DC Plan Sponsor takes the path towards more education
Many employees that run their company’s defined contribution (DC) plan like 401ks and 403bs struggle because they don’t have the proper training or resources. This lack of education is the primary reason that TPSU (The Plan Sponsor University) half day education programs have grown so quickly reaching over 200 programs since 2013 with 75 scheduled in 2017.
At a TPSU program held at Queens University in Charlotte, NC, the administrator of a 403b and ERISA plan at an 800 employee organization explains how she runs her committee and what she learned at TPSU that will improve outcomes for employees.
Companies would never turn over their defined benefit (DB) plan without giving their employees significant training and resources for one simple reason. If the plan is mismanaged because investments are imprudent or contributions are not adequate, not to mention negating returns due to high fees, the company has the liability to fund the gap.
But because that liability has shifted to the employees, senior executives have not provided their HR or finance people the proper training to run their DC plan. But if older employees have not saved enough or invested wisely, or if the fees are too high, they keep working affecting their company’s cost structure and productivity which can ultimately affect their competitiveness.
The administrator attending TPSU struggles with poor participation but she learned at the program that she could quickly solve the problem through auto-enrollment and auto-escalation, key features of the Ideal DC plan.
She had also hired a TPA (third party administrator) to help with compliance and plan design – both their advisor and TPA sit on the company’s retirement committee along with senior management and board members. The idea of including HR and finance on the committee raised at TPSU seemed appealing to her.
Noting that “Knowledge is power,”, the administrator realized that she needed to be more aware of the company’s fiduciary responsibilities as well as better communication with employees. Indeed.
