As some employers with multiple retirement plans are choosing to work with a single recordkeeper for all their plans, new research from Principal finds most plan sponsors believe they’d save time on retirement plan administration by working with one recordkeeper instead of several. And, in reality, using one recordkeeper for multiple retirement plans can be an “efficiency game changer,” the firm says.
The survey, which included more than 300 plan sponsors and was conducted by NMG Consulting on behalf of Principal, finds employers that worked with one recordkeeper on several retirement plans had potentially significant time savings, features and services that made plan administration easier.
With a single recordkeeper, plan sponsors said they spent less time on plan administration and still have access to the plan features and expertise they typically need. More than three-quarters of plan sponsors said they could reduce the time spent on their retirement plans by working with a single recordkeeper. Depending on the type of plan, sponsors with multiple recordkeepers reduced the time they spent on their plan by 17% if they switched to a sole recordkeeper. Hourly time savings from using one recordkeeper translated to as many as 14 business days over the course of a year, Principal says.
Additionally, sponsors with one recordkeeper reported increased employee satisfaction and higher engagement, and many said they believed their employees have a better understanding of retirement benefits. Among employers working with a single recordkeeper, 73% reported their employees are better engaged with all their retirement benefits, while 62% of those working with multiple recordkeepers said the same.
Compared with plan sponsors with multiple recordkeepers, the Principal research found those with a single recordkeeper are slightly more likely to say their experience across plans is consistent (93% vs. 88%), plan compliance non-discrimination testing and Form 5500 filing are efficient (93% vs. 89%), and that they have access to integrated reporting on plan performance metrics (86% vs. 80%).
Principal also found that sponsors working with multiple recordkeepers report their plans have complex or specialized plan design provisions that require the expertise of a specialist recordkeeper and subject matter experts. In fact, sponsors that work with multiple providers reported this is one of their biggest concerns when working with a single recordkeeper. However, this fear might be misplaced, as the survey determined those that work with one recordkeeper reported access to those same capabilities.
Employers also say they appreciate the ease of having one point of contact to evaluate overall retirement plan strategy, measure how well the plan is working and make suggestions for plan improvements. Among plan sponsors that don’t have a single, strategic point of contact, 69% said they would value that form of communication.