6 tips to make sure your DC plan is successful

6. Fee allocation: Get ready for the spotlight

New fee disclosures will bring heightened scrutiny of fees. Has your committee reviewed and documented your plans methodology for allocating fees to participant accounts (whether through revenue sharing or other methods)? Be prepared to defend your allocation methodology against participant inquiries and fiduciary lawsuits. [Images: Thinkstock]

5. Make sure your spend down strategy is working

Expected retirement age is shifting from the 60s into the 70s: 20% of the workforce older than age 50 expects to never retire. One factor in this dynamic is uncertainty around managing income through retirement. Plan sponsors increasingly look to spend-down strategies to help with retirement-related workforce management issues. The marketplace for spend-down products is evolving to address the competing demands of access to capital, protection from risk and enhanced returns. While awaiting key regulatory guidance, stay abreast of developments in institutional-quality products, still in early stages of development.

4. Use plan governance to promote strategic plan management

Appropriate plan governance is not just limited to risk management. As defined contribution plans take on heavier workloads and exert more impact on organizations and their workforces, it becomes increasingly important that plan decisions are thoughtful and strategic. Begin by ensuring that your plan objectives are clear. Then use those clear objectives along with specific action plans and stronger metrics to help ensure that your objectives are being met.

3. Monitor your stable value option

The stable value market continues to undergo stress and change, as some managers exit automatic enrollment, the market and wrap providers increase pricing and restrictions on investment guidelines. The result will be further limits on capacity and potentially reduced return premiums over alternative capital preservation options. Stable value options deserve the same care and prudence as other plan options, including evaluations of the team, process, constraints, competitive advantages of the provider, and consideration of alternative capital preservation options, including money market and short-duration bond options. The industry is also awaiting the final rules on whether new wrap contracts will be exempted from new swap rules.

2. Understand that automatic features do not necessarily drive engagement

Although DC plans with automatic enrollment and auto-increase features have improved participation and contribution rates, they often fall short of the contribution rates of actively engaged participants. Even if you have high participation rates, commit to using every communication media and approach you can to increase the number of engaged retirement savers.