The situation

The existing solution with the two defined contribution plans and non-qualified deferred compensation plans involved a bundled solution (the investment menu contains proprietary investments offered by the service provider). The defined benefit plans were administered in-house.

Initially, the Company wanted to receive advice on the investment menu for the two defined contribution plans. After several investment committee meetings, the scope of work expanded. The Company wanted to help employees prepare for retirement by including all retirement plan information with a combined statement and provide one-on-one investment advice for the defined contribution plans while considering pension benefits. The company wanted to reduce cost and risks associated with administering the defined benefit plans in-house.  

The Approach

This meant we needed to communicate the right message with participants about the benefits of each retirement plan. The goal was to focus on income replacement at retirement with participants. We needed to communicate all retirement plan benefits and offer participants an opportunity to receive investment advice in a one-on-one environment.

First, we analyzed the existing fee structure for all the Plan Sponsors retirement plans. Initially, we approached the incumbent service provider with the investment menu and expanded services for a quote. We separated the cost of the investments from the cost of service provider services with (using criteria in the investment policy statement) the introduction of an investment menu with virtually no revenue sharing. The expanded services included administrative services to the defined benefit plan and integrating this information with the defined contribution and non-qualified deferred compensation plans. Second, we conducted a request for quote on the expanded services against the incumbent, held final meetings, and selected a new service provider. 

The Result

The employer does not offer a contribution to the defined contribution plan as the employer contributes to the defined benefit plans. The retirement plan fees have been reduced by 41%. Participation increased from 60.1% to 79.6%. Average deferral rate increased from 3.50% to 6.82%. 40% of participants increased their salary deferral during re-enrollment to the new investment menu and service provider. The resulting solution includes a consolidated statement, portal, and projected income at retirement. One service provider serves all retirement plans to include full administration services to all the plans.