Some Thanksgiving Thanks!

Thanksgiving has been called a “uniquely American” holiday, and while that may be something of an overstatement, it is unquestionably a special holiday, and one on which it seems appropriate to reflect on all for which we should be thankful.

So, as I look back at this past year:

• I’m thankful that so many employers voluntarily choose to offer a workplace retirement plan – and that so many workers, given an opportunity to participate, do.

• I’m thankful that a growing number of employers have chosen to automatically enroll valued workers into these programs, and that they are increasingly opting to establish a default contribution rate in excess of the “traditional” 3%.

• I’m thankful that the vast majority of workers defaulted into retirement savings programs tend to remain there – and that there are mechanisms (automatic enrollment, contribution acceleration and qualified default investment alternatives) in place to help them save and invest better than they might otherwise.

• I continue to be thankful that participants, by and large, continue to hang in there with their commitment to retirement savings, despite lingering economic uncertainty and competing financial priorities, such as rising health care costs and college debt.
  

• I’m thankful that more plan sponsors are making it easier for workers to participate in retirement savings programs, and automatically enrolling them sooner and at higher default contribution rates.

• I’m thankful for the strong savings and investment behaviors emerging among younger workers – and for the innovations in plan design and employer support that foster them. I’m thankful that, as powerful as those mechanisms are in encouraging positive savings behavior, we continue to look for ways to improve and enhance their influence(s).

• I’m thankful for qualified default investment alternatives that make it easy for participants to benefit from well-diversified and regularly rebalanced investment portfolios – and for the thoughtful and ongoing review of those options by prudent plan fiduciaries. I’m hopeful that the nuances of those glidepaths have been adequately explained to those who invest in them, and that those nearing retirement will be better served by those devices than many were a decade ago.

• I am thankful that powerful, impactful legislation like the SECURE Act can still pass the often-divided House of Representatives on a robust bipartisan basis – though I can’t help but be disappointed that, for the moment, anyway, the much-needed benefits have fallen prey to other matters.

• I'm thankful for the increase in contribution and benefit limits - so that those who can afford to set aside more for retirement can do so (as we all strive to help our retirement funding keep pace with the cost of living).

• I’m thankful for the development of our new Certified Plan Sponsor Professional(TM) credential, the support of our education partners in not only developing the program, but in partnering with us, and our various advisor networks to help distribute critical education to plan sponsors who, though tasked with an awesome task, are seldom provided the training or education commensurate with that responsibility. 

• I’m thankful that figuring out ways to expand access to workplace retirement plans remains, even now, a bipartisan focus – even if the ways to address it aren’t always.

• I’m thankful that the ongoing “plot” to kill the 401(k)… (still) hasn’t. Yet.

• I’m thankful to be part of a team that champions retirement savings – and to be a part of helping improve and enhance that system.

• I’m thankful that those who regulate our industry continue to seek the input of those in the industry – and that so many, particularly those among our membership, take the time and energy to provide that input.

• I’m thankful for all of you who have supported – and I hope benefited from – our various conferences, education programs and communications throughout the year.

• I’m thankful for the opportunity to acknowledge so many outstanding professionals in our industry through our Top Women Advisor, Top Young Retirement Advisor (“Aces”), Top DC Wholesaler (Wingmen), and Top DC Advisor Team lists. I am thankful for the blue-ribbon panels of judges that volunteer their time, perspective and expertise to those evaluations.

• I’m thankful for the warmth with which readers and members, both old and new, continue to embrace the work we do here.

• I’m thankful for the team at the American Retirement Association, and for the strength, commitment and diversity of the membership. I’m thankful to be part of a growing organization in an important industry at a critical time. I’m thankful to be able, in some small way, to make a difference.

 But most of all, I’m once again thankful for the unconditional love and patience of my family, the camaraderie of an expanding circle of dear friends and colleagues, the opportunity to write and share these thoughts — and for the ongoing support and appreciation of readers… like you.

Wishing you and yours a very happy Thanksgiving!

- Nevin E. Adams, JD

Plan Sponsors Are From… Mars?

Do plan sponsors really know what participants want?

Back in the early 1990s, there was a very popular “self-help” book on relationships titled “Men Are From Mars, Women Are From Venus.” The basic premise, of course, was that men and women have different means and styles of communication – that, in essence, they might as well be from different planets (hence the title).

It suffers, as most such works do, from over-generalizing (to say the least – the hidden points system ostensibly maintained by each gender struck me as truly bizarre, even in the 1990s) – but it no doubt stimulated some relationship conversations, and if it opened some of those doors – well, that’s a good thing.

The relationship between plan sponsors and participants isn’t generally fraught with the same layers of complexity, but every so often a survey comes out that makes me think otherwise.

The latest was a report by American Century which surveyed (separately, but both during Q1 2019) 1,500 respondents between the ages of 25 and 65, currently working full-time outside the government and 500 defined contribution plan decision makers.

The survey found that only a small minority of plan participants (14% of those ages 25-54) wanted employers to "leave them alone" when it came to help with retirement savings – about half the number that plan sponsors thought felt that way. And, according to the survey, more than 80% of participants wanted at least a "slight nudge" from their employers (though, let’s face it, plan fiduciaries might well be reluctant to go too far).

On target-date funds, some 40% of responding employers felt that investment risk pertaining to market movements was the most important factor in target-date investments – while a comparable number of employees were more concerned about longevity risk (in fairness, investment risk wasn’t far behind).

Speaking of investments, nearly all – 90% - who either already offered or were considering offering ESG investments thought their participants would be interested (and why wouldn’t they), while two-thirds of sponsors say their retirement plan advisor is currently or should be recommending ESG solutions.

However, only 37% of participants actually expressed some interest in ESG options – and we’ve seen plenty of industry surveys (including the Plan Sponsor Council of America’s, among others – and that interest, not surprisingly, was apparently at least somewhat dependent on performance comparable to the average product. Ultimately, American Century found that while sponsors believed that 88% of workers were at least somewhat interested in the option, fewer than 40% actually were.

Sometimes the disconnects aren’t even between different parties; the American Century survey found that 82% of plan sponsors believe it was at least “very important” to measure how ready employees are for retirement – and yet only 46% formally did so.
Over the years, we’ve seen similar “disconnects” in the benefit priorities, availability of retirement income options, and, in fairness, we’ve also seen disconnects between what individuals say they would do – and what they seem to actually do given an opportunity. Not to mention those between plan sponsors and providers – and yes, between plan sponsors and advisors.

There are, of course, any number of rational explanations for those apparent gaps. We can be reasonably sure that these surveyed plan sponsors and participants aren’t coming from the same place - literally. We also know that different industries, and different employers, and even different geographic locations seek to hire and attract different kinds of workers – who are, in turn, motivated and attracted by different things – which they may or may not choose to share with their employer.

Sometimes people are more inclined toward openness with an anonymous survey – which may present option(s) they hadn’t even considered. And sometimes, of course, they’re “led” by questions designed to produce a certain outcome. Plan sponsors glean their sense of their workforce from any number of sources with a wide range of reliability – everything from personal experience, to industry surveys to the headlines in the press…to the inevitable “squeaky wheels” that (too?) often darken the door of HR with their latest complaint and/or suggestion.

That there are different perspectives should come as no real surprise – and, if the occasional survey highlights some apparent discrepancies in priorities, well one hopes that should spur some constructive consideration and engagement.   

Because, ultimately, what matters isn’t what “planet” you’re coming from – but that you’re speaking the same language.

- Nevin E. Adams, JD

How Much (Should) a New Committee Member Know?

A recent federal court decision should remind us all of the importance of plan committee education.

The case involved a suit by participants in the SunTrust 401(k) plan (see Is Fiduciary Responsibility Retroactive?) that challenged the initial selection of, and subsequent acquiescence with, an ostensibly imprudent plan investment menu. The court’s decision focused on one aspect of the case: the liability of “new” plan committee members for actions that predated their involvement on the committee, but continued after their involvement. The court, in a decision that will likely be viewed favorably by new committee members, excluded them from liability for committee moves that predated their participation, at least to the extent they lack “actual knowledge” of imprudence.

Along the way to that determination, Judge Orinda D. Evans of the U.S. District Court for the Northern District of Georgia incorporated the testimony of those new committee members as to the training/information they received as they joined. While it may reflect their recollection more than the reality, they convey[1] a very strong sense of being handed reading materials, and left to their own devices to fill in the blanks.

The deposition questions were doubtless focused on the particular aspect of fund selection, and perhaps dealt with nothing beyond that. Indeed, several of the committee members did recount both an exposure to the plan document itself and some awareness of the importance of their role as a plan fiduciary.

As a baseline, I have long maintained that every plan committee member needs to know that:

You are an ERISA fiduciary.

Even if you consider yourself to be a small and relatively silent member of the committee, you direct and influence retirement plan money, and fiduciary status is based on one’s responsibilities with the plan, not a title. Simply stated, if you (or the committee you are part of) control the plan’s assets (such as choosing the investment options or choosing the firm that chooses those options), you are a fiduciary to the extent of that discretion or control.

You are responsible for the actions of other plan fiduciaries.

All fiduciaries have potential liability for the actions of their co-fiduciaries. For example, the Department of Labor notes that if a fiduciary knowingly participates in another fiduciary’s breach of responsibility, conceals the breach, or does not act to correct it, that fiduciary is liable as well. So, it’s a good idea to know who your co-fiduciaries are – and to keep an eye on what they do, and are permitted to do.

As an ERISA fiduciary, your liability is personal.

If they didn’t hear this message out the outset, the onset of litigation surely brought this reality home to the committee members. A committee member may be required to restore any losses to the plan or to restore any profits gained through improper use of plan assets. Now, you can obtain insurance to protect against that personal liability – but that’s probably not the fiduciary liability insurance you may already have in place, or the fidelity bond that is often carried to protect the plan against loss resulting from fraudulent or dishonest acts of those covered by the bond. If you’re not sure what you have, find out. Today.

The plan’s investment policy matters.

Note that I didn’t say the plan’s investment policy statement. The law (ERISA) doesn’t require that you have a written investment policy statement, but that same law does expect that the plan’s investments will be monitored as though one was in writing. Indeed, the vast majority of plans do have a written IPS – more than 90%, according to the Plan Sponsor Council of America’s 61st Annual Survey of Profit Sharing and 401(k) Plans.

More than that, generally speaking, you should find it easier to conduct the plan’s investment business in accordance with a set of established, prudent standards if those standards are in writing, and not crafted at a point in time when you are desperately trying to make sense of the markets. In sum, you want an IPS in place before you need an IPS in place.

And a suggestion for you: have a formal “on-boarding” process for plan committee members.

Every plan, and every plan committee is unique. But the responsibility, and the prudent expert standard to which those responsibilities must be held applies uniformly – and it has been called “the highest known to the law.” In forming and conducting the committee it’s imperative not only that the members be selected wisely, but that they be informed and engaged so that they can adequately and fully discharge those responsibilities.

One recent court decision (Wildman v. Am. Century Servs.) in favor of the plan committee defendants explains that the committee met regularly three times a year, and had “special meetings if something arose that needed to be discussed before the regularly scheduled meetings.” Moreover, the defendants testified that those meetings “were productive and lasted as long as was needed to fully address each issue on the agenda. On average, the meetings lasted an hour to an hour and a half.”

The plan provided “training and information about their fiduciary duties, including a ‘Fiduciary Toolkit,’ which outlined their duties as fiduciaries, as well as a summary plan document, and articles regarding fiduciary duties in general.” That kit included a copy of the current Investment Policy Statement, and the court noted that “the Committee members read these materials and took their responsibilities as fiduciaries seriously.”

Arguably the personal interests of the new plan committee members in the SunTrust case were, at least at this stage, “well-served” by their lack of education (more specifically, the lack of “actual knowledge”) regarding the background of the decisions made prior to their appointment. However, this is only one set of issues, and they may yet be held to account for their subsequent affirmation (be it active or passive) in the continuance of those decisions.

And that’s when ignorance of your duties as a plan fiduciary can be really expensive.

- Nevin E. Adams, JD
 
Footnote

1. Defendant Jerome Lienhard stated in his deposition that he received binders describing the funds in the Plan “presumably” containing documents describing fiduciary standards, that he spoke with Defendants Donna Lange and Ken Houghton about being a Benefits Plan Committee member and, upon becoming a member of the Benefits Plan Committee in August of 2006, familiarized himself with the Plan document. However, he did not recall taking action to determine whether previous breaches of fiduciary responsibility had been committed.

Defendant Christopher Shults said that he received training regarding the funds in the Plan when he became a Benefits Plan Committee member, and that he was “directed… to meet with an investment consultant representative "to become more educated about the investment decisions made by the Benefits Plan Committee.” However, he did not "remember any of the details of specificity around what we discussed" and he did not recall discussing previous investment decisions by the Benefits Plan Committee with the representative. Nor did he recall learning about selection decisions made by the Benefits Plan Committee prior to his becoming a member.

Defendant Mimi Breeden remembered that she “would have talked to subject matter experts and [her] staff and others to come up to speed on what the committee’s work was” and “what key priorities were,” that she “probably” had knowledge of the history of the Plan before 1997 but could not recall it or any information about the 1996 selection of Affiliated Funds, and that she could not recall whether she ever knew about the initial selection of Plan funds in 1996.

Defendant Mary Steele was sure she had read the Plan document at some point while a member of the Benefits Plan Committee and that Defendant Donna Lange briefed her regarding her fiduciary responsibilities as a Benefits Plan Committee member and “the most important things that [she] need[ed] to know about the committee,” and that while she did not remember how the SunTrust proprietary funds first came to be offered in the Plan, but that the 1996 change in the Plan from common trust funds to mutual funds “sound[ed] familiar.”

Defendant Thomas Kuntz did not recall whether he received any training regarding his duties as a Benefits Plan Committee member or whether he reviewed prior meeting minutes, though he recalled that the Benefits Plan Committee, “[a] s a matter of course,” “reviewed all the funds in the plan ... for appropriateness.” In a disposition he explained that he believed the proprietary funds in the Plan were appropriately included because “[t]hey looked to be reasonable choices based on assessments that [he] might have had at the time,” though he did not recall what those assessments were.

Defendant Donna Lange said that she was not aware of the process used in initially selecting the Affiliated Funds in 1996, just that “the approved funds were in place when [she] arrived.” As for that 1996 fund selection, Lange went on to say that she did not "recall studying this other than being aware “this is the plan, this is what we started with.” She did state, however, that she knew the Plan was only using proprietary funds when she arrived.

Defendant Aleem Gillani stated in his deposition that he does not recall ever being briefed or “brought up to speed” on the Benefits Plan Committee's decisions prior to becoming a member, and that he had no knowledge of them when appointed to the Benefits Plan Committee.

Finally, Defendant William H. Rogers, Jr. stated in his deposition that he has no knowledge of the initial Affiliated Funds selection in 1996, 1999, and 2001.

Education Precedents

I’ve been working with retirement plans for my entire professional career, during which I have met, spoken with, and written to tens of thousands of plan sponsors. And yet, in all that time, and with all those people, I’ve not met more than a handful who had chosen that specific role as a career path. More often than not, they’ve found themselves in that role with no training, education or background in the role beyond an out-of-date plan document and the cryptic notes left behind by a harried predecessor.

Indeed, there’s more than a bit of irony that individuals who find themselves in a job with personal liability for their actions (and the actions of their co-fiduciaries), alongside an expectation of prudence that courts have described as the “highest known to man,” have had little in the way of practical, retirement-plan-focused training.

That’s a problem for those plan sponsor fiduciaries, of course, but also for the plan advisors who support them. While some may find it easier to lead someone who doesn’t know any better, every quality advisor I’ve ever met much prefers working with plan sponsors who know their job and responsibilities well enough to appreciate the value and contributions of a trained professional.

NAPA members have long valued the benefits not only of education in the field, but the ability – the critical need – to be able to stay up to date on the latest legal and regulatory developments. In addition to conferences, webcasts, and the NAPA Net Daily, we’ve helped you do just that. In the past few years, we’ve launched several NAPA credentials and certificates – the Certified Plan Fiduciary Advisor and more recently the Nonqualified Plan Advisor, as well as NAPA’s PracticeBuilder and Qualified Plan Financial Consultant (QPFC) credential.

Now it’s time for plan sponsors.

This need for education – and acknowledgement of expertise – of plan sponsors was one of the first items discussed with the Plan Sponsor Council of America as they joined the American Retirement Association. We’ve spent the past year in close collaboration with various subject matter experts, including volunteers and the leadership of the PSCA not only discussing this scope of this education need, but also developing a solution.

Last week we unveiled a new industry credential: the Certified Plan Sponsor Professional (PSCA CPSP^TM), and – coincident with the NAPA 401(k) Summit – we are extending to NAPA Certified Plan Fiduciary Advisors the opportunity to extend complimentary access for some of their plan sponsor clients and prospects to the education program associated with the CPSP credential.

Leveraging the latest in online education technology and adult learning methods, this three-course, nine-module online program was developed by plan sponsors and some of the nation’s leading retirement experts to improve and enhance plan sponsors’ understanding of how to effectively evaluate, design, implement and manage a comprehensive employer-sponsored retirement plan. It deals with establishing organizational objectives, plan design, behavioral finance and employee engagement, investment concepts, fiduciary oversight and risk management, compliance, and even vendor management. In sum, it deals with a broad spectrum of issues, concerns and insights regarding retirement plan design and administration.

The education program is designed so that plan sponsors with varying levels of experience and expertise can move through the course flexibly – but provides enough detail and supporting resources that those who are still relatively early in a plan sponsor role can focus on needed knowledge points. Ultimately, those who attain the CPSP credential, by possessing the requisite experience and passing the rigorous credentialing exam, will have demonstrated that they have the knowledge and practical application skills needed to protect their organization from unnecessary fiduciary risk while helping their plan participants achieve better outcomes.

We’re excited about this new credential, and its prospects – not only for enhancing the knowledge and appreciation of dedicated plan sponsors, and for helping advisors add value to their relationships, but also for the positive impact that valuable, practical, timely education in the hands and minds of dedicated retirement plan professionals surely has on the outcomes from our nation’s retirement system.

You can find out more about the program, the credential and the PSCA National Conference, where we’ll be sponsoring a preparatory boot camp for plan sponsors, at www.pscalearn.org.

- Nevin E. Adams, JD

The 3 Biggest Mistakes Fiduciaries Make

A recent Alliance Bernstein survey found that plan sponsors’ awareness of their fiduciary role, much less the responsibility, has deteriorated significantly in recent years. In fact, their survey found that less than half of plan sponsors knew they were fiduciaries.

Here are, in my estimation, the three biggest mistakes fiduciaries make.

Not knowing they are fiduciaries.

As noted above, a significant – and apparently growing – number of individuals who are, in fact, plan fiduciaries are oblivious to that reality. The reasons for that are varied, though the Alliance Bernstein survey suggests that knowledge gap is wider among those who serve on a plan committee than with those who have primary responsibility for the plan.

Of course, fiduciary status is based on one’s responsibilities with the plan, not a title. Simply stated, if you have discretion in administering and managing the plan, or if you control the plan’s assets (such as choosing the investment options or choosing the firm that chooses those options), you are a fiduciary to the extent of that discretion or control. If you are able to hire a fiduciary, you’re almost certainly a fiduciary.

Speaking of committees, if you’re responsible for selecting those who are on the committee(s) that administer the plan, you’re a fiduciary. Not to mention if you happen to be on a committee that makes decisions regarding the plan’s assets…

Not knowing the liability that comes with being a plan fiduciary.

ERISA fiduciaries are personally liable, and may be required to restore any losses to the plan or to restore any profits gained through improper use of plan assets. That’s right, the legal liability is personal (you can, however, buy insurance to protect against that personal liability – but that’s not the fiduciary liability insurance some have in place, nor is it typically covered by your standard corporate director liability insurance).

What does that liability mean? Consider that, in the Enron case, the outside directors and committee members settled for about $100 million, most of which was paid by the fiduciary insurer. However, the individuals also had to pay approximately $1.5 million from their own pockets.

And all fiduciaries have potential liability for the actions of their co-fiduciaries. So it’s a good idea to know who your co-fiduciaries are – and to keep an eye on what they do, and are permitted to do.

Thinking that they can outsource their fiduciary liability.

Even when they aren’t fully aware of their liability exposure – and certainly once they are – plan fiduciaries have a strong interest in shielding themselves from the consequences of that exposure.
They often think that by hiring another plan fiduciary – and frequently that’s a financial advisor –  they have managed to absolve themselves from that responsibility.

As it turns out, ERISA has a couple of very specific exceptions; more precisely, ways in which you can limit – but not eliminate – your fiduciary obligations. One exception has to do with the specific decisions made by a qualified investment manager – but even then, the plan fiduciary remains responsible for the prudent selection and monitoring of that investment manager’s activities on behalf of the plan.

The second exception has to do with specific investment decisions made by properly informed and empowered individual participants in accordance with ERISA section 404(c). Here also, even if the plan meets the 404(c) criteria (and it is by no means certain it will), the plan fiduciary remains responsible for the prudent selection and monitoring of the options on the investment menu.

It is important to remember that ERISA’s “prudent man” rule is a standard of care, and when fiduciaries act for the exclusive purpose of providing benefits, they must act at the level of a hypothetical knowledgeable person and must reach informed and reasoned decisions consistent with that standard. Fiduciaries who are concerned that they fall short of that standard – and let’s face it, many, perhaps most, are placed in those roles without training – may want to look to the counsel of the Department of Labor, which has said that “[l]acking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions.”

Doing so may not insulate you from all liability – but turning to experts is not only prudent, it surely minimizes the likelihood of making big mistakes.

- Nevin E. Adams, JD

View "Points"

By any measure, the just-concluded NAPA 401(k) Summit was an incredible, record-breaking success – with so much good content and networking that it was hard to choose between sessions. For those who weren’t able to be there – or who were unable to be everywhere at once – here are some random thoughts, insights and perspectives from that event.

Health savings accounts could wind up being a big deal.

One man’s loophole is another man’s incredibly important tax preference.

The most important thing is not what happened, it’s what’s going to happen.

Online gambling didn’t kill Vegas – and robo-advisors won’t kill 401(k) advice.

In tax reform, everything is about trade-offs.

84% of Millennials surveyed want their investments to make the world better.

Retirement plans are about 1/50th of what a plan sponsor does.

Fees are still a major factor in landing a new client.

Most people want to do the right thing, but they don’t know how to do it.

When the market goes down, lawsuits go up.

Claiming Social Security before age 66 permanently reduces a client’s retirement benefit. Almost
75% of Americans claim Social Security before their Full Retirement Age.

After 66, Social Security retirement benefits grow by 8% per year.

All PEPs are MEPs but not all MEPs are PEPs.

People want to be financially secure. They know what to do to become financially secure. Yet, they are not financially secure.

What do you have “in your head” that’s not on your website?

In 1835 the normal retirement age was… death.

The DOL’s been very clear that “QDIA protection evaporates” under certain circumstances.

President Trump is like a tech stock – he could fly high, or he could be a train wreck.

For a plan committee, especially when it comes to investment changes, doing nothing is often best.

For prospects, at the end of the day, client references are the ultimate value message.

Repeatability is an important key to building a practice.

Plan sponsor: “Don’t assume what’s obvious to you is obvious to me.”

So, how are you going to top this?

We heard the latter a number of times during the course of the 2017 NAPA 401(k) Summit – which admittedly set a whole new standard for what has become the nation’s retirement plan advisor convention. But we also heard that after the 2016 NAPA 401(k) Summit, and I think we managed to do so. Thanks again to our sponsors, our presenters and facilitators, and most particularly those who supported the event with your attendance and participation – who were all part of a remarkable experience!

If you were there, tell a friend. And whether you were there or not, make plans now to attend the 2018 NAPA 401(k) Summit – and see how we’ll top this year’s!

Sign up for updates at http://napasummit.org/.

- Nevin E. Adams, JD

5 Things Plan Sponsors Don’t (Always) Do — But Should

There is frequently a difference between doing all that the law requires of a plan sponsor and doing everything that could be done.

Here are five things that plan sponsors don’t always do — but should.

1. Have a Plan/Plan Investment Committee.

ERISA only requires that the named fiduciary (and there must be one of those) make decisions regarding the plan that are in the best interests of plan participants and beneficiaries, and that are the types of decisions that a prudent expert would make about such matters. ERISA does not require that you make those decisions by yourself — and, in fact, requires that, if you lack the requisite expertise, you enlist the support of those who do have it.

However, having a committee for having a committee’s sake can not only hinder your decisions — it can result in bad decisions. Make sure your committee members add value to the process. (Hint: Once they discover that ERISA has a personal liability clause, casual participants generally drop out quickly.)

2. Keep Minutes of Committee Meetings.

There is an old ERISA adage that says “prudence is process.” However, an updated version of that adage might be “prudence is process — but only if you can prove it.” To that end, a written record of the activities of the plan committee(s) is an essential ingredient in validating not only the results, but also the thought process behind those deliberations.

More significantly, those minutes can provide committee members — both past and future — with a sense of the environment at the time decisions were made, the alternatives presented, and the rationale offered for each, as well as what those decisions were. They also can be an invaluable tool in reassessing those decisions at the appropriate time and making adjustments as warranted — properly documented, of course.

3. Have an Investment Policy Statement.

While plan advisers and consultants routinely counsel on the need for, and importance of, an investment policy statement, the reality is that the law does not require one, and thus, many plan sponsors — sometimes at the direction of legal counsel — choose not to put one in place. Of course, if the law does not specifically require a written investment policy statement (IPS) — think of it as investment guidelines for the plan — ERISA nonetheless basically anticipates that plan fiduciaries will conduct themselves as though they had one in place. And, generally speaking, plan sponsors (and the advisors they work with) will find it easier to conduct the plan’s investment business in accordance with a set of established, prudent standards if those standards are in writing, and not crafted at a point in time when you are desperately trying to make sense of the markets. In sum, you want an IPS in place before you need an IPS in place.

It is worth noting that, though it is not legally required, Labor Department auditors routinely ask for a copy of the plan’s IPS as one of their first requests. And therein lies the rationale behind the counsel of some in the legal profession to forego having a formal IPS; because if there is one thing worse than not having an investment policy statement, it is having an investment policy statement — in writing — that is not followed.

4. Remove ‘Bad’ Funds from the Plan Menu.

Whether or not the plan has an official investment policy statement (IPS), plan sponsors are expected to conduct a review of the plan’s investment options as though they do. Sooner or later, that review will turn up a fund (or two) that no longer meets the criteria established for the plan. That’s when you will find the true “mettle” of the investment policy; will the plan sponsor/committee have the discipline to do the right thing and drop the fund(s), or will they succumb to the very human temptation to leave it on the menu (though perhaps discouraging or even preventing future investment)? Oh, and make no mistake — there will be someone with money in that fund. Maybe even a senior executive. Still, how can leaving an inappropriate fund on your menu — and allowing participants to invest in it — be a good thing?

5. Monitor Providers on a Regular Basis.

In some sense, we all “monitor” the performance of our plan provider all the time. Is the website available when people try to access it? Do checks and statements arrive on time? Are the balances displayed accurate? The reality is that, for most of us, no news is seen as “good” news. After all, if the answer to any of the foregoing questions was “no,” we’d not only know about it, we’d be complaining about it (after fending off our own set of complaining phone calls). Plan sponsors have a very full-time job dealing with a myriad of things that are “broken” — why go looking for trouble?

At least once a year — no matter how well things are going — it’s worth determining if your plan has access to the new services that have come online since you converted; that you are getting the advantages of the most current thinking about costs and fees; and how your plan’s participation, deferral, and asset diversification stack up. And yes, even with a reliable provider, you may have to ask.

Beyond that, every three to five years (sooner if there are problems, of course), plan sponsors should go through a formal request for information (RFI) or request for proposal (RFP) process—on your own, or with the help of an adviser (who undoubtedly has more experience with such things).

Two other things to keep in mind: First, if you are a fiduciary, and you feel that you lack the expertise to make those decisions, you will of course want — and, in fact, are expected — to hire someone with that professional knowledge to help.

Secondly, while fiduciaries are often reminded of the things they shouldn’t do, recent litigation trends suggest that they’re just as likely to get sued (if not more so) for failing to do something they should be.

- Nevin E. Adams, JD

7 Common Retirement Plan Mistakes

The headlines are all about revenue-sharing, conflicts of interest and statutes of limitation — but the things that are likely to get plans and plan sponsors in trouble are a lot more mundane.

Here are seven that are more likely to gum up the works for your average plan sponsor.

1. Not following the terms of the plan document regarding the administration of loan provisions (maximum amounts, repayment schedules, etc.) or hardship withdrawals.

Plan documents routinely provide that hardship distributions can only be obtained for certain very specific reasons, and that participants first avail themselves of all other sources of financing before applying for hardship distributions. (These conditions often are incorporated directly from the requirements of the law.) Similarly, loans are permissible from these programs only when they comply with certain standards regarding the amount, purpose and repayment terms.

Failure to ensure that these legal requirements are met can, of course, result in a distribution that is not authorized under the terms of the plan document. And since these types of distributions are often spent quickly by participants, and thus are not readily recoverable, it can be complicated and time-consuming to set the situation right.

Oh, and don’t forget that administrative procedures for dealing with such things have been known to be, or become, inconsistent with plan documents over time.

2. Failure to follow plan document eligibility and vesting provisions.

The plan document also spells out employees’ rights to retirement benefits and the formulas for determining them based on the correct application of service and/or age requirements of the plan regarding eligibility for participation, as well as the proper application of the plan’s vesting schedule.

To comply with those requirements, you need to maintain accurate service records for all employees. If these records are incorrect, the benefits provided may be incorrect — either in excess of what is permissible or less than what was due to the participant. Note that the failure to properly follow the plan’s provisions can cause the plan to lose its qualified status.

The plan document serves as the foundation for plan operations; simply put, it is the operating manual for the plan. Sometimes, particularly if you are relying on a document that has been prepared by a third-party service provider, certain “gaps” can emerge between what the document allows and how the plan is actually administered. As a result, it is a good idea to conduct a document/process “audit” every couple of years. Don’t assume that “the way we’ve always done things” is supported by the legal document governing your plan.

3. Not keeping your plan document up to date.

As central to the plan’s operation as the plan document should be, it needs to be updated when the tax laws affecting 401(k) plans change. The IRS generally establishes a firm deadline by which plan amendments reflecting tax law changes must be adopted. If you don’t remember the last time you updated your plan, you’re probably overdue.

4. Not starting required minimum distributions (RMDs) on time.

A minimum payment must be made to the participant by the required beginning date (RBD) and for each following year. Normally, the RBD for a participant who is not a 5% owner is April 1 following the end of the calendar year in which the latter of two events occurs: either the participant reaches age 70½ or the participant retires. For 5% owners, the RBD is April 1 following the end of the calendar year in which they attain age 70½ regardless of their retirement date.

Plan sponsors often discover that required minimum payments either have not been paid on a timely basis or have not been paid at all, especially when a non-5% owner continues working after reaching age 70½. Failure to follow the minimum payment rules as written in the plan document can lead to the loss of the plan’s tax-qualified status. If participants or beneficiaries do not receive their minimum distribution on time, they — not the plan — are subject to a 50% additional tax on the underpayment.

5. Not depositing participant contributions on a timely basis.

The legal requirements for depositing contributions to the plan are perhaps the most widely misunderstood elements of plan administration. A delay in contribution deposits is also one of the most common flags that an employer is in financial trouble — and that the Labor Department is likely to investigate.

Note that the law requires that participant contributions be deposited in the plan as soon as it is reasonably possible to segregate them from the company’s assets, but no later than the 15th business day of the month following the payday. If employers can reasonably make the deposits sooner, they need to do so. Many have read the worst-case situation (the 15th business day of the month following) to be the legal requirement. It is not.

Note also that the rules about the timing of matching contributions or other employer contributions are different than those for elective deferrals.

6. Failing to obtain spousal consent.

A common plan mistake submitted for correction under the Voluntary Correction Program (VCP) is the distribution to a participant of a benefit in a form other than the required QJSA (e.g., a single lump sum) without securing proper consent from the spouse. This often happens when the sponsor’s HR accounting system incorrectly classifies a participant as not married (or when the participant was not married at one point and subsequently married or remarried).

The failure to provide proper spousal consent is an operational qualification mistake that would cause the plan to lose its tax-qualified status.

7. Paying expenses from the plan that are not eligible to be paid from plan assets.

Assuming that the plan allows it (another plan document check), the Department of Labor has divided plan expenses into two types: so-called “settlor expenses,” which must be borne by the employer; and administrative expenses, which — if they are reasonable — may be paid from plan assets. In general, settlor expenses include the cost of any services provided to establish, terminate or design the plan. These are the types of services that generally are seen as benefiting the employer, rather than the plan beneficiaries.

Administrative expenses include fees and costs associated with things like amending the plan to keep it in compliance with tax laws, conducting nondiscrimination testing, performing participant recordkeeping services or providing plan information to participants.

- Nevin E. Adams, JD

IRS Guidance Available
 
As for plans that fall short of any of the above, the IRS has resources available to help you identify these problems before they occur — and an outline of how to go about fixing them if they do occur. And should you find a plan in one of the foregoing predicaments, you might want to check out these resources from the IRS:

• If you haven’t updated your plan document.

• If you have issues with required minimum distributions.

• If you haven’t made contributions on a timely basis.

• If you didn’t get spousal consent.

5 Investment Committee Lessons Learned From Tibble

Two things have been overlooked by many people in the days leading up to the Supreme Court’s decision in Tibble v. Edison International and the weeks thereafter: (1) most of the wrongs¹ initially alleged did not survive the judgment of the district court; and (2) only a single issue — the determination as to how to apply ERISA’s statute of limitations to fund selection — was before the nation’s highest court.

While the Supreme Court rejected the notion that an initial fund review was sufficient in the absence of significant changes in circumstance to preclude the need for an ongoing assessment, the defendants in Tibble did a lot of things right that many plans don’t. Here are five:

1. They had a plan investment committee.

ERISA only requires that the named fiduciary (and there must be one of those) make decisions regarding the plan that are in the best interests of plan participants and beneficiaries, and that are the types of decisions that a prudent expert would make about such matters. ERISA does not require that you make those decisions by yourself — and, in fact, requires that if you lack the requisite expertise, you must enlist the support of those who do have it. No committee required.

2. They had regular committee meetings.

Having a committee and not having committee meetings is potentially worse than not having a committee at all. If there is a group charged with overseeing the activities of the plan and that group doesn’t convene, then one might well assume that the plan is not being properly managed, or that the plan’s activities and providers are not prudently managed and monitored, as the law requires. The Edison investment committee met quarterly to review plan investments and to review reports and recommendations from investment staff.

3. They kept minutes of committee meetings.

There is an old ERISA adage that says, “prudence is process.” However, an updated version of that adage might be “prudence is process — but only if you can prove it.” To that end, a written record of the activities of your plan committee(s) is an essential ingredient in validating not only the results, but also the thought process behind those deliberations.

More significantly, those minutes can provide committee members — both past and future — with a sense of the environment at the time decisions were made, the alternatives presented and the rationale offered for each, as well as what those decisions were. They also can be an invaluable tool in reassessing those decisions at the appropriate time and making adjustments as warranted — properly documented, of course. And they can be useful in subsequent litigation. Or not.²

4. They had an investment policy statement.

While plan advisors and consultants routinely counsel on the need for, and importance of, an investment policy statement, the reality is that the law does not require one, and thus, many plan sponsors — sometimes at direction of legal counsel — choose not to put one in place.

Of course, if the law does not specifically require a written investment policy statement (IPS) — think of it as investment guidelines for the plan — ERISA nonetheless basically anticipates that plan fiduciaries will conduct themselves as though they had one in place. And, generally speaking, you should find it easier to conduct the plan’s investment business in accordance with a set of established, prudent standards if those standards are in writing, and not crafted at a point in time when you are desperately trying to make sense of the markets. In sum, you want an IPS in place before you need an IPS in place.

Not also that, while not legally required, Labor Department auditors routinely ask for a copy of the plan’s IPS as one of their first requests. And therein lies the rationale behind the counsel of some in the legal profession to forego having a formal IPS: Because if there is one thing worse than not having an investment policy statement, it is having an investment policy statement — in writing — that is not followed.

That said, the Edison investment committee had an IPS, and by all accounts, were attentive to its terms. Terms that apparently were focused on the investment and asset allocation aspects of the fund choices, rather than on the costs and alternatives.

5. They hired an investment professional to help.

The Edison plan investment committee had access to, and relied on the services of, an investment adviser (AonHewitt’s investment consulting arm) to review/select/monitor funds. And they did make fund changes during the period in question (in fact, the district court noted that in 33 of 39 instances during the period in question, they replaced funds with others that actually decreased the revenue-sharing received by the plan).

The Tibble defendants clearly did a lot of things right in reviewing and monitoring their investment menu — so what did they do wrong?

Well, with regard to this litigation, what this $2 billion+ plan didn’t do was ask investment fund providers to waive the minimums for investment in institutional class shares, shares that were reportedly identical in every way save one (fees) to the retail class chosen. It might well be that the IPS itself and the focus of the committee didn’t consider all the factors (notably fees) that play into fund performance and suitability, and should be considered.

Following the Supreme Court’s ruling, it’s clear there is a fiduciary duty to review the funds on the retirement plan menu on an ongoing basis, though how much and how often remain to be established.
But perhaps most importantly, one lesson is now crystal clear now, if it wasn’t previously: “set it and forget it” is not an appropriate standard of review for ERISA fiduciaries.

Nevin E. Adams, JD

Footnotes

1. The district court cited three possible rationales for the retention of retail-class shares offered by witnesses for the defendant/employers — but found no evidence for them in the actions taken (or not taken).

2. The district court noted that witnesses for the defendant/employers offered three possible rationales for keeping the retail shares: If the retail share class of a certain mutual fund had significant performance history and a Morningstar rating, but the institutional share class did not; to avoid confusion among participants resulting from frequent changes in the fund; or if there were certain minimum investment requirements. But Judge Stephen V. Wilson noted that, “None of these explanations is supported by the facts in this case.”

QDIA Essentials

PLANSPONSOR’s National Conference last week featured a series of panels titled “Five Things You Need to Know About…” focused on a series of topics.

One of those was qualified default investment arrangements (1), or QDIAs—and while the “five things” that follow are somewhat different from the list presented by that panel, what follows was certainly inspired by the discussion.

Here’s my list:


(1) You don’t need to have a QDIA to get 404(c) protection.

IMHO, one of the most marvellous things about the Pension Protection Act’s defined contribution provisions was that they weren’t imposed on plan sponsors. They provided clarity, structure, guidance, and, yes, protection on things like automatic enrollment, contribution acceleration, and default fund choices—but didn’t require that you embrace these concepts, unless, of course, you hoped to benefit from the protections associated with adhering to those structures. Sure, IMHO, it’s a lot easier to obtain 404(c) protection under the umbrella of the PPA’s qualified default investment alternative (QDIA) provisions—but plan sponsors who had those protections in place before the PPA can still have them by still continuing to doing the things required to retain them today.

(2) You need to pay attention to participant notices.

Among all the fuss over what a QDIA is, and the applicable structures for automatically enrolling participants in those options, it has been easy to gloss over the requirement to notify those defaulting workers that they are being defaulted, and that they have a right to opt out—both upon enrollment and annually thereafter. Failure to provide the proper notices at the proper times has long been an impediment to fulfilling 404(c)’s conditions—and, if you’re not careful, perhaps enough to thwart QDIA’s shield as well.

(3) A QDIA doesn’t have to be a target-date fund.

Admittedly, target-date funds are the low-hanging fruit of QDIA options. While balanced funds, managed accounts, or even target-risk funds are explicitly acknowledged in the regulations, it is also clear that in order to be “qualified,” the QDIA must be structured in such a way as to take into account the age of the participant and/or the workforce (see “IMHO: It’s About Time” at http://www.plansponsor.com/IMHO___It’s_About_Time.aspx). New adoptions seem to be embracing the target-date approach, but, at least anecdotally, it seems that plan sponsors who previously had a balanced-fund default are finding ways to make it work.

(4) The fiduciary requirements to prudently monitor and select a QDIA are no less than for any other plan investment option—and they are fiduciary requirements.

Plan fiduciaries can reap significant benefits from the adoption of a QDIA, and participants even more so—if the option is prudently selected and monitored. Now, personally, I think you could make a case that the selection of an investment fund in lieu of any participant direction whatsoever (much less one that studies consistently indicate will likely never be reallocated) should, if anything, be held to a higher standard than that imposed on the “regular” investment options on the retirement plan menu.

But, at a minimum, in the QDIA regulations, the Labor Department made it abundantly clear that “selection of a particular qualified default investment alternative… is a fiduciary act and, therefore, ERISA obligates fiduciaries to act prudently and solely in the interest of the plan’s participants and beneficiaries.”

Moreover, that, “[a]s with other investment alternatives made available under the plan, fiduciaries must carefully consider investment fees and expenses when choosing a qualified default investment alternative.”

(5) Just because a default fund isn’t a QDIA doesn’t mean it isn’t a prudent default choice.

While target-date vehicles are certainly convenient for plan sponsors and well-received by participants—and explicitly acknowledged as QDIA-eligible—they aren’t the exclusive prudent choice for a default option. Of course, choosing something else—a target-risk fund with no age orientation, a balanced offering, or even a stable value fund—won’t afford you the same protections that a QDIA will. On the other hand, a well-chosen, thoughtfully monitored investment default might not require them.

—Nevin E. Adams, JD

(1) Default investments are investment options chosen by plan fiduciaries in situations where participants fail to provide investment instructions, either through some kind of administrative oversight, or in cases such as automatic enrollment. The Pension Protection Act of 2006 (PPA) provided certain specific conditions under which plan fiduciaries would be afforded special protections when certain specific qualified default investment alternatives were provided for that purpose.

Duty 'Calls'

When it comes to qualified retirement plans, there are three kinds of people: people who are fiduciaries and know it, people who aren’t fiduciaries and know it, and people who are fiduciaries and don’t know it.

Now, for the most part, those in the first category are in pretty good shape. Oh, there are a plethora of ways in which a fiduciary can fail to uphold his or her responsibilities under the Employee Retirement Income Security Act (ERISA)—but, in my experience, if you’re at least trying to do the right thing(s), and taking the time to document that effort, you’re in good shape. Still, even those who are trying to do the right things—and who embrace that role—don’t always fully appreciate the implications.

The second category mostly tends to include those folks or firms that provide services to the retirement plan fiduciaries. Most enjoy that status because they don’t technically have any authority to do anything on their own; they just help those who do know what to do. Of course, there are some who think they are in the second category—who are actually in the third category.

As for that third category—well, if your plan sponsor clients are there, IMHO, it means you aren’t doing your job as a plan adviser. Here are seven things that every plan sponsor should know about being a fiduciary:

If you’re a plan sponsor, you’re a fiduciary.

Fiduciary status is based on your responsibilities with the plan, not your title. If you have discretion in administering and managing the plan, or if you control the plan’s assets (such as choosing the investment options or choosing the firm that chooses those options), you are a fiduciary to the extent of that discretion or control. If you’re not sure—and are worried that you aren’t sure—there’s a good chance you are.

Note that every plan must have at least one fiduciary (either a person or an entity) specifically named in the written plan document, a “named fiduciary” that is either identified by office or by name.

Of course, if there is a title less well-understood than “fiduciary,” it may well be “plan sponsor.”

For the very most part, you can’t offload or outsource your fiduciary responsibility.

ERISA has a couple of very specific exceptions; more precisely, ways in which you can limit—but not eliminate—your fiduciary obligations. One exception has to do with the specific decisions made by a qualified investment manager—and, regardless, you remain responsible for the prudent selection and monitoring of that investment manager’s activities on behalf of the plan. The second exception has to do with specific investment decisions made by properly informed and empowered individual participants in accordance with ERISA’s 404(c). Here also, even if your plan meets the 404(c) criteria (and it is by no means certain it will)—you remain responsible for the prudent selection and monitoring of the options on the investment menu from which they are selecting (1).

Outside of these two exceptions, you’re essentially responsible for the quality of the investments of the plan—including those that participants make.

If you’re responsible for selecting those who are on the committee(s) that administer the plan, you’re a fiduciary. If you are able to hire a fiduciary, you’re (probably) a fiduciary.

The power to put others in a position of power regarding plan assets is as critical as the ability to make decisions regarding those investments directly.

Hiring a co-fiduciary doesn’t keep you from being a fiduciary.

Moreover, all fiduciaries have potential liability for the actions of their co-fiduciaries. If a fiduciary knowingly participates in another fiduciary’s breach of responsibility, conceals that breach, or does not take steps to correct it, both are liable.

You have personal liability as an ERISA fiduciary.

That’s right, the legal liability is personal (you can, however, buy insurance to protect against that personal liability—but that’s not the fiduciary liability insurance you may already have in place).

You may be required to restore any losses to the plan or to restore any profits gained through improper use of plan assets. Consider that, in the Enron case, the outside directors and committee members settled for about $100 million, most of which was paid by the fiduciary insurer. However, the individuals also had to pay approximately $1.5 million from their own pockets.

Once you’re a fiduciary, you can’t just quit and walk away.

The Department of Labor cautions that “fiduciaries who no longer want to serve in that role cannot simply walk away from their responsibilities, even if the plan has other fiduciaries. They need to follow plan procedures and make sure that another fiduciary is carrying out the responsibilities left behind. It is critical that a plan has fiduciaries in place so that it can continue operations and participants have a way to interact with the plan.”

You’re expected to be an expert—or to hire help that is.

ERISA’s Prudent Man rule is a standard of care, and when fiduciaries act for the exclusive purpose of providing benefits, they must act at the level of a hypothetical knowledgeable person and must reach informed and reasoned decisions consistent with that standard. None other than the Department of Labor itself notes that “[l]acking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions.”

As a plan fiduciary, it’s never too late to start doing the right things the right way. But doing the right things means understanding what is expected of you—and appreciating the implications.

—Nevin E. Adams, JD

For more information, see Fiduciary Fundamentals

http://www.dol.gov/elaws/ERISAFiduciary.htm

(1) With the enactment of the Pension Protection Act of 2006 (PPA), fiduciaries who automatically enroll participants in accordance with the provisions of the automatic enrollment safe harbor into a qualified default investment alternative (QDIA) get the protections of 404(c ) for those balances. However, the plan fiduciary remains responsible for the prudent selection and monitoring of the QDIA itself.

Crisis of Confidence

I’m old enough to have been a driver (albeit a young one) the last time we had a “real” gas crisis (the one where the issue was not being able to buy gas, not just being able to afford to buy gas).

I can still remember the national sense of frustration when a bunch of crackpots in Iran held 52 Americans hostage for 444 days; the concerns when the USSR, using language startlingly similar to that employed during the recent invasion of Georgia, strolled into Afghanistan—and, yes, I can still remember what a “real” recession felt like (the one where we actually had a 5% drop in GDP).

I also remember the “response” of our leaders in Washington at the time. Now, it’s easy to sit on the sidelines and judge those who actually have to make the tough decisions, but I think it’s fair to say that a common sentiment was that we were “getting what we deserved.” America had too long strutted the world stage imposing its values on others, some said—this was just the ghosts of Vietnam and Watergate coming home to roost. We were told that we were suffering from a crisis of confidence, a “national malaise.” It was, some said, simply time we, as a nation, learned to make do with less.

Fortunately, IMHO, not everyone accepted that assessment as a foregone conclusion. The turnaround wasn’t overnight, and it wasn’t easy. But it began with a leader who saw America’s best days still ahead, who was willing to call to mind that “shining city on the hill.” Frankly, it began when people began to believe they could solve the problems confronting them, rather than being victims of circumstance.

Now, I wouldn’t for a moment suggest that the current economy isn’t struggling. Like you, I feel the anger every time I pull up to the pump—that I get excited at the prospect of paying (slightly) less than $4/gallon is troubling, in and of itself. Like yours, no doubt, my 401(k) portfolio has seen (much) better days, and I have every reason to expect that I’ll be paying twice as much to heat my home this winter as I did a year ago.

Unfortunately, it seems that there is today a growing chorus of “it’s all our own fault” and a willingness, if not an eagerness—at least on the part of some—to once again effectively throw in the towel. Not just on the economy, mind you, or gas prices, but on the employer-sponsored retirement system.

Encouraging Words

It was encouraging, therefore, to see this week’s report from Fidelity that suggested that deferrals were up, albeit slightly, even while balances were down over the past year. It was even more encouraging that participants who had been deferring into the same plan year over year saw a more significant increase (see “Fidelity Database Shows Participants More Inclined To Save”), while statistics on participant loans (down slightly) and hardship withdrawals (up slightly) suggest that participants are, in large part, not only staying the course, but upping their ante.

Our industry has long cautioned against the consequences of not preparing adequately for retirement, but those June 30 participant statements were almost certainly a shock to participants who had been acting on those admonitions. Certainly there were some (perhaps many) who, as the averages in the Fidelity study suggest, saw their entire quarter’s contributions apparently “disappear” into the ether, swept under by the market’s maelstrom. That will, no doubt, fan concerns about how “safe” your 401(k) (or 403(b) or 457) plan is.

Without question, changes will be required. The three-legged stool, to the extent it ever existed, is a thing of the past for most workers (see "Saving While You Still Work"). We may well have to rethink our notion of retirement—though I’m not sure that notion will wind up being much different than the one our parents are already living. And yes, I think the federal government may well be part of the solution—but I don’t think most Americans want government to be THE solution.

The Fidelity survey offers hope—a reassurance that we can make (and are making) a difference; that we don’t necessarily have to lower our expectations of people. We could always do more—and perhaps better—of course. We need to keep exploring the reasons people hesitate to save, or don’t save enough. We need to continue to find solutions, like target-date funds, that make it easy to do the right things when it comes to retirement savings. We need to be willing to be open and honest not only about the goals and risks of these programs, but about their costs. We need to continue to encourage employers of all sizes to remain committed to these programs.

And, yes, we need to do all of that with an appreciation of the importance of our mission—and confidence in the abilities of ourselves and our profession to succeed.

- Nevin E. Adams, JD

Legends for Our Times

Ours is an industry of fairly recent invention–one that is, in many respects, only just beginning to emerge from the growth pangs of adolescence. Ours is an industry constantly and dramatically evolving–and one that all too often seems relentlessly driven to push us forward to the next challenge, through the next legislative overhaul, and onto the next wave of tumult in the markets, sometimes in the same six-month period. For plan sponsors, change is not only the order of the day, it is the day. That certainly has been true for the 15 years during which PLANSPONSOR has been published.

But if the pace is relentlessly forward, there are nonetheless those among us who have a vision that stands out from the crush of the day, who provide a better way for the rest of us, either through thoughts or deeds, to succeed in helping bring about a more secure future for those who depend on us.

As our 15th anniversary approached, we began thinking about those individuals--individuals who have made an impact on this business of retirement benefits. For clarity, we limited our focus to the past 15 years, though there are certainly individuals whose contributions predate that timeframe and whose impact is still felt today. We also limited our list to 15, though it could easily have been twice that size.

They are leaders, innovators, partners—some have challenged the status quo, others have laid the foundation for a new one, and still others have helped us all negotiate the period(s) in between. There are some familiar faces, as you might expect–many have appeared in our pages over the years, several were highlighted as “influencers” in our 10th anniversary issue, and a number have subsequently been honored with PLANSPONSOR’s Lifetime Achievement Award. There also are some with which you may not be familiar, though you are almost certainly aware of their contributions. We are pleased to be able to introduce them to you here. Admittedly, there may well be those on this list that some may challenge–or some not represented who have arguably made equally significant contributions.

This is, however, our list–15 who have, in our estimation, during the passage of the past decade and a half, made a lasting contribution to the nation’s retirement security.

There are those who make a difference in our lives– parents, spouses, mentors, friends–and then there are those who make a difference in all of our lives.

They are legends.

- Nevin E. Adams, JD

The legends are online HERE