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PSCA Finds High Fiduciary Awareness Among 403(b) Plan Sponsors

Sponsors of 403(b) plans evince a high level of awareness of fiduciary duties, the Plan Sponsor Council of America (PSCA) found in a recent study it conducted. It also found that changes to plan investments, as well as governance changes, were common.

In its “Fiduciary Awareness in 403(b) Plans” study sponsored by Principal, the PSCA found that 80% of the plan sponsors in the study considered themselves to be plan fiduciaries, a 3.5 percentage point increase since 2016. Overall, half of the plans made changes to their investments; 72% of large plans — those with more than 1,000 participants — did so; and less than 20% of plans with fewer than 50 participants did.

Other key findings regarding investments include:


  • half of large plans changed from retail to institutional share classes;

  • 4% of mid-size plans eliminated proprietary funds of the service provider; and

  • one-fourth of small plans adopted a Qualified Default Investment Option (QDIA).


Plan Governance

Just under 20% of plans studied made changes to their governance; that figure was slightly higher among large plans, 25% of which did so. Half of the plans which changed their plan governance hired a fiduciary advisor or switched from a non-fiduciary to a fiduciary advisor; half reevaluated the plan’s governance structure; and 40% created an investment policy statement (IPS).

Plan Fees

One-fourth of the plans made changes to fees, including half of the large plans. Of those, nearly half implemented fee levelization, and 30% began benchmarking fees.

Three hundred 403(b) plan sponsors responded to the survey. Two-thirds are ERISA plans, nearly one quarter are not subject to ERISA, and 10% are unsure of their ERISA status. One-third of respondents have fewer 50 participants, and less than 20% have more than 1,000. Respondents hailed from a wide range of industries, including social and community service organizations, higher education, K-12 education and religious institutions.

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