What’s Had the Biggest Impact on DC Plan Management?

A new survey asked plan sponsors to rank the top event(s) influencing the management of DC plans.

According to Callan Associates’ 2016 Defined Contribution (DC) Trends Survey, (registration required) the two top events cited by plan sponsors were the Pension Protection Act of 2006 and the Labor Department’s fee disclosure requirements.

The most important step to improving fiduciary position was updating or reviewing the investment policy statement, the plan sponsor respondents said. The second-most important was fee review. Among the plan sponsor respondents, 45% say they have a written fee payment policy in place, 53% are “likely to rebate revenue-sharing,” and three-fourths benchmark fees as part of fee calculations.

TDF Trends

While target-date funds continue to dominate as the most prevalent default fund choice (cited by 86%), the number of plans offering their record keeper’s proprietary TDF declined from 70% in 2011 to 32% in 2015. Approximately one in five (22%) plan sponsors evaluated the suitability of their glide path in 2015, and more (30%) plan to evaluate theirs this year.

Among the survey respondents (144 plan sponsors, primarily large and mega 401(k) plans):

  • 61% had automatic enrollment in place;
  • 62% had Roth-designated accounts; and
  • 80% of the plans with automatic enrollment also had automatic escalation in place.

Additionally, Callan reports that one in five plan sponsors engaged in an asset reenrollment.

Survey respondents said the three most important factors in measuring plan success are:

  1. Contribution rate
  2. Participation
  3. Cost effectiveness

Nearly 6 out of 10 (59%) of plans with a money market fund are still evaluating actions to take in view of SEC regulations.

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