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.
Selecting and Monitoring Plan Investment Lineup Performance
The Retirement Committee at your company meets at least annually and reviews a report sent by the record keeper. Most of the colors on the page are green; however, one investment is in red. Does the Committee understand why the investment is “failing” the criteria and the others are “passing”? Does the Committee know the criteria, or benchmark, to which the lineup is measured against? Do they have the information necessary to know the true investment lineup performance?
Selecting and Monitoring Service Providers Fee Performance
Your plan has had the same record keeper for over 10 years. The day-to-day support and Relationship Manager are well liked. Even though your plan size has grown, the service fees have remained the same percentage. Does the Retirement Committee understand how the fees are paid or whether they are reasonable? Is there an objective standard the fees are being compared to? Does the Committee know what the proper benchmark is or how fee performance is measured?
Your plan has someone from the record keeper come out twice a year to meet with participants and discuss options. It comes to light that over 70% of the plan participants are solely invested in target date funds, which bear the same name as the record keeping company. Are these outcomes because of education, advice, or something else? What objective standard is being used to measure the success of the education being provided? Are participants receiving the outcomes they need to be on their way to a secure and successful retirement?
Someone in payroll discovers that the employer match was not calculated correctly on the last payroll. Now there is a fiduciary issue at play; should payroll correct the error? If so, how should the error be corrected? The Department of Labor (DOL) sets forth specific guidelines for various plan administrative errors and how to correct them. The decision to correct and how to correct plan errors are fiduciary decisions.
How do you know that you are properly overseeing the plan’s management? The Department of Labor informs fiduciaries that their decisions are held to an expert standard of care. However, the DOL also states that if fiduciaries are not experts, they should hire experts. In the above examples, a retirement plan adviser could assist the plan fiduciaries in each area of plan management and put objective performance standards in place so you have confidence you are managing a good plan.
Fiduciaries need to be confident that they are managing the plan well. If you have any questions about how to become a more confident fiduciary, contact us by email email@example.com or by phone 800-234-9584. And don’t forget to download our FREE Fiduciary Best Practices Guide to aid you in becoming a moreconfident fiduciary.
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With just some simple information about your plan, our team can see how your plan is performing in the three key areas. Then, we’ll set up a meeting with you and your team to review the results and talk about how we can help.