Defined Contribution Benchmarking Survey Appendix 2017 Edition Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Appendix
Exhibit 1.1. Please indicate the primary nature of your business. Exhibit 1.2. Please indicate the ownership structure of your company. n n n n n n n n n 12
n n 12 n 4 n n 52 22
n n 17 n n 12 n=239 n=239
Exhibit 1.3. How many employees work for your company? Exhibit 1.4. Please identify whether you are responding for a:
403 n 2013–2014 2015 2017
1–100 13% 8% 8%
101–500 23% 11% 12%
501–1000 9% 10% 10%
1001–5000 10% 31% 23%
5,001–10,000 22% 13% 10%
More than 10,000 23% 27% 37%
n=239 401 n 2 n=216
2 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 1.5. Please identify whether you are responding for a: Exhibit 1.6. What are the total plan assets in your plan?
n n n 2013–2014 2015 2017 2 Less than $5M 9% 7% 3% $5M–10M 10% 4% 6% $10M–25M 10% 8% 7% $25M–50M 9% 8% 5% $50M–100M 8% 9% 11% $100M–500M 23% 27% 28% $500M–1B 11% 13% 11% $1B–5B 16% 18% 22% More than $5B 3% 6% 7% n n n n n=216 n=208
3 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 1.7. Please indicate your primary provider for administrative services:
2013–2014 2015 2017 2013–2014 2015 2017 ADP 1% 1% 1% Milliman 1% 1% 1% American Funds Nationwide 0% 0% 0% 0% 1% 1% Distributors, Inc. Newport Group 0% 0% 1% Aon Hewitt 5% 6% 3% OneAmerica Financial 0% 0% 0% Ascensus 0% 1% 0% Partners Bank of America/Merrill Oppenheimer 0% 0% 0% 3% 3% 2% Lynch PayChex, Inc. 0% 0% 0% BB&T 0% 0% 0% PNC Bank 5% 0% 1% Ceridian 0% 0% 0% Principal 3% 6% 4% City National Bank 0% 0% 0% Prudential 1% 1% 2% Charles Schwab & Co., 0% 3% 2% Securian 0% 0% 0% Inc. SEI 0% 0% 0% Conduent (Xerox) 0% 0% 1% SunTrust 0% 1% 0% Deutsche Asset 0% 0% 0% Management TD Bank 0% 0% 0% DST Retirement TIAA-CREF 1% 1% 1% 0% 0% 1% Solutions, LLC T.Rowe Price 0% 6% 6% Transamerica Empower Retirement 0% 5% 6% 3% 1% 2% EPIC Advisors 0% 0% 1% Retirement Services Fidelity 25% 29% 30% UBS 0% 0% 0% GuideStone Financial Union Bank & Trust 0% 0% 0% 0% 0% 0% Resources VALIC Retirement 0% 1% 1% John Hancock 0% 1% 3% Vanguard 8% 12% 7% Lincoln Financial Group 0% 2% 1% Voya Financial 0% 3% 7% MassMutual 0% 3% 1% Wells Fargo 3% 3% 7% Mercer HR Services 2% 1% 2% In-house 1% 1% 1% MetLife 0% 0% 0% Other 11% 7% 4% MFS 0% 0% 0% n=202
4 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 1.8. Does your recordkeeper manage multiple employee Exhibit 1.9. Do you use multiple recordkeepers for your defined benefit plans for your business (check all that apply)? contribution plan?
2017 2013–2014 2015 2017 Nonqualified Deferred Compensation Defined Yes, due to participant accounts 42% Contribution Plan(s) with individual contracts with former recordkeepers, but 4% 16% 2% non-Employee Retirement Income Security Act of 7% single recordkeeper for current 1974 (ERISA) Covered Defined Contribution Plan(s) contributions Qualified Defined Benefit Plan(s) 17% Yes, due to participant accounts 0% 0% 0% Nonqualified Defined Benefit Plan(s) 9% with illiquid assets Health and Welfare Plan(s) 10% Yes, because we chose to provide multiple recordkeeping 14% 8% 1% No 46% options for employees n=202 Yes, other 0% 8% 1% No 82% 68% 96%
n=201
Exhibit 1.10. Do you use a common remitter service? Exhibit 1.11. Do you use a compliance coordinator service?
20 31
0
n=16 n=15
5 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 1.12. As a plan sponsor, do you feel an obligation to prepare your employees for retirement?
2013–2014 2015 2017 We feel that our only responsibility is to offer a competitive retirement 21% 15% 16% plan We feel that our responsibility includes taking an interest whether our employees are tracking towards a comfortable retirement (i.e., offering 62% 62% 60% options that allow participants to plan for a reasonable retirement income replacement ratio) We feel very responsible to prepare our employees for retirement (e.g., taking a very involved approach such as monitoring utilization of 17% 23% 24% financial planning tools, etc.)
n=200
6 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section B: Hot topics Exhibit 2.1. How confident are you that your organization Exhibit 2.2. Which of the following areas have you reviewed understands its fiduciary responsibilities under the new DOL with your recordkeeper and/or plan investment advisor(s) guidance? in response to the Department of Labor (DOL) guidance on fiduciary responsibility of retirement plan investment advisors published on April 8, 2016, in the federal register? nfi n 4 n 2 (check all that apply)
2017 nfi n 37 Contracts for investment advice services 36% Call center scripts 16%
nfi n Asset allocation and investment modeling 31% 57 Individual retirement account (IRA) rollover 23% services and communications My recordkeeper will be an advice fiduciary 31% under the new rules My recordkeeper will not be an advice fiduciary 19% n=198 under the new rules Other 3% Still under review 37% None; do not anticipate impact 12%
n = 199
7 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 2.3. Which of the following approaches to communication Exhibit 2.4. How are targeted communications being used targeting are used by your organization (check all that apply)? (check all that apply)?
2017 2017 Demographic-based 65% Encourage participants to increase savings rate/adopt 74% step-up contribution feature Activity-based 54% Provide investment and financial market education 54% Behavior-based 45% Encourage participants to use recordkeeper tools 54% Other 11% Other 6% n=199 n=199
Exhibit 2.5. What do you consider to be the most important Exhibit 2.6. Which groups are being actively targeted (check all financial wellness concern among your employees? that apply)?
3 n 2017 n 13 n n Baby Boomers 44% n 1 Generation X 40% Generation Y/Millennials 43% Women 22% n Nonparticipants 58% n Participants who have recently reduced deferral 12% n percentages 15 Participants who have recently increased deferral 5% n percentages n Employees who are not contributing up to the match 61% 53 n=175 Other 12%
n=199
8 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 2.7. What sort of behavioral finance approaches has your Exhibit 2.8. Does your recordkeeper’s website integrate with organization adopted to help participants plan for retirement broader financial wellness software (e.g., Mint, HelloWallet)? (check all that apply)? 2017 n 20 2 Enhanced or introduced "Auto-Pilot" solutions (e.g., automatic enrollment, step-up feature, 65% managed accounts) Simplification of investment options 55% Social norms/peer comparisons 9% Investment reenrollment periods/forced 5% investment assessments Delayed implementation of automatic enrollment 4% features
n=182 52 n=199
Exhibit 2.9. How are fees paid for financial wellness software? Exhibit 2.10. Which components of financial wellness tools and services are integrated with your Definted Contribution (DC) n n plan offering (check all that apply)? n n n 3 44 2017 Retirement planning (monitoring progress, exploring additional savings opportunities, 56% Roth/traditional support, integration with social security/Medicare) Budgeting and expense projections 42% Financial market education 38% Debt management 35% n Education planning 35% n n n 3 Income planning and tax strategies 31% n 15 n=34 Benefit utilization and insurance planning 17% n=48
9 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 2.11. For employees that are currently eligible to retire, Exhibit 2.12. Do you use total participant or peer comparisons to what is the primary reason that they are delaying retirement? encourage increased participant savings for retirement?
n 2017 n n Employee preference 19% n n n n n n n Need to keep health care coverage 16% 52 n Have not saved enough for retirement 13% n n n Need to continue working to pay down debt or defined peer group 8% meet current expenses 12 Supporting family members 2% Lower investment value 0% Unsure 38% Other 4% n n n=167 2 n=172
Exhibit 2.13. Do you allow participants to delay enrollment rather than opting out of automatic enrollment?
enrollment for a fixed period n n n n n specific milestone date 2 2
34 2
n=176
10 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 2.14. Please indicate which of the following are Exhibit 2.15. How have enrollments in target date funds integrated with retirement modeling tools offered by your changed over the past two years? recordkeeper: (check all that apply).
2017 2 5 5 Outside participant accounts (e.g., savings, 1 0 46% brokerage, IRAs)
Deferred compensation plans 42% n Pension plans 35% 5 27 Retiree health plans 7% n None of the above 30% n n 2 n n=182 51
n 2 5 21
n=164
Exhibit 2.16. Please provide the percentage of participant actions for the following post-terminated behaviors:
3 n fi n n 3
n n n 41
20 n=75
11 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section C—Eligibility and enrollment Exhibit 3.1. What is the primary reason that employees Exhibit 3.2. What is the primary reason that employees do not participate in your plan? participate in your plan?
2013–2014 2015 2017 2013–2014 2015 2017 Take advantage of company Lack of awareness or 43% 35% 41% 30% 34% 28% match understanding Personal desire to save for Uncertain economy/job market 14% 12% 7% 39% 40% 31% retirement Employees are saving elsewhere 3% 4% 4% They were auto-enrolled and did 13% 18% 19% Lack of a company match 2% 2% 3% not take action to opt out Recent market performance has Proactive communications from 2% 1% 1% discouraged employees your company and/or provider 2% 2% 2% encouraging participation Other 20% 18% 18% "Word of mouth"—their peers Unsure 29% 29% 39% 0% 1% 1% and supervisors participate n=218 Other 0% 1% 1% Unsure 4% 3% 5%
n=218
Exhibit 3.3. What are the service requirements for plan entry?
n 5 n 5
n 24
n=218
12 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 3.4. Does your plan contain an automatic enrollment/ Exhibit 3.5. Does your plan contain a step-up contribution negative election feature? (Defined as a feature that will feature? (typically a feature whereby the participants’ deferrals automatically begin deducting contributions from participants are automatically increased each year) as they become eligible unless the participant elects not to contribute.) 2013–2014 2015 2017 Yes, tied to the Automatic 2013–2014 2015 2017 18% 28% 31% Enrollment feature Yes, satisfies safe harbor Yes, as a separate, stand- conditions defined by the 38% 40% 48% 28% 34% 33% alone feature Pension Protection Act of 2006 No 41% 27% 27% Yes, does not satisfy the safe harbor conditions defined by No, but considering it 12% 10% 8% 11% 15% 14% the Pension Protection Act of No, we were unaware of this 1% 1% 1% 2006 feature Yes, unsure of safe harbor 6% 7% 5% conditions n=217 No, we have never had it 32% 28% 25% No, we discontinued it 1% 0% 0% No, but considering it 12% 10% 7% No, we were unaware of this 0% 0% 1% feature
n=218
13 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 3.6. What is the default investment election for Exhibit 3.7. What is the default deferral percentage for automatic enrollment? automatic enrollment?
2013–2014 2015 2017 2013–2014 2015 2017 Principal preservation (stable 4% 2% 3% value, money market, etc.) One percent N/A 3% 3%
Balanced fund 8% 6% 5% Two percent (two percent or less 13% 5% 8% Lifestyle fund (risk based) 6% 4% 2% for 2013–2014) Lifecycle/target retirement date 72% 85% 85% Three percent 59% 47% 35% fund Managed account 7% 3% 2% Four percent 11% 14% 16% Retirement income product 0% 0% 1% (annuity) Five percent 7% 8% 8% Other 3% 0% 2%
n=116 Six percent 9% 22% 28%
Exhibit 3.8. What percentage of employees opt out/cancel Seven percent 1% 1% 2% automatic enrollment?
2013–2014 2015 2017 Eight percent 0% 0% 0% 0%–5% 63% 68% 72% 6%–10% 17% 23% 24% Nine percent 0% 0% 0% 11%–25% 15% 9% 3% Ten percent or more 0% 0% 0% More than 25% 5% 0% 1%
n=114 n=116
14 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 3.9. Does your plan contain a step-up contribution Exhibit 3.10. What is the incremental step-up percentage feature? applied each year?
2013–2014 2015 2017 Elective (participants must actively elect to enroll in the 48% 43% 41% 27 step-up program) Automatic for some or all participants (deferrals will automatically increase each year 52% 57% 59% 3 0 unless the participant elects out 2 of the step-up feature) 3 n=106 1 70
Exhibit 3.11. What percentage of your participants is currently in n=107 the step-up contribution program?
2013–2014 2015 2017 0–10% 50% 52% 47% 11–25% 27% 27% 29% 26–50% 17% 14% 18% More than 50% 6% 7% 6%
n=98
15 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section D—Employee contributions Exhibit 4.1. Based on the results of your most recent Exhibit 4.2. Do you offer a Roth 401(k) feature? discrimination testing, what was the Average Deferral Percentage (ADP) of Highly Compensated Employee (HCEs) n n n and Non-highly Compensated Employee (NHCEs)? n 12 24 n n n 5 n n 12 2013–2014 2015 2017 n HCE ADP 6.9% 7.0% 7.2% NHCE ADP 5.2% 5.9% 6.0%
n=104 n n n n 70 1
n=216
Exhibit 4.3. What is the current participant adoption rate of the Roth 401(k) feature? n 1 10 n 10 23
1 5 40 6 10 27
n=114
16 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section E— Employer contributions Exhibit 5.1. Do you offer: Exhibit 5.2. What service requirement must be met before employer matching contributions are made? 2013–2014 2015 2017 Matching contributions on 2013–2014 2015 2017 employee basic contributions 37% 37% 36% None, employer matching only contributions are made 62% 71% 74% immediately upon participation Matching contributions on in the plan employee basic and catch-up 27% 26% 27% contributions Less than 1 year 10% 8% 4% Profit-sharing contributions 1 year 24% 19% 20% 6% 5% 4% only Other 4% 2% 2% Both matching (employee basic only) and profit-sharing 16% 12% 15% n=205 contributions Both matching (employee basic and catch-up 10% 14% 11% contributions) and profit-sharing contributions None, we have suspended/ 0% 1% 2% discontinued company match None, we do not offer company match or 4% 5% 5% profit-sharing contributions
n=216
17 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 5.3. Have you changed your company’s matching Exhibit 5.4. What is the plan’s vesting schedule for matching formula in the past year? contributions?
2015 2017 2013–2014 2015 2017 Yes, increased match 6% 7% Immediate full vesting 32% 43% 43% Yes, decreased match 1% 1% 1–3 year cliff 22% 22% 22% Yes, suspended match 0% 0% 1–3 year graded 10% 5% 7% Yes, reinstated match 0% 0% 4–6 year graded 30% 25% 22% Yes, instituted other formula/design changes 1% 2% Other 6% 5% 6%
No, and we are not considering any changes 74% 82% n=152 No, but we are considering changes 18% 8%
n=152
Exhibit 5.5. How often is the match calculated and deposited? Exhibit 5.6. Do you true-up your employer match at the end of the year for employees who reach the maximum compensation 2013–2014 2015 2017 limit or who hit the 401(k) limit before receiving the maximum possible match? Each pay period 82% 89% 89% Monthly or quarterly (less 7% 4% 4% 2013–2014 2015 2017 frequently than each pay period) Yes 52% 45% 54% Annually (once a year), 3% 2% 2% No 44% 46% 40% regardless of hours No, unaware of this option 4% 3% 1% Annually (once a year), with a required number of hours, or Not applicable, match is 8% 5% 5% employed on the last day of the calculated and deposited 52% 6% 5% year annually
n=152 n=152
18 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 5.7. What are the service requirements for Exhibit 5.8. How is your profit-sharing contribution structured? profit-sharing contributions? 2013–2014 2015 2017 2013–2014 2015 2017 Fixed 29% 36% 36% Immediate 24% 42% 40% Discretionary, this Less than 1 year 16% 7% 11% contribution was made this 54% 51% 50% year 1 year 40% 45% 38% Discretionary, this Other 19% 6% 11% contribution was NOT made 10% 11% 10% n=53 this year Combination 7% 2% 4%
n=52
Exhibit 5.9. Are there vesting requirements for these Exhibit 5.10. How is your match structured? profit-sharing contributions? n n n 7 n n n 23 10
n n n 0
n 77 n=53 3 n=114
19 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 5.11. Do participants have the option to direct the Exhibit 5.13. What is the match formula used for the majority of investment of these matching contributions? participants in your plan?
2013–2014 2015 2017 11 25% of the first 6% of the 1% 3% 1% employee's contribution 50% of the first 6% of the 15% 18% 16% employee's contribution 100% of the first 3% of the N/A 3% 6% employee's contribution 100% of the first 4% of the N/A 8% 9% employee's contribution 100% of the first 5% of the N/A 7% 7% employee's contribution 100% of the first 6% of the 7% 12% 11% employee's contribution n=152 100% of the first 3% of compensation and 50% of 1% 1% 2% the next 2% of compensation without immediate vesting
Exhibit 5.12. Do you make the matching contributions in 100% of the first 3% of compensation and 50% of the employer stock or Employee Stock Ownership Plan ESOP? 8% 7% 9% next 2% of compensation with immediate vesting (safe harbor) 3% nondiscretionary contribution with immediate 1% 1% 1% vesting (safe harbor) Other 67% 40% 38%
n=151
2 n=74
20 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section F—Investments Exhibit 6.1. Do you offer managed accounts? (allows employees Exhibit 6.2. Why is financial counseling/investment advice not to choose a professional manager for their 401(k) plan account offered? where investment decisions are made and executed in line with their investment objectives and risk tolerance) 2013–2014 2015 2017 n Potential fiduciary liability 45% 48% 53% 3 Employees are not 30% 30% 33% n n requesting this service Cost 41% 36% 25% We are actively researching this feature and may 25% 21% 22% implement in the future Simply not interested in 13% 10% 10% 45 offering in the DC plan We were unaware of this 0% 2% 2% feature 44 Other 7% 8% 4% n=160 n=51
21 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 6.3. Do you offer the following types of core investment options in your plan (check all that apply)?
Yes No Yes No Stable Value/GIC 76% 24% Emerging Markets 60% 40% Money Market 59% 41% Socially Responsible 17% 83% General/Core Bond 84% 16% Real Estate 38% 62% TIPS (Treasury Inflation Protected Sector Funds (e.g., Technology, 32% 68% Securities) Communications, Biotechnology, Health 18% 82% Care, and Utilities) High Yield Bond Fund/Treasury Bond Fund 59% 41% Hedge Funds 3% 97% Lifestyle Funds (risk-based) 19% 81% Employer Stock 28% 72% Lifecycle/Target Date Funds (time-based) 89% 11% Mutual Fund Window (Mutual Funds only) 16% 84% Actively Managed Domestic Equity (i.e., Large/Mid/Small Cap, Value, Growth, and 90% 10% Self-Directed Brokerage 35% 65% Blend) Exchange Traded Funds 10% 90% Passively Managed Domestic Equity (i.e., Large/Mid/Small Cap, Value, Growth, and 88% 12% Yes No Blend) In-Plan Retirement Income Product 6% 94% Actively Managed Global/International (Annuity) Equity (i.e., Large/Mid/Small Cap, Value, 88% 12% Custom/Hybrid Fund 7% 93% Growth, and Blend) n=148 Passively Managed Global/International Equity (i.e., Large/Mid/Small Cap, Value, 77% 23% Growth, and Blend)
Exhibit 6.4. What is the total number of investment options in your plan? (Note: When counting the number of investment options in your plan, please count all lifestyle and/or target retirement date funds as one option and count all funds in a mutual fund window/self-directed brokerage account as one option.)
2013–2014 2015 2017 20.8 22.3 19.4
n=160
22 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 6.5. What is the overall average weighted expense ratio Exhibit 6.6. Approximately how much of your fund line-up is for your plan (excluding assets in Company Stock, Mutual fund made of proprietary funds (investment funds managed by your and/or Brokerage Windows)? provider)?
2013–2014 2015 2017 2013–2014 2015 2017 Up to 0.5% 29% 36% 40% 0%–25% 58% 59% 64% 0.51% to 0.85% 32% 33% 34% 26%–50% 18% 18% 16% 0.86% to 1.25% 11% 11% 8% 51%–75% 15% 12% 10% More than 1.25% 0% 0% 0% 76%–100% 9% 11% 10%
Unsure 28% 20% 18% n=153 n=149
Exhibit 6.7. What percentage of plan assets are invested in Exhibit 6.8. What percentage of participants use the managed proprietary funds? account service?
2013–2014 2015 2017 n 1 7 0%–25% 58% 52% 60% n 10 26%–50% 18% 16% 15% 15 51%–75% 15% 17% 16% 76%–100% 9% 15% 9%
n=143
6 10 2 1 5 50
n=56
23 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 6.9. Which types of investment vehicles are utilized in Exhibit 6.10. Is individual financial counseling/investment advice your plan? (check all that apply) available to participants?
2013–2014 2015 2017 2013–2014 2015 2017 Annuities 14% 9% 8% Yes, to all participants 57% 62% 67% Collective trust Yes, to some participants 5% 4% 4% 39% 33% 42% funds No, and we are not Mutual funds 89% 82% 84% currently considering this 26% 24% 22% feature Separate 24% 19% 20% accounts No, but we are considering adding this feature within 5% 5% 5% Other 7% 6% 4% the next 12 months n=164 No, but we are considering adding this feature within 7% 5% 2% the next 12–24 months
n=159
Exhibit 6.11. Who currently provides financial counseling/ Exhibit 6.12. How is this financial counseling/investment advice investment advice to participants? delivered? (check all that apply)
2013–2014 2015 2017 2013–2014 2015 2017 Plan recordkeeper/ Online 75% 74% 69% 56% 64% 61% investment manager Over the phone 81% 81% 87% Plan investment manager Face-to-face 60% 52% 56% (if separate from 12% 7% 14% recordkeeper) n=117 Independent provider 32% 26% 24% In-house staff N/A 3% 1%
n=117
24 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 6.13. Approximately what percentage of your Exhibit 6.14. Who performs the investment monitoring for your participants use this service? plan? (check all that apply)
n 1 2013–2014 2015 2017 2 An outside investment n 25 64% 65% 66% consultant 20 1 5 24 Internal staff/team/ 47% 48% 49% committee Your plan provider/ 35% 25% 24% recordkeeper Other 1% 2% 2%
n=158 11 25 30 6 10 24 n=92
Exhibit 6.15. Have you considered adding an in-plan retirement Exhibit 6.16. What is/was the biggest driver of your selection income product (accumulation annuity) to your current plan? decision of a retirement income product (annuity)? (check all that apply) 2013–2014 2015 2017 2017 Yes, we are looking into it 10% 11% 11% Recommendation by advisor/ Yes, we have added this to 37% 4% 2% 2% consultant the plan Organizational strength (high rating No, we are not considering 32% 71% 74% 79% agency ratings) at this time Crediting rates on the deferred Unaware of this feature 15% 13% 8% 21% annuity n=158 Only option offered by our provider(s) 11% Name recognition 0% Other 21%
n=19
25 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 6.17. Why are you not considering adding an in-plan Exhibit 6.18. Have you considered adding an at-retirement retirement income product to your plan? income solution (annuity purchase option and/or annuity selection software) to your current plan? n 15 2013–2014 2015 2017 22 Yes, we are looking into it 12% 14% 13% Yes, we have added this to 1 5% 5% 4% the plan No, we are not considering 69% 72% 71% at this time n Unaware of this feature 14% 9% 12% n n n n n=157 25 fi 27
n n 5 ffi n=127 5
Exhibit 6.19. Why are you not considering adding an Exhibit 6.20. Are you considering any changes to your at-retirement income solution to your plan? restrictions on company stock? (check all that apply)
n 2013–2014 2015 2017 1 Eliminate or reduce restrictions 23 3% 4% 5% on investment of company match 2 Eliminate or reduce restrictions on diversification of company 3% 4% 0% stock Eliminate future investments in company stock (investment 5% 14% 5% n elections on future contributions) n n n n Cap investment in company 3% 11% 18% 24 fi stock (current balance allocation) 23 None/no restrictions remain 83% 67% 56% n n Other 15% 7% 15% ffi n=115 n=39 26 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section G—Fees Exhibit 7.1. How are your 401(k) plan’s recordkeeping and Exhibit 7.2. How are the fees charged by your 401(k)/403(b) administration fees paid? recordkeeper paid?
2015 2017 n n n n n No additional fees - all of the recordkeeping and n n administrative fees are paid through investment 17 15 revenue (e.g., expense ratios or revenue-sharing 50% 39% arrangements that may be in place with the plan's investment funds) There is a direct fee that is charged by the 41% 53% recordkeeper There are additional fees in the form of a wrap fee or added basis point charge on the 9% 8% investments n n=157 n n n fl 25 n 43 n=94
Exhibit 7.3. Which plan-level services/fees are paid for Exhibit 7.4. If your plan offers financial advice/counseling to separately? (check all that apply) your participants, who pays for this service? (check all that apply) 2013–2014 2015 2017 2013–2014 2015 2017 Communications 18% 28% 43% Participants, via a per 5500 reporting 12% 40% 39% 12% 14% 11% participant fee Compliance/ Participants, via an asset- nondiscrimination 11% 37% 37% 24% 17% 21% based fee testing Plan sponsor 17% 17% 16% Other 13% 15% 14% There is no charge for this None 46% 39% 30% 57% 58% 53% service n=94 n=109
27 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 7.5. If your plan offers managed accounts to your participants, who pays for this service? n
n n 7
n n 5 n=84
Exhibit 7.6. Please indicate whether you agree with the following statements:
Neither Strongly Strongly Agree Agree nor Disagree Agree Disagree Disagree We have no difficulty obtaining a clear understanding of the total 45% 43% 6% 3% 3% plan/participant administrative fees being charged We have no difficulty obtaining a clear explanation of the normal 42% 44% 7% 4% 3% fund operating expenses of the funds in our plan We believe our fees are competitive 45% 44% 7% 1% 3% We have no difficulty obtaining a clear description of all the revenue-sharing arrangements that our recordkeeper has with the 39% 41% 12% 5% 3% mutual funds included in our plan We have no difficulty obtaining what it costs our provider to 31% 39% 19% 7% 4% administer our plan We have performed a detailed fee analysis and have a thorough 41% 45% 9% 1% 4% understanding of all plan expenses
n=150
28 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 7.7. Do you have an ERISA account/fee credit as a result Exhibit 7.8. How do you use the fee credit resulting from of revenue share collected in excess of plan administrative fees? revenue share?
2013–2014 2015 2017 n 1 n Fee credits are used to purchase additional services 4 from our provider, such as 7% 8% 11% communication materials and investment advice tools. Fee credits are used to pay for other plan expenses, 76% 66% 50% such as plan audit fees, and consultant fees. Fee credits are used to allocate the credit back to 17% 24% 35% participants (pro rata based 35 n=153 on account balances) Fee credits are used to allocate the credit back to 0% 2% 4% participants (equal dollar amount to all participants)
n=54
29 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section H—Administration capabilities Exhibit 8.1. Does your primary provider support transaction Exhibit 8.2. Does your plan offer participants the option to elect processing via smartphone or other mobile device? automatic fund rebalancing (a feature where the employee can elect a target allocation percentage among the fund offerings n fi n and the system will automatically initiate interfund transfers on n a regular basis to achieve the target allocation)? n 12 21 2013–2014 2015 2017
Yes 67% 72% 79% nn n n n No, unavailable 18% 13% 7% n n 24 n No, uninterested 6% 4% 7% No, but considering it 4% 4% 5%
No, we were unaware of n 5% 7% 2% this feature 5 n=153 n=153
Exhibit 8.3. Approximately what percentage of your participants Exhibit 8.4. How many outstanding loans can a participant have uses this automatic fund rebalancing service? at any time (considering both Primary Residence and General Purpose Loans)? n 25 11 n 1 2013–2014 2015 2017 17 11 25 0 10% 8% 9% 4
1 46% 50% 42%
2 37% 35% 41%
3 or more 7% 7% 8% 6 10 2 n=152 1 5 3 n=106
30 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 8.5. Do participants receive retirement income Exhibit 8.6. What data and/or functionality does your provider projections illustrating anticipated annual income in give you access to via a plan sponsor website (check all that retirement? apply)?
2013–2014 2015 2017 2013–2014 2015 2017 Yes, provided online 48% 54% 66% Plan data 95% 96% 95% Yes via participant 10% 15% 11% Participant data 95% 95% 97% statements Plan-level statement information 84% 89% 92% Yes via separate 15% 8% 5% communication Participant-level statement 85% 89% 90% No, we are considering information adding this feature in the 6% 6% 3% View individual participant-level 83% 85% 84% next 12 months transactions No, we are considering Post payroll contribution/loan 69% 75% 76% adding this feature in the 6% 1% 1% repayment files next 12–24 months Post compliance information 63% 69% 66% No, this feature is not 9% 9% 5% offered by our vendor Process indicative data updates 51% 56% 62% No, we are not considering Investment performance 83% 82% 86% 6% 7% 9% adding this feature Plan benchmarks 43% 52% 56% n=152 Ad hoc queries and reports 75% 81% 82% Payroll ACH funding 46% 51% 50% Other 1% 1% 1%
n=153
31 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section I—Innovative tools Exhibit 9.1. Do you believe participants are interested Exhibit 9.2.: Have participants interacted with your in interacting with retirement providers via social media recordkeeper through any of the following methods? channels? (check all that apply)
2013–2014 2015 2017 2013– 2015 2017 2014 Yes, they are doing this now 8% 9% 15% Hand-held devices are used in Not yet, but they will be in group and individual meetings 37% 21% 17% the near future to allow immediate participant 8% 14% 25% action (enrollment, investment No 23% 26% 18% changes, allocation changes, etc.)
Unsure 32% 44% 50% Participants use Social Media to interact with our recordkeeper 5% 4% 7% (Facebook, LinkedIn, Twitter, etc.) n=152 Participants use instant chat via the recordkeeper's secure 8% 13% 12% participant website Participants use smartphone and/or tablet applications to interact with our recordkeeper 31% 40% 48% (via iPhone, iPad, Android, Blackberry, etc.)
No 28% 20% 18%
Unsure 39% 38% 31%
n=153
32 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section J—Provider relationship Exhibit 10.1. What is your plan recordkeeper structure? Exhibit 10.2. What is the length of your current service agreement?
2013– 2015 2017 2013–2014 2015 2017 2014 Less than 3 years 32% 28% 23% Bundled (all services and funds 3 years 22% 23% 33% coordinated through one vendor, 71% 71% 69% investments may include multiple 4 years 4% 5% 3% fund families) 5 years 13% 18% 20% Alliance (services and funds More than 5 years 29% 26% 21% provided by different vendors under an alliance agreement, n=149 with the coordination of trust, 8% 8% 9% investment, and recordkeeping services handled by the primary Exhibit 10.4. If you have made a change in recordkeepers in vendor, not the plan sponsor) the last five years, please list the primary or most compelling reason for the change: Unbundled (services and funds provided by unrelated vendors; 2013–2014 2015 2017 plan sponsor plays a role in the 21% 21% 22% coordination of trust, investment, Vendor consolidation 10% 9% 3% and recordkeeping services) A change in your 0% 8% 3% n=14 organizational structure Local presence 0% 1% 0% Quality of service 10% 5% 6% Exhibit 10.3. How long have you been with your recordkeeper? representatives Quality of 2013–2014 2015 2017 23% 27% 36% recordkeeping services Less than 2 years 10% 10% 3% Quality of investment 0% 4% 3% choices 2–5 years 12% 18% 17% Overall cost to plan 15% 14% 7% Overall cost to 10% 5% 6% 5–10 years 33% 27% 27% participants Overall relationship 8% 11% 13% More than 10 45% 45% 53% years Other 23% 16% 23%
n=153 n=31
33 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 10.5. In general, how satisfied are you with the services provided by your recordkeeper?
2013–2014 2015 2017 Very satisfied 47% 47% 53% Satisfied 40% 44% 41% Neither satisfied 9% 6% 4% nor dissatisfied Dissatisfied 4% 3% 1% Very dissatisfied 0% 0% 1%
n=151
Exhibit 10.6. How would you rate your current recordkeeper on the following?
1 2 3 4 5 N/A Investment fund performance 1% 0% 7% 38% 26% 28% Fees compared to marketplace 1% 0% 11% 45% 43% 0% Fee disclosure 1% 0% 10% 39% 50% 0% Administration/recordkeeping 1% 1% 11% 38% 49% 0% Employee communication/education 1% 5% 19% 40% 34% 1% Plan sponsor support and relationship 1% 3% 8% 32% 55% 1% management Call center services 2% 2% 16% 47% 32% 1% Voice response system 1% 2% 18% 41% 26% 12% Plan website for participants 1% 2% 12% 44% 40% 1% Plan website for sponsors 1% 5% 14% 40% 37% 3% Compliance/regulatory 1% 2% 9% 41% 45% 2% Consulting 1% 4% 20% 37% 29% 9% Investment advice tools 1% 0% 24% 41% 28% 6% Innovation 1% 3% 23% 46% 25% 2% Overall 1% 1% 11% 48% 39% 0%
n=147
34 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 10.7. Select the top five changes/improvements that your recordkeeper could make in the order of importance, with 1 being the most important and 5 being the least important.
1 2 3 4 5 Reduce direct fees to plan sponsor 13% 9% 10% 9% 8% Offer investment options with lower fees and/or 8% 3% 5% 3% 5% better performance Add/enhance plan sponsor website and tools 14% 15% 9% 16% 11% Add/enhance participant website and tools 9% 14% 11% 9% 13% Improve participant experience (enhanced website, expanded call center hours, targeted 9% 11% 14% 14% 11% communications) Improve participant readiness for retirement 16% 13% 14% 9% 10% Improve communications/participant education 15% 11% 7% 14% 13% Products and services for other benefit programs (defined benefit, health and welfare, and 3% 6% 5% 5% 5% nonqualified) Improve accuracy of information 1% 2% 4% 3% 2% Improve turnaround times for reports and 2% 6% 5% 5% 4% statements Improve relationship management and 4% 2% 7% 3% 7% responsiveness to plan sponsor inquiries/issues Fee transparency 4% 6% 5% 3% 5% Other 2% 2% 3% 4% 5%
n=149
35 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 10.8. Which service levels are being measured? Exhibit 10.9. If you have not changed recordkeepers in more (check all that apply) than five years, please list the primary or most compelling reason you stay with the current vendor: 2013–2014 2015 2017 2013–2014 2015 2017 Statement and report 51% 43% 41% turnaround time Local presence 1% 3% 0% Accuracy 63% 51% 54% Quality of service 5% 3% 5% representatives Loan, distribution, and withdrawal check 50% 35% 42% Quality of recordkeeping 19% 17% 20% processing time services Participation rate 34% 26% 24% Quality of investment 5% 1% 1% choices Fund diversification at the 25% 18% 18% participant level Overall cost to participants 2% 5% 13% Call center statistics 58% 47% 50% Overall cost to plan 6% 4% 2% Other 12% 5% 3% Overall relationship 32% 32% 30% No compelling reason to n=153 26% 26% 24% change Other 4% 9% 5%
n=120 Exhibit 10.10. Does your recordkeeper agree to maintain specific levels of service or performance with the risk of sacrificing fees or providing additional services should these levels not be met?
2013–2014 2015 2017 Yes 49% 49% 53% No 31% 31% 30% Don't know 20% 20% 17%
n=151
36 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Section K—Plan effectiveness Exhibit 11.2. Do you feel that your 401(k) plan assists in retaining your existing employees? Exhibit 11.1 Do you feel that your 401(k) plan is an effective recruiting tool?
n 1 n 20
10
74 1 2
n=146 n=153
Exhibit 11.3. Rank the following primary indicators of an effective 401(k) plan, with 1 being the most important and 5 being the least important.
1 2 3 4 5 High level of participation 64% 14% 10% 7% 5% Easy accessibility/technology 6% 11% 21% 27% 35% Employee appreciation 8% 26% 14% 20% 32% Cost-effectiveness 10% 18% 26% 29% 17% Investment performance 12% 31% 28% 18% 11%
n=148
37 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 11.4. Do you feel there are any barriers to making your Exhibit 11.5. Do you feel there are any barriers to making your 401(k)/403(b) plan a more effective recruiting tool? (check all 401(k)/403(b) plan a more effective employee retention tool? that apply) (check all that apply)
2013–2014 2015 2017 2013–2014 2015 2017 A 401(k)/403(b) plan is required It is not a differentiator—all of 29% 16% 18% just to do business in my industry our competitors have similar 74% 24% 30% plans Our plan does not provide a competitive level of benefits Participants do not have an 19% 15% 17% (eligibility period, match, vesting, adequate understanding of the 13% 16% 18% profit-sharing, etc.) benefits of our plan Most individuals do not Our plan is not competitive understand how such a plan 19% 11% 11% (eligibility, match, profit-sharing, 3% 11% 12% works etc.) Participants do not value this Other 10% 5% 1% 19% 11% 8% benefit No barriers N/A 50% 47% Other 14% 6% 7% n=148 No barriers N/A 50% 48%
n=148
38 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 11.6. What is the primary barrier to making your plan more effective? (Please check your top three barriers)
#1 #2 #3 Ineffective employee communications 10% 7% 13% Administrative costs 10% 3% 3% Lack of employee understanding 18% 22% 13% Lack of employee interest 11% 11% 11% Employee demographics (age, salary, education level, language 20% 11% 22% barrier, etc.) Low company matching formula/waiting period for matching 8% 5% 5% contribution Waiting period for matching contribution 3% 3% 3% Investment performance 1% 3% 1% Employee turnover 5% 10% 13% Current market/economic trends 7% 18% 11% Lack of provider support/internal resources 5% 4% 4%
n=148
39 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 11.7. In your opinion, are your employees saving Exhibit 11.8. Have you conducted a retirement readiness adequately for retirement? assessment in the past 12 months to determine expected income replacement ratios for employees in retirement? No. 1 No. 2 No. 3 n 35 Most employees are or will be 12% 19% 19% 13 financially prepared for retirement
Some employees are or will be 72% 67% 65% financially prepared for retirement n n Very few employees are or will be 13 15% 13% 15% financially prepared for retirement
Other 1% 1% 1%
n n n=145 n=144 31
40 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 11.9. Please indicate whether you agree with the following statements:
Neither Agree Strongly Strongly Agree Agree Disagree nor Disagree Disagree Employees are well informed of plan 18% 48% 23% 9% 2% features and investment options An employee education campaign, either through targeted communications or meetings, would 16% 47% 28% 7% 2% be highly utilized and valuable to our employees Our recordkeeper/plan administrator offers valuable tools to educate 26% 55% 14% 4% 1% employees on investment fundamentals and retirement readiness We utilize the latest communication methods (e.g., Social media, smartphone/tablet applications) to 7% 25% 32% 32% 4% educate employees on retirement readiness
n=142
Exhibit 11.10. Please indicate whether you feel the following will positively impact employee retiree readiness:
Somewhat Not at all likely Not sure likely Enactment of the auto Individual retirement account (IRA) 31% 46% 23% Expanding auto enrollment to cover all employees (not just new hires) 23% 11% 66% Expanding auto step-up as the default option with auto enrollment 18% 11% 71% Improving company match 16% 9% 75% Enhancing participant communication/education strategy 11% 11% 78% Simplifying investment choices 32% 21% 47%
n=136
41 Defined Contribution Benchmarking Survey From Oversight to Participant Experience: Plan Sponsors are Taking Their Fiduciary Role up a Notch
Exhibit 11.11. If you have ever solicited or received feedback from your employees regarding aspects of the plan that they found to be confusing, please indicate those items here. (check all that apply)
2013–2014 2015 2017 Where to invest/which funds to use 55% 40% 39% How much to save for retirement 35% 30% 34% Loans 21% 16% 24% Company contributions 24% 20% 22% Rollovers 18% 13% 20% Withdrawals 24% 17% 19% Vesting 11% 12% 16% Impacts of contribution limitations/discrimination testing 13% 9% 14% Enrollment 11% 9% 13% Website 16% 16% 12% Employee contributions 6% 5% 11% Fees 10% 14% 11% Financial planning tools 22% 17% 11% Fund transfers/reallocations 13% 13% 9% Participant statements/confirmation statements 6% 3% 7% Conversion/blackout periods 5% 5% 4% Voice Response System 2% 2% 4% Forceout conditions 1% 2% 1% Other 9% 3% 1% Have never solicited/received feedback N/A 32% 27%
n=148
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