People don’t always act rationally. You’ve, no doubt, experienced this reality many times in life. It will come as no surprise then to learn that retirement plan governance is not exempt from this proverb.
A recently released survey from Towers Watson (and reported on planadviser.com) says that 80% of defined benefit and defined contribution plan sponsors identified regulatory compliance as a top risk over the next two years; however, only one in four (26%) conduct regular compliance reviews.
Proper plan administration is so complex that it is virtually impossible to avoid every regulatory misstep. On-going compliance reviews are essential to identifying mistakes and correcting them timely. Conducting compliance reviews require time, energy and focus. We all struggle to find time, are usually tired as a result and therefore lose focus. So it’s really no wonder that so many plan sponsors irrationally worry about something that they do nothing about.
For those charged with running retirement plans worth millions and millions of dollars and hundreds or thousands of employees, it simply isn’t a risk worth taking. For your sake, your company’s sake, and the sake of all of the employees, take the time and commit to a regular compliance review. Seeking compliance guidance can be an enormous benefit in preparing for reviews.
It isn’t particularly rational to be seriously concerned about something and then fail to address it.
But, you knew that already.
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