Mercer Suggests 2011 New Year’s Resolutions

Mercer released its list of suggested New Year’s Resolutions for defined contribution sponsors; something a plan adviser may want to pass forward. 

The resolutions include: 

  • Participant Fee Disclosure. New rules are coming in 2012. Determine what’s required, who’s responsible and how to integrate the new requirements with other plan communications.
  • Fee Oversight. Establish a policy for ongoing fee benchmarking. Receive all required disclosures. Document your oversight in a fee policy statement.
  • Stable Value Wrap Contracts. A joint study by Federal regulatory agencies (to be completed by October 2011) will determine whether stable value wrap contracts are exempt from the swap restrictions of Title VII of the Wall Street Reform and Consumer Protection Act .
  • Inflation Hedge Option. Consider adding a diversified inflation hedge option to your lineup. Evaluate a diversified option versus a Treasury Inflation-Protected Securities (TIPS) option.
  • Retirement Income Solutions. New retirement income products and modeling tools continue to hit the market. Plan sponsors should understand the available solutions to determine if one or more are appropriate for their demographics.
  • Participants Nearing Retirement. Investment performance is critical for near-retirees. Do their investment strategies match expected spend-down needs? Would retirement planning seminars and other assistance reduce financial anxiety (and its drag on productivity)?
  • Roth 401(k) Contributions. In tough economic times, consider a low-cost plan enhancement, such as a Roth, that expands financial opportunities for participants.
  • Managed Accounts and/or Investment Advice. Should you offer participants advice or managed accounts (or both)? Should you take advantage of improved access to custom target date funds, which allow tailored glide paths based on your core options?
  • Auto Features. “Set it and forget it” doesn’t work for plan sponsors! For example, should auto-enrollment contribution rates be increased? Are vesting and withdrawal provisions still appropriate for your organization?
  • Plan Operations. The Internal Revenue Service and Department of Labor are focusing on defined contribution plan compliance and recommend periodic review of plan operations both against the terms of the plan and against governmental requirements.