June 21, 2012
--- Benchmarking services are emerging that can compare
the suite of retirement plan services against costs to plans of similar size
and complexity. ---
However, this still does not answer
the basic question about the true value
proposition of a defined contribution (DC) plan, a report
The report, issued by Unified Trust
Company, says a “successful retirement” is the the key
metric to measure value of defined contribution
plans. Successful retirement can be measured on an actuarial basis and can
then be used to calculate the cost/benefit of each defined contribution plan.
In the report is a method to follow.
Successful small plans with good
cost/benefit ratios will, on average, have total annual costs of $600 to $1,100
for each successful participant; successful midsize plans will, on average,
have total annual costs of $500 to $900 for each successful participant; and
successful large plans will on average have total annual costs of $400 to $750
for each successful participant, the report suggests.
“In 2012, the upcoming 408(b)(2)
plan sponsor fee disclosures and 404(a) participant disclosures are going to
create a whole new discussion with plan sponsors. The discussion cannot be
about fees only. It is also important to benchmark fees, services and
outcomes. This fee discussion will make the delivery of tangible value of
huge importance,” concluded Dr. Gregory W. Kasten, author of the report.
The report is here.