Data & Research September 17, 2013

Industries with the Best 401(k) Plans

A ranking from BrightScope, Inc. indicates companies in the law industry have the best 401(k) retirement plans.
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Among the 23 industries rated, blue collar industries such as manufacturing and automotive beat out health and medicine.

The top 10 industries with the highest ranked 401(k) plans containing more than $100 million in assets included:

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  1. Law;
  2. Utilities;
  3. Mining, quarrying, and oil and gas extraction;
  4. Technology;
  5. Airlines;
  6. Professional, scientific and technical services;
  7. Business and finance;
  8. Manufacturing;
  9. Automotive; and
  10. Wholesale trade.

    “The range of industries topping this list shows that employers of all types are taking necessary steps to set up employees for a secure retirement by providing a robust 401(k) plan,” said Brooks Herman, head of Data and Research for BrightScope. “We hope companies across the country are now inspired to evaluate the options available to workers and make positive changes that have the potential to make a huge impact to employees’ financial future over time.”

    BrightScope’s 401(k) plan rating system was developed by the firm, in cooperation with academics and independent 401(k) fiduciaries. Analyzing more than 200 individual data points, BrightScope’s rating algorithm can calculate a single numerical score for each 401(k) plan in the country. The data points examined cover broad categories such as total plan cost, company generosity and investment menu quality.

    The full list can be found here.

    Compliance September 17, 2013

    A Conversation with the DOL

    Assistant Secretary of Labor Phyllis Borzi, with the Department of Labor’s (DOL’s) Employee Benefit Security Administration (EBSA), said it has been engaged in a very vigorous focus on defined contribution (DC) plans.
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    Speaking at the Plan Sponsor Council of America’s (PSCA’s) 66th Annual Conference, Borzi revealed she is a big supporter of defined benefit (DB) plans, but realizes the three-legged stool of retirement savings has changed, so the industry and the DOL must work together to create ways for employees to save and to educate them about the importance of saving. “I have no magic bullet for DC plans,” she said, adding that her focus has been broadening transparency and accountability, and reducing conflicts of interest.

    What Borzi now calls the “conflict of interest rule”—the fiduciary definition proposal—will not be out in October because “we want to make sure it’s right,” she said. She explained that the regulators are not finished with prohibited transaction exemptions. “When released, it will be a complete package of rules and exemptions,” she added.

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    Borzi said the jury is out about the effectiveness of the 408(b)(2) service provider fee disclosures, because in particular, service providers are not following the rule to the letter. According to Borzi, the agency did not intend for providers to offer a master list of services and fees and have plan sponsors figure out which services they are using and paying for. Also, she said, it doesn’t serve the purpose of the regulations if the plan sponsor doesn’t have to understand the fee information it is provided because providers take care of everything for 404(a)(5) participant fee disclosures.

    Borzi said the agency is looking at things they can do to clarify the rule—whether they can improve the regulations to meet its original goals. The agency has no timeline for such clarification. Borzi revealed the agency is working on a guide for plan sponsors about how to review the 408(b)(2) disclosures they receive. “We need to continue to educate plan sponsors about what their choices are and how to evaluate them,” she said.

    When asked about target-date fund disclosures, Borzi confirmed the agency is working on such guidance. As with the conflict of interest rule, it is working together with the Securities and Exchange Commission (SEC).

    The EBSA is also working with the Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS) to issue companion guidance shortly about the effect of the Supreme Court Defense of Marriage Act (DOMA) ruling.

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