Dive Brief:
- Helped by a recent push from the Department of Labor, 401(k) plan sponsors are taking a much harder look at fees that can eat into defined contribution retirement accounts and their results, according to SHRM.
- Mainly, that means paying close attention to plan administration and investment fund fees, SHRM reports, citing the annual Retirement Planscape report by market research firm Market Strategies International.
- Apart from giving employees the best return on their investment, plan sponsors now are fiduciaries, meaning they are at-risk to face class action lawsuits, especially after a major Supreme Court decision in 2015 served notice on plan sponsors and their responsibilities.
Dive Insight:
SHRM cites a recent CNBC report that found poor 401(k) account management is driving litigation against employers, with negatives such as high fees, bad fund choices and conflicts of interest as the main culprits.
For HR and benefits leaders, the Market Strategies International report notes that Denver-based Empower Retirement is the provider that 401(k) plan sponsors associate most with providing good value for their money, with others being Ascensus, Betterment, OneAmerica, Paychex, American Funds, ADP Retirement Services and Wells Fargo.
Clearly, it's no longer business as usual when it comes to retirement plans, especially now that the old-fashioned retirement plan, which was funded by employers, has become a dinosaur. It's now largely replaced by the defined contribution model, primarily funded by employees themselves.
