Posted on by Jerome.Pfeffer

Your retirement plan recordkeeper should be a valued partner that helps support your plan and participants. It’s important to be confident in your recordkeeper and fully understand the value they can deliver for your plan.

One area where your recordkeeper can provide support is by helping your plan remain competitive. Our most recent plan sponsor guide highlights important conversation topics to learn about new technologies and available features.


Posted on by Jerome.Pfeffer

The IRS has announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019. For company retirement plans, the most recognized highlight is the 401(k) contribution limit increase to $19,500 for the new year.

Review the full list of contribution limit changes below and share with your plan participants!


Posted on by Jerome.Pfeffer

If you’re not using data analytics to help you make progress toward improving participant outcomes, then you could be missing out on a key component of plan governance. Data analytics are becoming a meaningful part of defined contribution plan governance for retirement plan fiduciaries.

Data analytics can provide detailed information on different participant segments and help sponsors recognize pain points in their plans.

Defining Pain Points

Think about using detailed analytics to break down plan data into specific employee segments based on key factors like age, job category, and tenure. Analytics highlight the employees and groups most at risk of retirement savings shortfalls, giving you useful insight on the tools and strategies that could best help them. Once you assess the analytics, it’s time to apply them to your plan.

Tactics for Retirement Readiness

PLAN DESIGN | Employers can use information from analytics to make changes or establish plan design features that can nudge participation at more impactful rates.

Plan Design options to consider:

  1. Low participant rate à Reenroll employees not participating
  2. Low deferral rate à Implement a higher automatic enrollment default rate
  3. Low deferral rate à Encourage auto-escalation of those enrolled but not saving enough
  4. Low deferral rate à Encourage participants to defer more by stretching the company match
  5. Improper asset allocation à Reenroll all participants into the plan’s QDIA

PLAN TOOLS | Positive employee behavior could be driven by using detailed analytics to help select plan tools and technology whether you want to increase participation, savings, tax efficiency, investing, budgeting or provide other education. With the help of your financial advisor, plan sponsors can develop tangible goals, scorecards, wellness programs, and more to track progress going forward to improve plan governance and help participants achieving retirement readiness.

Plan Sponsor Take Away

In a recent white paper, Willis Watson Tower stated, “We believe plan-wide statistics on mean or median participation rates, balances or contribution rates measure aggregate data on all participants but offer little in the way of insight into retirement adequacy and meaningful benchmarks for individuals or segments of the population.”[1](Emphasis added). Therefore, today, when most retirement plan committees look at roll-up 30,000 foot level data, data analytics will help you peek into the effectiveness of your plan. 

With the proper analytics, plan sponsors can understand their employees’ needs, then adjust and develop customized plans, enhanced plan features, and communication strategies and provide tools and technology to engage employees in positive behaviors. Analytics highlight the employees and groups most at risk of retirement savings shortfalls, giving you useful insight on the tools and strategies that would best help them reach retirement.

[1] Willis Towers Watson. “The defined contribution plan proposition: Retirement readiness.” September 2018.


Posted on by Jerome.Pfeffer

If you want to predict the wants, needs and fears of participants when it comes to retirement planning, look into the potential of predictive analytics.  

The use of “big data” (a bite-size term often used instead of the nerdier “predictive analytics”) is helping to steer plan sponsor actions towards enhancing 401(k) participant outcomes and providing insights into consumer behavior. 

But what’s the best way to jump on this moving train and, more importantly, what does it all mean? 

Predictive Analytics and Your 401(k) Plan

First off, predictive analytics is “using many techniques from data mining, statistics, modeling, machine learning, and artificial intelligence to analyze current data to make predictions about the future,” as defined by the International Research Journal of Engineering and Technology.

Applying that to the 401(k) world means that data is being analyzed to help plan sponsors and advisors understand what employees need at different stages of their retirement planning, even before they know they need it. This jump start can be used to initiate auto techniques, proactive communications and even targeted educational sessions to help participants manage their 401(k)s.

Enhancing the Conversation

A number of financial services companies are upping the ante by investing big money into big data. For example, John Hancock Retirement Plan Services (JHRPS) expanded its data analytics capabilities last year to “help plan sponsor clients and advisors make plan and platform decisions to help participants save more for retirement.” It conducted a predictive analytics pilot with a client which had “very high participation and retirement readiness but wanted to know why the few non-contributors had opted out after they were auto-enrolled.”[1]

According to JHRPS, they used predictive analytics to “model participant data to identify participant segments – top, normal, and non-contributors – and then enriched the data with third-party data to provide broader insight into the personas.” From there they used machine-learning algorithms to predict future outcomes, which helped identify the non-contributors, while providing insight into what might help them save more.

They learned that the employees who kept opting out were often single mothers or midcareer people who faced similar financial stress when returning to the workforce. To encourage these employees to participate, the sponsor decided to lower the auto-enroll default deferral rate from 6% to 1%, which it coupled with auto escalation. The savings nudge worked: “Nearly 85% of the non-contributors who were auto enrolled at the lower default rate stayed in the plan, and many increased their contribution rates,” according to Pension & Investments.[2]

Personalization for the Win

Artificial Intelligence (AI) technology is another way we can look at participant behavior and retirement planning. To boil down these sci-fi futuristic terms, AI technology has been described as a technique used to conduct predictive analytics.

As another example, the Economist’s EIU Perspectives Series examined how AI technology can affect participant outcomes, noting that “enhanced data and technology capabilities and improved transparency enable participants to access greater expertise and have more control and personalization of their investments.”[3]

Additionally, they observed that AI technology “can provide more and better information and help take some of the guesswork out of the process (for less-engaged participants) and, as a result, they can make more informed investment choices.”

Their conclusion? “Plan sponsors can also take advantage of data, transparency and technology to understand trends in investing and participant activity, as well as participants’ goals in their retirement plans. With better information, sponsors can offer more personalized options.” 

The Future is Now

According to research released in 2018, financial services ranked 4th in adoption of big data for predictive analytics, just behind telecommunications, insurance and advertising.

Make no mistake, the interest in big data and what it can do for client modeling and predicting behavior is becoming an industry-wide trend.

Despite the sci fi-sounding jargon, any data, trend predictions and related information should always be thoroughly reviewed and thought out.  This could mean setting up a one-on-one conversation with a financial professional about how to approach complicated retirement plan issues because while technology enhancements are great, there is still no substitute for human experience.

However, one thing is clear. The future of data is already here. 

[1] Berczuk, Melissa. “ John Hancock Retirement Plan Services Expands Predictive Analytics Capabilities to Close Retirement Savings Gap.“ 15, March 2018.  

[2]   Pensions & Investments. “Providers mining big data for look into participants.” August 2018.

[3] Safane, Jack. “Creating Better Retirement Outcomes Using Data, Technology and Transparency.” Perspectives from The Economist Intelligence Unit (EIU), The Economist Newspaper, 1 Aug. 2018.


Posted on by Jerome.Pfeffer

As we approach the New Year, we look at the future trends of the retirement plan industry to better support plan design, plan administration, participant outcomes, and fiduciary plan governance. Download and enjoy our quarterly Lift Retirement Newsletter!

Our topics this quarter are:


Posted on by Jerome.Pfeffer

Your workforce is full of employees with different financial goals; however, the one common denominator is they want to always achieve financial health!

In our recent participant guide, we have outlined 7 steps to help your employees organize their financial life. This easy-to-use checklist will help them take charge of their financial health. Send and share it with your workforce today!


Posted on by Jerome.Pfeffer

A Multiple Employer Plan (MEP) is a qualified retirement plan for two or more employers who are not related. It can be particularly appealing to smaller businesses for a number of reasons.

MEPs can be easier and may be cost effective to operate, allowing employers to focus on running their businesses while a professional manages the administrative and legal aspects of the plan. This can potentially help you attract and retain top talent. Learn more about MEPs in our short 2-minute video!


Posted on by Jerome.Pfeffer
Formation of Lawsuit Trends

The barrage of excessive fee lawsuits filed in 2006 started a trend that continues to this day. At first, plan sponsors saw early signs of success in getting cases dismissed.

However, this changed after a few years when participants started honing in on claims of self-dealing, i.e. the plan’s fiduciaries benefitting themselves at the expense of the plan’s participants. Dozens of additional lawsuits have been brought, and plan participants have won both trials and settlements, totaling in the hundreds of millions (over $6.2 billion).[1]

One of the most famous cases alleging self-dealing was Tussey v. ABB, which alleged that the plan sponsor caused the 401(k) participants to overpay for services to the plan recordkeeper so that the plan sponsor would receive free or discounted services for other benefit plans to which they were responsible for the cost. Almost ten years later and after a four-week trial and multiple appeals, the case finally settled for tens of millions of dollars.

Why Lawsuits Arise

While plan sponsors accidently self-dealing will happen from time to time, many plan sponsors have heeded the lessons from these lawsuits and have addressed any outstanding issues.

Today, the vast majority of lawsuits allege process violations, meaning the fiduciaries failed to have a good process in place to act in the participants’ best interests, and thus the participants were harmed. Allegations include the plan paying excessive recordkeeping fees, failing to monitor the amount of revenue sharing generated, keeping underperforming investments in the plan, and failing to offer an appropriate mix of investment vehicles.

Additionally, the Department of Labor, the federal agency that regulates private retirement plans, has increased its enforcement related to these same issues through a nationwide workforce of plan investigators. When an investigation occurs, it can feel and look a lot like a lawsuit, including pages and pages of document requests about the plan.

It is also important to note that unlike class action lawyers, the Department of Labor does not limit their efforts to large plans that results in large damages. The Department of Labor is happy to investigate a plan with only ten participants if they believe harm has occurred. As an example, a recent lawsuit was brought against a small plan sponsor accused of failing to remit employee salary deferrals to the plan, which effectively amounts to theft. The plan sponsor not only faces civil liability, but also criminal liability under federal law.

5 Ways to Mitigate Plan Sponsor Liability

Despite the headline grabbing nature of each new lawsuit, there is good news to be found, and that is where a plan sponsor can demonstrate that they have engaged in a prudent process as evidence they are acting in plan participants best interests. In a recent trial decision in Wildman v. American Century, the plan’s fiduciaries were cleared of all wrongdoing based heavily on their best practices, which included:

  1. Assembling a plan committee made up of diverse individuals with diverse viewpoints  
  2. Holding a minimum of three meetings per year and special meetings as necessary  
  3. Hiring a competent, trustworthy plan advisor
  4. Providing each new committee member with a fiduciary training manual (consider performing this action during the first committee meeting and recording it in the meeting notes)   
  5. Regularly reviewing the plan’s investments and their performance, including the use of a Watch List

Since most plan sponsors are not experts with regard to retirement plans, many rely on the support of professionals to assist them. A retirement plan advisor can assist plan sponsors with ERISA best practices to mitigate fiduciary risk. For more information on best practices or to discuss your company’s retirement plan, contact us to setup a conversation. 

[1] NAPA ”ERISA Litigation Tab: $6.2 billion.” April 15, 2019.


Posted on by Jerome.Pfeffer

An old saying goes, “You get what you pay for.” But as a consumer, how do you know if you’re getting the best value for your dollar unless you shop around and compare costs? Benchmarking is the process of comparing your retirement plan with others that are similar in size and type.

Benchmarking can help reduce fees and improve retirement readiness; download our plan sponsor guide to four reasons to benchmark your retirement plan!


Posted on by Jerome.Pfeffer

Approach, review, document, and decide

As a member of your company’s retirement plan committee, if you have recently been informed that one or more of your company’s retirement plan investments are on the Watch List, don’t panic. This is an opportunity for due diligence and possibly to enhance the plan’s performance. 


As a thoughtful plan fiduciary, your company’s retirement plan probably had a process in place when you originally selected the investments offered.  Whether working with an advisor, hiring an investment fiduciary, and/or leaning on the support of your recordkeeper, some guiding forces probably helped you create the list of investment options. 

Additionally, you probably have heard the term, Investment Policy Statement (IPS). It is the governing document that helps plan fiduciaries evaluate their investment choices and outline a path of reasonableness for performance. IPS’s have a range of methodology criteria; and while IPS’s are not technically required by ERISA, they could be the first document that most DOL auditors request when auditing your plan.  Therefore, it’s a best practice to have one – and follow it.


Once your retirement plan’s investment methodology is in place (IPS), now it’s time to regularly compare your investment offerings against their criteria.  This often includes:

These are just a few of the common comparison criteria.

Now that you are objectively evaluating the plan’s funds, it’s time to review how they are performing compared to your IPS criteria and the peer group. This process provides a reasonable apples-to-apples style comparison.  For example, if your plan offers a large cap growth fund, does it make sense to compare that fund against short-term bond funds? Probably not, right?  This would be apples to oranges.  Rather, you’d want to line up and compare all funds in the same investment category (Large Cap Growth Funds).

To evaluate and aggregate investment information, many plan sponsors ask the help of professional investment advisors.  These advisors generally subscribe to screening, monitoring, and score software that catalogs and evaluates over 50,000 investment offerings.

Once you have aggregate data about the funds in the same category, you can review your IPS and start to document your thought process.


With the investments evaluated and oftentimes scored based on the peer category and IPS criteria, it’s pertinent to start evaluating the results. When a fund is underperforming, it generally means it’s time for your retirement plan committee to place that fund on the Watch List.

What is a Watch List? Simply stated, it is a list of investment offerings that do not meet the investment criteria outlined in your company’s investment policy statement. 

Once a fund goes on the Watch List, you guessed it, you should watch it. As the Department of Labor states, “The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.”[1] This includes oversight of the plan  investments and a continual obligation to monitor them, so eventually they will provide a retirement benefit to your plan participants and their beneficiaries.

As a best practice after a fund goes on the Watch List, committees should decide how long is reasonably appropriate for that fund to be on watch.  This is where documentation is important. Nowhere in ERSIA does it state a defined period of time.  Rather, it is up to prudent fiduciaries to determine the horizon – and, of course, to document all thoughts considered.


In the long term, responsible plan fiduciaries will make decisions.  They are usually binary decisions that include either:

Whatever decision is made, it is mission critical to document WHY it was made, HOW it was made (investment reports, history, meeting meetings) and WHAT are the next steps.

In short, if an investment offering is going to stay within the plan and on the Watch List, a prudent fiduciary process is to follow it with documentation.

Also, keep in mind that funds can have periods of underperformance and be placed on the Watch List; then as market cycles change, those funds may meet screening criteria and can be removed and placed back into the good graces of the IPS and screening methodology.  In effect, the fund will have regained its status and is no longer on the Watch List.

On the other hand, if the decision is made to replace the fund, a prudent due diligence process should take place to find appropriate fund(s) that meet the IPS and scoring methodology (again, many times this process is supported by an investment advisory professional with access to investment analytics and the vast universe of fund offerings). Once the new fund is selected, it’s best to connect with your recordkeeper to understand the replacement process. It usually entails a notice to plan participants and a mapping period.

When a fund is placed on the Watch List, it’s not the end of the world. It means that plan fiduciaries need to watch the fund and discuss if the fund’s methodology still meets its intended objective. As market cycles ebb and flow, certain investment management styles will come in and out of favor. Investments funds will see periods of meeting criteria and not meeting criteria – this may be due to normal market fluctuation. 

What is most important as an ERISA plan fiduciary is to remember to act in the best interest of the plan, your participants, and their beneficiaries at all times. Your documentation of WHY, HOW, and WHAT your actions are should be front and center in your plan’s fiduciary process, because the goal of a company- sponsored retirement is to ultimately provide a meaningful retirement benefit to employees.

[1] U.S. Department of Labor. “Fiduciary Responsibilities.” 18 Apr 2019

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