your plan is performing.
As a plan fiduciary, you are charged with overseeing plan management with the goal of providing a good plan for your employees.
Plan management includes selecting and monitoring plan investments, selecting and monitoring plan service providers, assisting employees in preparing for a successful retirement, and the administration of the plan.Each area of plan management will require fiduciaries to use discretion that may impact the participants in the plan and their beneficiaries.
Below is a chart outlining the COLA limits that become effective January 1, 2018, along with the two prior tax years’ limits:
If you make decisions regarding the administration of your employer’s retirement plan or its investment choices, then you are a fiduciary to the plan. As a fiduciary, you are charged with making decisions that can impact the employees’ assets in the plan, and ultimately their retirement readiness. Those decisions must be prudent, but they should also drive your plan toward being a good plan. However, you may ask what does it mean for a plan to be a good plan?
Over this past week, Pension Focus hosted another successful year of the Pension Focus Conference (“PFC”).
Hosted at the beautiful Chateau on the Lake in Branson, Missouri, the PFC focuses on providing in-depth, retirement plan management education for both plan fiduciaries and plan administrators.
This year PFC was fortunate to have several speakers from various avenues of retirement plan management ranging from ERISA attorneys, to a consumer behaviorist, to a Department of Labor representative. Among those speakers was our nationally-recognized keynote speaker, Mr. Bradford Campbell, ERISA attorney at Drinker, Biddle & Reath, LLP.Continue reading
Protecting against the Self-Interest of Others for the Good of Participants
Fiduciaries of the JP Morgan Chase 401(k) Savings Plan have recently been sued by Plan participants. Listed allegations include:
- failing to monitor and evaluate the cost of investment options
- imprudently allowing the Plan’s assets to remain in various proprietary (JPMorgan) investment vehicles rather than lower fee, similar investment vehicles, and
- failing to remove fiduciaries whose performance was sub-par.
A recently filed lawsuit attempts to hold plan fiduciaries to what has been an unprecedented standard until now. Previous lawsuits accused plan fiduciaries (with a slight amount of industry knowledge) of what could be considered “a no brainer”: don’t pay too much. If there is an identical or nearly identical investment option offered at a lower cost, choose the lowest cost option. If it is not feasible to switch to the lowest cost option, retain the fund but rebate revenue sharing. Simple, provided you know what you’re looking for. This new lawsuit requires fiduciaries to put more thought into the plan’s fund lineup, particularly with respect to fund expenses relative to fund performance.Continue reading
The financial planning industry has overplayed the marketing line ‘what’s your number.” I am referring to how financial literature and commercials primarily focus on having a particular asset value (i.e. one million dollars) and once you reach that mythical dollar amount you can have a successful retirement.Continue reading
Pension Consultants, Inc. tops the list of the area’s largest certified financial planner professionals (CFP®) in the January 18-24, 2016 print edition of the Springfield Business Journal. The article ranks southwest Missouri area companies by the number of certified financial planner (CFP®) professionals and then by financial planning staff. Pension Consultants retains their number one ranking from the previous year. The article also lists assets under management (AUM) and assets under advisement (AUA), and services offered. Listed services include retirement plan management, individual retirement planning, investment management, financial planning, and more.
There seems to be a lot of talk in the industry about benchmarking retirement plans. This may be attributable to the new disclosure requirements under 408(b)(2), or the recent wave of retirement plan litigation related to fees. Whatever the reason, retirement plan vendor* benchmarking is all the buzz.
Furnishing goods or services between a party in interest and a retirement plan is usually a prohibited transaction under section 406(a)(1)(C) of ERISA. However, 408(b)(2) provides for a prohibited transaction exemption so long as the goods and services are necessary for the operation of the plan and no more than reasonable compensation is paid.Continue reading