Segal Charts the Multiemployer DC Plan Market

The firm says multiemployer DC plan trustees can benchmark their plans against Segal’s client database.

The predominant plan design for multiemployer defined contribution (DC) plans is a profit sharing plan, according to Segal Consulting’s Study of Multiemployer Defined Contribution Plans.

Less than one-quarter (24%) of multiemployer DC plans offer a 401(k) feature, and 23% use a money purchase plan design.

When looking at administration, which excludes contributions because those are always handle by the fund office, 57% of plans are self-administered by the fund office. Nearly one-third (32%) of plans use a service provider such as a recordkeeper or third-party administrator (TPA), and for 11% administration is shared by the fund office and service providers.

For 52% of multiemployer DC plans, investments are trustee-directed, while the remainder (48%) are participant-directed.

Hardship-withdrawal provisions, which Segal says can only be offered by profit-sharing plans, are more common than loan provisions. Fifty-eight percent of plans permit hardship withdrawals, and 35% permit loans.

“Given the increasing importance of defined contribution plans as a supplement to defined benefit plans, trustees have an opportunity to examine the several different DC approaches that can further ensure participants’ retirement readiness,” says Rick Reed, director of defined contribution at Segal Consulting.