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Retirement Plan Benchmarking/Plan Design

Benefit:

  • Helps meet fiduciary responsibility requirements of providing a fair return with reasonable plan fees
  • Potentially reduces costs associated with providing employee retirement plans
  • Potentially increases employee satisfaction with retirement plan through better understanding of how to make investment decisions

Who's most likely to benefit:

  • Any company with a qualified retirement plan
  • Organizations unsure of whether their retirement plan's fees are competitive or uncertain of what fee levels are being charged
  • Organizations whose employees desire more investment options, better service or more access to retirement plan fund information

Description:

Ensuring that retirement plans are cost-effective can be difficult, simply because plan costs are hard to discern. Some costs may be borne upfront by the plan sponsor. Others may be paid from investment earnings within the plan, and as a result, go unnoticed since the participant doesn't see an out-of-pocket expense.

It's both good business sense and a plan sponsor's fiduciary responsibility to make sure a retirement plan's costs are in line. Industry consultants are predicting an increase in litigation related to retirement plan management, so it's in the plan sponsor's best interests to ensure that employees are not penalized financially with returns lowered by high administrative and other fees (US Supreme Court 2015 - Tibble v. Editson International).

In a plan review, AGH Employer Solutions' employee-benefits consultants analyze plan documents and investment information to determine the true costs of a retirement plan – both for the plan sponsor and the participants. Those costs are then compared to industry benchmarks and can be used as a negotiation tool. A review and benchmark study could potentially result in netting significant savings even after the study expense.

If, after review, the plan's costs or structure are not aligned with the organization's needs and fiduciary responsibility, AGH Employer Solutions can design a retirement plan around meeting those goals. For example, does the organization seek to create a plan that helps recruit and retain employees? Maximizes shareholder return? Rewards long-term or highly compensated employees?

Our consultants look at the organization's overall existing employee benefit programs to develop a plan design best complementing them that will also scale with an organization's potential growth or downsizing. Once an overall framework is established, our consultants outline a plan and work with the plan sponsor's ERISA counsel or a third-party counsel to create a formal plan document and implement it.

To execute, AGH Employer Solutions can help the organization put the other three components of a retirement plan in place: recordkeeping, investment management and education. AGH Employer Solutions and its affiliated entity have extensive experience in those areas. We also work with outside investment managers and other providers the organization chooses.