Plan sponsors, their members and record keepers have divergent views about the top priorities when it comes to their defined contribution pensions, according to a new report by global consulting firm Cerulli Associates.
The research, which collected data from surveys of American 401(k) plan sponsors, their members and record keepers, found 27 per cent of plan sponsor respondents cited improving the quality of the investment lineup as a top priority for 2018. For record keepers, only four per cent cited that as a top priority for plan sponsors. In addition, fewer plan sponsors identified minimizing fiduciary risk and avoiding litigation as a top priority, compared to the percentage of record keepers that emphasized the issue.
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“Plan sponsors and record keepers might not be on the same page in thinking about topics related to improving the quality of the investment lineup, minimizing fiduciary risk/avoiding litigation and reducing plan administration costs,” said Jessica Sclafani, director for retirement at Cerulli Associates, in a news release.
Indeed, 40 per cent of record keepers cited reducing plan administration costs as a top priority for plan sponsors this year, while just 23 per cent of plan sponsors said the same.
Plan sponsors and record keepers appear to be on the same page when it comes to financial wellness, according to the report. Nearly one-third of plan sponsors (31 per cent) and record keepers (32 per cent) identified improving the overall financial wellness of employees as a top priority.
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In addition, when looking at how 401(k) plan sponsors and record keepers evaluate the success of a plan, the report found they both look at the same metrics; however, there are noticeable points of divergence. For plan sponsors, metrics associated with the decumulation period, such as retirement income replacement ratios (26 per cent), ranked lower on the list of considerations. On the other hand, 58 per cent of record keepers look to that metric as an indicator of the plan’s success.
“The aim in comparing this data is to ensure that when record keepers communicate with plan sponsors, whether they are clients or prospects, they focus on the most important, broadly valued metrics and use the same language,” said Sclafani.
The research also found less than half (44 per cent) of plan sponsors believe employees are solely responsibly for their own retirement savings and investment decisions. More than three-quarters (77 per cent) of participants, however, feel they have sole responsibility for those decisions.
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