DC Plan Help: What Committees Need

A recent blog entry provides some insight about what plan committees are looking for and how they evaluate service providers. 

Plan sponsors have “tremendous responsibility” as stewards of DC plan assets, writes Mark Olsen, Managing Director at PlanPILOT in their blog. Not only are they meeting their responsibility to act in the interest of plan participants, they also must contend with the attention of legislators and agency officials, as well as the changes taking place in the retirement industry and affecting retirement.

Olsen notes that many plan sponsors seek the assistance of retirement plan professionals in meeting these challenges, and offers some tips to help committees in seeking it. And this, in turn, can give service providers the following ideas to hone in on when they offer their services to potential clients. 

The Plan Itself

• How ready the employees are to retire 
• What changes may be necessary to help employees be ready to retire
• Establishing the role the committee wishes to have
• Keeping in mind that committee decisions may affect the Qualified Default Investment Alternative (QDIA) as well as other plan features
• How the committee keeps track of whether plan goals and objectives are being met over set periods  
• Whether there is a process to ensure that plan oversight is conducted consistently and in a timely manner
• How well the Investment Policy Statement (IPS) is being adhered to
• Review of the investment structure 
• Changing investment vehicles 

Service Providers 

• Transitions of key providers 
• Assessment, monitoring and management of service providers and investment managers
• Managing fees

Economic Factors

• Market volatility
• Inflation
• Interest rates
• Expected returns
• The effect of economic trends and market shifts on plan needs
• Whether there is a need to expert assistance in meeting the effects of economic trends

The Retirement Environment

The retirement landscape, Olsen notes, “is evolving rapidly” and DC plans have a very important place in retirement readiness. Factors to consider, he suggests, include: 

• Assessing plan offerings based on plan and participant needs
• Qualified Default Investment Alternatives (QDIAs) 
• Glide path suitability 
• Implementation techniques 
• Interest in, and demand for, retirement income services and solutions
• ESG investments
• Cybersecurity 
• Financial wellness programs
• Risk/reward profiles and their effect ion outcomes 

The Committee Itself

A variety of developments and events in recent years, such as the pandemic, have affected not only the workforce, but also committees that run and oversee retirement plans, Olsen writes. He suggests some factors to consider regarding committees themselves.  

• Committee resources 
• Committee turnover
• The effects of committee turnover 
• How intact the institutional memory is
• Access to those who made decisions earlier
• The rationale behind earlier decisions

The Bottom Line

The complexity of overseeing a DC plan and the growing amounts to time and attention made on a plan committee “cannot be underestimated,” Olsen says, and the critical importance of DC plans continues to grow. While some committees do not need assistance, many do—and could benefit by enlisting the help of service providers or finding new ones. Time spent assessing a plan’s needs, Olsen says, “is time well spent.”