Principal Guide Outlines a Course

As market turbulence takes its toll on everything from 401(k) account balances to pension plan funding, employers are scrambling to assess the full impact on their retirement programs.

That’s where a new guide – “Navigating Your Way through Market Turbulence’ – from the Principal Financial Group purports to assist employers as they review their retirement programs.

The guide takes a look at how the market volatility may be affecting four retirement plan types: defined benefit, defined contribution, Employee Stock Ownership Plan and nonqualified deferred compensation – and offers action steps to consider for each plan type.

“In this rapidly changing environment, it is more important than ever for employers to make a careful review of their retirement programs,’ said Dennis Long, vice president, Retirement and Investor Services at The Principal. “This guide can help them work with their financial professional to make informed decisions about changes that may be needed as a result of market unrest.’

The guide is the latest in a series of educational resources from The Principal for financial professionals and employers about weathering the financial storm. The new guide is available in the retirement section of the Principal Research Center at
www.principal.com/research, or directly at http://www.principal.com/banners/landing/white_paper_volatile_markets.pdf

Schwab Makes Plan Benchmarking Data Available to TPAs

Charles Schwab is now making available industry insights and benchmarking data compiled from retirement plan clients to third-party administrator (TPA) clients.

According to a press release, the information gives Schwab’s TPA clients the ability to evaluate how the individual retirement plans they serve compare with retirement plans of the same size and industry segment in terms of participation rates, adoption of products and plan features, and a number of other metrics. Similar to Schwab’s plan sponsor clients, participating TPAs will receive detailed reports on each of their own plans, in addition to broader reports reflecting all Schwab plans broken out by plan size, 18 industry segments, and aggregate data from all Schwab plan clients combined.

Schwab’s benchmarking data, including participating plan sponsor and TPA clients, represents two million plan participants and 2,400 plans. Newly added, TPA-specific benchmarking data represents more than 406,000 plan participants and more than 900 plans.

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“Extending our benchmarking program to include plans serviced by TPAs will also be beneficial to plan sponsors who work directly with Schwab, because it gives them a more comprehensive set of information to which they can compare their own plan,’ said Schwab Corporate & Retirement Services Director Andrew Gorder, in the press release.

Benchmarking Insights

Some insights from Schwab’s TPA-specific 2008 benchmarking report include:

  • Plans with fewer participants are more likely to offer features that provide flexibility and personalization such as self-directed brokerage accounts (SDBA). According to Schwab data, 26% of plans serviced by Schwab TPA clients with less than 100 participants offer an SDBA.
  • Plans with more participants are more likely to offer target-date retirement funds. According to Schwab data, 23% of plans serviced by Schwab TPA clients with more than 2,500 participants offer target-date retirement funds, compared with 7% of plans with less than 100 participants.
  • The Schwab data also indicate that TPA-serviced plans with more participants are more likely to provide an employer matching contribution, as opposed to plans with fewer participants that tend to offer profit-sharing agreements for employees.

According to the Schwab press release, the TPA data now included in Schwab’s overall retirement plan benchmarking information is composed of 10 of Schwab’s largest TPA clients including Conrad Siegel Actuaries, Interactive Retirement Systems, Kibble & Prentice, Milliman Inc., Northwest Plan Services Inc., REDW Benefits LLC, Retirement Direct LLC, Retirement Plan Services LLC, Spectrum Pension Consultants Inc., and Trautmann, Maher & Associates.

More information is available at www.schwab.com.

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