After over 125 TPSU programs since May 2013, I am shocked how ill prepared most plan fiduciaries are to run their DC plan. This observation is not a condemnation of the mostly HR and benefits professional tasked with running their company’s retirement plan. For almost all, the responsibility was just thrust upon them with little or no training offered – even worse, sometimes the person who had been in charge has left so there’s no continuity. Yet an educated, engaged and motivated plan fiduciary is arguably the most important factor in determining the plan’s success.
Billions are spent educating employees with little or no results, mostly as a fiduciary hedge, yet very little is allocated to educating the plan fiduciaries. Plans that do not have educated, motivated and engaged fiduciaries are less likely to hire the right professionals to help them manage their plans and are not likely to employ the necessary resources to help put their employees in a better position to retire. It’s time to start focusing our attention and money on helping these overworked HR and benefits professionals at small and mid-sized companies to help better run their DC plan limiting costs, work and liability while helping employees prepare for retirement.
First and foremost, we need to engage the CFOs and CEOs to show how a poorly designed DC plan can increase costs when workers that want to or should retire cannot, threatening the company’s viability with mostly older, higher cost, less productive workers. When it comes to managing their DB plan, companies hire skilled professionals and make sure they had formal and continual training – we need to get CFOs and CEOs that there’s a significant liability if their HR professionals are not trained to run their DC plan never mind how it affects the viability of their company. Just like with DB plans.
