Defined Contribution Benchmarking Survey

Transcription

1 Defined Contribution Benchmarking Survey Appendix 2017 Edition

2 Appendix Exhibit 1.1. Please indicate the primary nature of your business. Technology, Media, and Telecommunications 8% Consumer Business and Transportation 12% Exhibit 1.2. Please indicate the ownership structure of your company. Public Sector 12% Professional Services 9% Energy and Resources 8% Financial Services 22% Publicly Held 48% Privately Held 52% Manufacturing 17% Health Care and Life Sciences 12% n=239 n=239 Exhibit 1.3. How many employees work for your company? Exhibit 1.4. Please identify whether you are responding for a: 403(b) Plan 8% % 8% 8% % 11% 12% % 10% 10% % 31% 23% 5,001 10,000 22% 13% 10% More than 10,000 23% 27% 37% n= (k) Plan 92% n=216 2

3 Exhibit 1.5. Please identify whether you are responding for a: Exhibit 1.6. What are the total plan assets in your plan? Union Plan 2% Nonunion Plan 98% n=216 Less than $5M 9% 7% 3% $5M 10M 10% 4% 6% $10M 25M 10% 8% 7% $25M 50M 9% 8% 5% $50M 100M 8% 9% 11% $100M 500M 23% 27% 28% $500M 1B 11% 13% 11% $1B 5B 16% 18% 22% More than $5B 3% 6% 7% n=208 3

4 Exhibit 1.7. Please indicate your primary provider for administrative services: ADP 1% 1% 1% American Funds Distributors, Inc. 0% 1% 1% Aon Hewitt 5% 6% 3% Ascensus 0% 1% 0% Bank of America/Merrill Lynch 3% 3% 2% BB&T 0% 0% 0% Ceridian 0% 0% 0% City National Bank 0% 0% 0% Charles Schwab & Co., Inc. 0% 3% 2% Conduent (Xerox) 0% 0% 1% Deutsche Asset Management DST Retirement Solutions, LLC 0% 0% 0% 0% 0% 1% Empower Retirement 0% 5% 6% EPIC Advisors 0% 0% 1% Fidelity 25% 29% 30% GuideStone Financial Resources 0% 0% 0% John Hancock 0% 1% 3% Lincoln Financial Group 0% 2% 1% MassMutual 0% 3% 1% Mercer HR Services 2% 1% 2% MetLife 0% 0% 0% MFS 0% 0% 0% Milliman 1% 1% 1% Nationwide 0% 0% 0% Newport Group 0% 0% 1% OneAmerica Financial Partners 0% 0% 0% Oppenheimer 0% 0% 0% PayChex, Inc. 0% 0% 0% PNC Bank 5% 0% 1% Principal 3% 6% 4% Prudential 1% 1% 2% Securian 0% 0% 0% SEI 0% 0% 0% SunTrust 0% 1% 0% TD Bank 0% 0% 0% TIAA-CREF 1% 1% 1% T.Rowe Price 0% 6% 6% Transamerica Retirement Services 3% 1% 2% UBS 0% 0% 0% Union Bank & Trust 0% 0% 0% VALIC Retirement 0% 1% 1% Vanguard 8% 12% 7% Voya Financial 0% 3% 7% Wells Fargo 3% 3% 7% In-house 1% 1% 1% Other 11% 7% 4% n=202 4

5 Exhibit 1.8. Does your recordkeeper manage multiple employee benefit plans for your business (check all that apply)? Nonqualified Deferred Compensation Defined Contribution Plan(s) non-employee Retirement Income Security Act of 1974 (ERISA) Covered Defined Contribution Plan(s) % Qualified Defined Benefit Plan(s) 17% Nonqualified Defined Benefit Plan(s) 9% Health and Welfare Plan(s) 10% No 46% 7% n=202 Exhibit 1.9. Do you use multiple recordkeepers for your defined contribution plan? Yes, due to participant accounts with individual contracts with former recordkeepers, but single recordkeeper for current contributions Yes, due to participant accounts with illiquid assets Yes, because we chose to provide multiple recordkeeping options for employees 4% 16% 2% 0% 0% 0% 14% 8% 1% Yes, other 0% 8% 1% No 82% 68% 96% n=201 Exhibit Do you use a common remitter service? Exhibit Do you use a compliance coordinator service? Yes 31% Yes 20% No 69% No 80% n=16 n=15 5

6 Exhibit As a plan sponsor, do you feel an obligation to prepare your employees for retirement? We feel that our only responsibility is to offer a competitive retirement plan We feel that our responsibility includes taking an interest whether our employees are tracking towards a comfortable retirement (i.e., offering options that allow participants to plan for a reasonable retirement income replacement ratio) We feel very responsible to prepare our employees for retirement (e.g., taking a very involved approach such as monitoring utilization of financial planning tools, etc.) 21% 15% 16% 62% 62% 60% 17% 23% 24% n=200 6

7 Section B: Hot topics Exhibit 2.1. How confident are you that your organization understands its fiduciary responsibilities under the new DOL guidance? Not confident 4% Unsure 2% Exhibit 2.2. Which of the following areas have you reviewed with your recordkeeper and/or plan investment advisor(s) in response to the Department of Labor (DOL) guidance on fiduciary responsibility of retirement plan investment advisors published on April 8, 2016, in the federal register? (check all that apply) Somewhat confident 37% Very confident 57% n= Contracts for investment advice services 36% Call center scripts 16% Asset allocation and investment modeling 31% Individual retirement account (IRA) rollover services and communications My recordkeeper will be an advice fiduciary under the new rules My recordkeeper will not be an advice fiduciary under the new rules 23% 31% 19% Other 3% Still under review 37% None; do not anticipate impact 12% n = 199 7

8 Exhibit 2.3. Which of the following approaches to communication targeting are used by your organization (check all that apply)? Exhibit 2.4. How are targeted communications being used (check all that apply)? 2017 Demographic-based 65% Activity-based 54% Behavior-based 45% Other 11% n=199 Encourage participants to increase savings rate/adopt step-up contribution feature % Provide investment and financial market education 54% Encourage participants to use recordkeeper tools 54% Other 6% n=199 Exhibit 2.5. What do you consider to be the most important financial wellness concern among your employees? Exhibit 2.6. Which groups are being actively targeted (check all that apply)? Paying down existing debt 16% Other 3% Lack of emergency savings 13% 2017 Baby Boomers 44% Generation X 40% Generation Y/Millennials 43% Inability to meet monthly expenses 15% Lack of retirement readiness 53% n=175 Women 22% Nonparticipants 58% Participants who have recently reduced deferral percentages Participants who have recently increased deferral percentages 12% Employees who are not contributing up to the match 61% Other 12% 5% n=199 8

9 Exhibit 2.7. What sort of behavioral finance approaches has your organization adopted to help participants plan for retirement (check all that apply)? Enhanced or introduced "Auto-Pilot" solutions (e.g., automatic enrollment, step-up feature, managed accounts) % Simplification of investment options 55% Social norms/peer comparisons 9% Investment reenrollment periods/forced investment assessments Delayed implementation of automatic enrollment features 5% 4% n=182 Exhibit 2.8. Does your recordkeeper s website integrate with broader financial wellness software (e.g., Mint, HelloWallet)? Unsure 28% Yes 20% No 52% n=199 Exhibit 2.9. How are fees paid for financial wellness software? No additional fees 38% Onetime implementation fees only 3% As a separate per participant fees 15% Included in administration fees 44% n=34 Exhibit Which components of financial wellness tools and services are integrated with your Definted Contribution (DC) plan offering (check all that apply)? Retirement planning (monitoring progress, exploring additional savings opportunities, Roth/traditional support, integration with social security/medicare) % Budgeting and expense projections 42% Financial market education 38% Debt management 35% Education planning 35% Income planning and tax strategies 31% Benefit utilization and insurance planning 17% n=48 9

10 Exhibit For employees that are currently eligible to retire, what is the primary reason that they are delaying retirement? Exhibit Do you use total participant or peer comparisons to encourage increased participant savings for retirement? 2017 Employee preference 19% Need to keep health care coverage 16% Have not saved enough for retirement 13% Need to continue working to pay down debt or meet current expenses 8% Supporting family members 2% Lower investment value 0% Unsure 38% Other 4% n=167 No, and not considering this approach 52% Yes, we show participants the average deferral rates/contribution amounts for all plan participants 8% Yes, we show participants the average deferral rates/ contribution amounts for a defined peer group 12% No, but considering this approach 28% n=172 Exhibit Do you allow participants to delay enrollment rather than opting out of automatic enrollment? Yes, we allow them to delay enrollment for a fixed period of time (e.g., three months) 2% 2% Yes, we allow them to delay enrollment until reaching a specific milestone date Not applicable 34% No 62% n=176 10

11 Exhibit Please indicate which of the following are integrated with retirement modeling tools offered by your recordkeeper: (check all that apply). Exhibit How have enrollments in target date funds changed over the past two years? Outside participant accounts (e.g., savings, brokerage, IRAs) % Decreased by 2% 5% 1% Decreased by 5% or more 0% Deferred compensation plans 42% Pension plans 35% Retiree health plans 7% None of the above 30% n=182 No substantial change (within +/ 2% change) 51% Increased by 5% or more 27% Increased by 2% 5% 21% n=164 Exhibit Please provide the percentage of participant actions for the following post-terminated behaviors: All others 3% Rollover to another qualified retirement plan 36% Remain in plan 41% Cash-out 20% n=75 11

12 Section C Eligibility and enrollment Exhibit 3.1. What is the primary reason that employees participate in your plan? Take advantage of company match Personal desire to save for retirement They were auto-enrolled and did not take action to opt out Proactive communications from your company and/or provider encouraging participation "Word of mouth" their peers and supervisors participate 43% 35% 41% 39% 40% 31% 13% 18% 19% 2% 2% 2% 0% 1% 1% Other 0% 1% 1% Unsure 4% 3% 5% Exhibit 3.2. What is the primary reason that employees do not participate in your plan? Lack of awareness or understanding 30% 34% 28% Uncertain economy/job market 14% 12% 7% Employees are saving elsewhere 3% 4% 4% Lack of a company match 2% 2% 3% Recent market performance has discouraged employees 2% 1% 1% Other 20% 18% 18% Unsure 29% 29% 39% n=218 n=218 Exhibit 3.3. What are the service requirements for plan entry? Four to six months 5% One Year 5% Zero to three months 24% Immediate 66% n=218 12

13 Exhibit 3.4. Does your plan contain an automatic enrollment/ negative election feature? (Defined as a feature that will automatically begin deducting contributions from participants as they become eligible unless the participant elects not to contribute.) Yes, satisfies safe harbor conditions defined by the Pension Protection Act of 2006 Yes, does not satisfy the safe harbor conditions defined by the Pension Protection Act of 2006 Yes, unsure of safe harbor conditions 38% 40% 48% 11% 15% 14% 6% 7% 5% No, we have never had it 32% 28% 25% No, we discontinued it 1% 0% 0% No, but considering it 12% 10% 7% No, we were unaware of this feature 0% 0% 1% Exhibit 3.5. Does your plan contain a step-up contribution feature? (typically a feature whereby the participants deferrals are automatically increased each year) Yes, tied to the Automatic Enrollment feature Yes, as a separate, standalone feature 18% 28% 31% 28% 34% 33% No 41% 27% 27% No, but considering it 12% 10% 8% No, we were unaware of this feature 1% 1% 1% n=217 n=218 13

14 Exhibit 3.6. What is the default investment election for automatic enrollment? Principal preservation (stable value, money market, etc.) 4% 2% 3% Balanced fund 8% 6% 5% Lifestyle fund (risk based) 6% 4% 2% Lifecycle/target retirement date fund 72% 85% 85% Managed account 7% 3% 2% Retirement income product (annuity) 0% 0% 1% Other 3% 0% 2% n=116 Exhibit 3.7. What is the default deferral percentage for automatic enrollment? One percent N/A 3% 3% Two percent (two percent or less for ) 13% 5% 8% Three percent 59% 47% 35% Four percent 11% 14% 16% Five percent 7% 8% 8% Six percent 9% 22% 28% Exhibit 3.8. What percentage of employees opt out/cancel automatic enrollment? 0% 5% 63% 68% 72% 6% 10% 17% 23% 24% 11% 25% 15% 9% 3% More than 25% 5% 0% 1% n=114 Seven percent 1% 1% 2% Eight percent 0% 0% 0% Nine percent 0% 0% 0% Ten percent or more 0% 0% 0% n=116 14

15 Exhibit 3.9. Does your plan contain a step-up contribution feature? Exhibit What is the incremental step-up percentage applied each year? Elective (participants must actively elect to enroll in the step-up program) 48% 43% 41% Employee's choice 27% Automatic for some or all participants (deferrals will automatically increase each year unless the participant elects out of the step-up feature) 52% 57% 59% n=106 3% or more 0% 2% 3% 1% 70% Exhibit What percentage of your participants is currently in the step-up contribution program? n= % 50% 52% 47% 11 25% 27% 27% 29% 26 50% 17% 14% 18% More than 50% 6% 7% 6% n=98 15

16 Section D Employee contributions Exhibit 4.1. Based on the results of your most recent discrimination testing, what was the Average Deferral Percentage (ADP) of Highly Compensated Employee (HCEs) and Non-highly Compensated Employee (NHCEs)? HCE ADP 6.9% 7.0% 7.2% NHCE ADP 5.2% 5.9% 6.0% Exhibit 4.2. Do you offer a Roth 401(k) feature? No, but considering it within the next 12 months 6% No, but considering it within the next months 5% n=104 No, and not considering it 19% Yes 70% n=216 Exhibit 4.3. What is the current participant adoption rate of the Roth 401(k) feature? Less than 1% 10% More than 10% 23% 6% to 10% 27% 1% to 5% 40% n=114 16

17 Section E Employer contributions Exhibit 5.1. Do you offer: Matching contributions on employee basic contributions only Matching contributions on employee basic and catch-up contributions Profit-sharing contributions only Both matching (employee basic only) and profit-sharing contributions Both matching (employee basic and catch-up contributions) and profit-sharing contributions None, we have suspended/ discontinued company match None, we do not offer company match or profit-sharing contributions 37% 37% 36% 27% 26% 27% 6% 5% 4% 16% 12% 15% 10% 14% 11% 0% 1% 2% 4% 5% 5% Exhibit 5.2. What service requirement must be met before employer matching contributions are made? None, employer matching contributions are made immediately upon participation in the plan 62% 71% 74% Less than 1 year 10% 8% 4% 1 year 24% 19% 20% Other 4% 2% 2% n=205 n=216 17

18 Exhibit 5.3. Have you changed your company s matching formula in the past year? Yes, increased match 6% 7% Yes, decreased match 1% 1% Yes, suspended match 0% 0% Yes, reinstated match 0% 0% Yes, instituted other formula/design changes 1% 2% No, and we are not considering any changes 74% 82% No, but we are considering changes 18% 8% Exhibit 5.4. What is the plan s vesting schedule for matching contributions? Immediate full vesting 32% 43% 43% 1 3 year cliff 22% 22% 22% 1 3 year graded 10% 5% 7% 4 6 year graded 30% 25% 22% Other 6% 5% 6% n=152 n=152 Exhibit 5.5. How often is the match calculated and deposited? Each pay period 82% 89% 89% Monthly or quarterly (less frequently than each pay period) Annually (once a year), regardless of hours Annually (once a year), with a required number of hours, or employed on the last day of the year 7% 4% 4% 3% 2% 2% 8% 5% 5% n=152 Exhibit 5.6. Do you true-up your employer match at the end of the year for employees who reach the maximum compensation limit or who hit the 401(k) limit before receiving the maximum possible match? Yes 52% 45% 54% No 44% 46% 40% No, unaware of this option 4% 3% 1% Not applicable, match is calculated and deposited annually 52% 6% 5% n=152 18

19 Exhibit 5.7. What are the service requirements for profit-sharing contributions? Immediate 24% 42% 40% Less than 1 year 16% 7% 11% 1 year 40% 45% 38% Other 19% 6% 11% n=53 Exhibit 5.8. How is your profit-sharing contribution structured? Fixed 29% 36% 36% Discretionary, this contribution was made this year Discretionary, this contribution was NOT made this year 54% 51% 50% 10% 11% 10% Combination 7% 2% 4% n=52 Exhibit 5.9. Are there vesting requirements for these profit-sharing contributions? No, immediate full vesting 23% Exhibit How is your match structured? Discretionary, this contribution was made this year 10% Combination 7% Discretionary, this contribution was NOT made this year 0% Yes, there is a vesting schedule 77% n=53 Fixed 83% n=114 19

20 Exhibit Do participants have the option to direct the investment of these matching contributions? No 11% Yes 89% Exhibit Do you make the matching contributions in employer stock or Employee Stock Ownership Plan ESOP? Yes 8% n=152 Exhibit What is the match formula used for the majority of participants in your plan? 25% of the first 6% of the employee's contribution 50% of the first 6% of the employee's contribution 100% of the first 3% of the employee's contribution 100% of the first 4% of the employee's contribution 100% of the first 5% of the employee's contribution 100% of the first 6% of the employee's contribution 100% of the first 3% of compensation and 50% of the next 2% of compensation without immediate vesting 100% of the first 3% of compensation and 50% of the next 2% of compensation with immediate vesting (safe harbor) 3% nondiscretionary contribution with immediate vesting (safe harbor) 1% 3% 1% 15% 18% 16% N/A 3% 6% N/A 8% 9% N/A 7% 7% 7% 12% 11% 1% 1% 2% 8% 7% 9% 1% 1% 1% Other 67% 40% 38% n=151 No 92% n=74 20

21 Section F Investments Exhibit 6.1. Do you offer managed accounts? (allows employees to choose a professional manager for their 401(k) plan account where investment decisions are made and executed in line with their investment objectives and risk tolerance) No, but considering it 8% No 44% No, unaware of this feature 3% Yes 45% n=160 Exhibit 6.2. Why is financial counseling/investment advice not offered? Potential fiduciary liability 45% 48% 53% Employees are not requesting this service 30% 30% 33% Cost 41% 36% 25% We are actively researching this feature and may implement in the future Simply not interested in offering in the DC plan We were unaware of this feature 25% 21% 22% 13% 10% 10% 0% 2% 2% Other 7% 8% 4% n=51 21

22 Exhibit 6.3. Do you offer the following types of core investment options in your plan (check all that apply)? Yes No Stable Value/GIC 76% 24% Money Market 59% 41% General/Core Bond 84% 16% TIPS (Treasury Inflation Protected Securities) 32% 68% High Yield Bond Fund/Treasury Bond Fund 59% 41% Lifestyle Funds (risk-based) 19% 81% Lifecycle/Target Date Funds (time-based) 89% 11% Actively Managed Domestic Equity (i.e., Large/Mid/Small Cap, Value, Growth, and Blend) Passively Managed Domestic Equity (i.e., Large/Mid/Small Cap, Value, Growth, and Blend) Actively Managed Global/International Equity (i.e., Large/Mid/Small Cap, Value, Growth, and Blend) Passively Managed Global/International Equity (i.e., Large/Mid/Small Cap, Value, Growth, and Blend) 90% 10% 88% 12% 88% 12% 77% 23% Yes No Emerging Markets 60% 40% Socially Responsible 17% 83% Real Estate 38% 62% Sector Funds (e.g., Technology, Communications, Biotechnology, Health Care, and Utilities) 18% 82% Hedge Funds 3% 97% Employer Stock 28% 72% Mutual Fund Window (Mutual Funds only) 16% 84% Self-Directed Brokerage 35% 65% Exchange Traded Funds 10% 90% In-Plan Retirement Income Product (Annuity) Yes No 6% 94% Custom/Hybrid Fund 7% 93% n=148 Exhibit 6.4. What is the total number of investment options in your plan? (Note: When counting the number of investment options in your plan, please count all lifestyle and/or target retirement date funds as one option and count all funds in a mutual fund window/self-directed brokerage account as one option.) n=160 22

23 Exhibit 6.5. What is the overall average weighted expense ratio for your plan (excluding assets in Company Stock, Mutual fund and/or Brokerage Windows)? Up to 0.5% 29% 36% 40% 0.51% to 0.85% 32% 33% 34% 0.86% to 1.25% 11% 11% 8% More than 1.25% 0% 0% 0% Unsure 28% 20% 18% n=149 Exhibit 6.6. Approximately how much of your fund line-up is made of proprietary funds (investment funds managed by your provider)? 0% 25% 58% 59% 64% 26% 50% 18% 18% 16% 51% 75% 15% 12% 10% 76% 100% 9% 11% 10% n=153 Exhibit 6.7. What percentage of plan assets are invested in proprietary funds? Exhibit 6.8. What percentage of participants use the managed account service? 0% 25% 58% 52% 60% 26% 50% 18% 16% 15% 51% 75% 15% 17% 16% 76% 100% 9% 15% 9% n=143 More than 10% 15% Less than 1% 7% 6% to 10% 28% 1% to 5% 50% n=56 23

24 Exhibit 6.9. Which types of investment vehicles are utilized in your plan? (check all that apply) Annuities 14% 9% 8% Collective trust funds 39% 33% 42% Mutual funds 89% 82% 84% Separate accounts 24% 19% 20% Other 7% 6% 4% n=164 Exhibit Is individual financial counseling/investment advice available to participants? Yes, to all participants 57% 62% 67% Yes, to some participants 5% 4% 4% No, and we are not currently considering this feature No, but we are considering adding this feature within the next 12 months No, but we are considering adding this feature within the next months 26% 24% 22% 5% 5% 5% 7% 5% 2% n=159 Exhibit Who currently provides financial counseling/ investment advice to participants? Plan recordkeeper/ investment manager Plan investment manager (if separate from recordkeeper) 56% 64% 61% 12% 7% 14% Independent provider 32% 26% 24% In-house staff N/A 3% 1% Exhibit How is this financial counseling/investment advice delivered? (check all that apply) Online 75% 74% 69% Over the phone 81% 81% 87% Face-to-face 60% 52% 56% n=117 n=117 24

25 Exhibit Approximately what percentage of your participants use this service? Exhibit Who performs the investment monitoring for your plan? (check all that apply) More than 25% 20% Less than 1% 2% 1% to 5% 24% An outside investment consultant Internal staff/team/ committee 64% 65% 66% 47% 48% 49% Your plan provider/ recordkeeper 35% 25% 24% Other 1% 2% 2% n=158 11% to 25% 30% 6% to 10% 24% n=92 Exhibit Have you considered adding an in-plan retirement income product (accumulation annuity) to your current plan? Yes, we are looking into it 10% 11% 11% Yes, we have added this to the plan No, we are not considering at this time 4% 2% 2% 71% 74% 79% Unaware of this feature 15% 13% 8% n=158 Exhibit What is/was the biggest driver of your selection decision of a retirement income product (annuity)? (check all that apply) Recommendation by advisor/ consultant Organizational strength (high rating agency ratings) Crediting rates on the deferred annuity % 32% 21% Only option offered by our provider(s) 11% Name recognition 0% Other 21% n=19 25

26 Exhibit Why are you not considering adding an in-plan retirement income product to your plan? Lack of mobility 1% Lack of interest among participants 25% Other 15% Administrative complexity 22% Concerns about fiduciary liability 27% Exhibit Have you considered adding an at-retirement income solution (annuity purchase option and/or annuity selection software) to your current plan? Yes, we are looking into it 12% 14% 13% Yes, we have added this to the plan No, we are not considering at this time 5% 5% 4% 69% 72% 71% Unaware of this feature 14% 9% 12% n=157 Cost 5% Communications difficulty 5% n=127 Exhibit Why are you not considering adding an at-retirement income solution to your plan? Exhibit Are you considering any changes to your restrictions on company stock? (check all that apply) Lack of mobility 2% Other 16% Administrative complexity 23% Eliminate or reduce restrictions on investment of company match Eliminate or reduce restrictions on diversification of company stock 3% 4% 5% 3% 4% 0% Lack of interest among participants 24% Concerns about fiduciary liability 23% Eliminate future investments in company stock (investment elections on future contributions) Cap investment in company stock (current balance allocation) 5% 14% 5% 3% 11% 18% None/no restrictions remain 83% 67% 56% Cost 6% Communications difficulty 6% n=115 Other 15% 7% 15% n=39 26

27 Section G Fees Exhibit 7.1. How are your 401(k) plan s recordkeeping and administration fees paid? Exhibit 7.2. How are the fees charged by your 401(k)/403(b) recordkeeper paid? No additional fees - all of the recordkeeping and administrative fees are paid through investment revenue (e.g., expense ratios or revenue-sharing arrangements that may be in place with the plan's investment funds) % 39% Both the company and the participants pay this fee 17% Allocated to participants prorata based on account balances 15% There is a direct fee that is charged by the recordkeeper 41% 53% There are additional fees in the form of a wrap fee or added basis point charge on the investments 9% 8% n=157 Paid directly by the company 25% Allocated to participants based on an equal flat dollar amount 43% n=94 Exhibit 7.3. Which plan-level services/fees are paid for separately? (check all that apply) Communications 18% 28% 43% 5500 reporting 12% 40% 39% Compliance/ nondiscrimination testing 11% 37% 37% Other 13% 15% 14% None 46% 39% 30% n=94 Exhibit 7.4. If your plan offers financial advice/counseling to your participants, who pays for this service? (check all that apply) Participants, via a per participant fee Participants, via an assetbased fee 12% 14% 11% 24% 17% 21% Plan sponsor 17% 17% 16% There is no charge for this service 57% 58% 53% n=109 27

28 Exhibit 7.5. If your plan offers managed accounts to your participants, who pays for this service? Plan sponsor 7% There is no charge for this service 8% Participants, via an asset-based fee 85% n=84 Exhibit 7.6. Please indicate whether you agree with the following statements: We have no difficulty obtaining a clear understanding of the total plan/participant administrative fees being charged We have no difficulty obtaining a clear explanation of the normal fund operating expenses of the funds in our plan Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree 45% 43% 6% 3% 3% 42% 44% 7% 4% 3% We believe our fees are competitive 45% 44% 7% 1% 3% We have no difficulty obtaining a clear description of all the revenue-sharing arrangements that our recordkeeper has with the mutual funds included in our plan We have no difficulty obtaining what it costs our provider to administer our plan We have performed a detailed fee analysis and have a thorough understanding of all plan expenses 39% 41% 12% 5% 3% 31% 39% 19% 7% 4% 41% 45% 9% 1% 4% n=150 28

29 Exhibit 7.7. Do you have an ERISA account/fee credit as a result of revenue share collected in excess of plan administrative fees? Exhibit 7.8. How do you use the fee credit resulting from revenue share? Unsure 16% No, there is no fee credit 49% Yes, there is a fee credit 35% n=153 Fee credits are used to purchase additional services from our provider, such as communication materials and investment advice tools. Fee credits are used to pay for other plan expenses, such as plan audit fees, and consultant fees. Fee credits are used to allocate the credit back to participants (pro rata based on account balances) Fee credits are used to allocate the credit back to participants (equal dollar amount to all participants) 7% 8% 11% 76% 66% 50% 17% 24% 35% 0% 2% 4% n=54 29

30 Section H Administration capabilities Exhibit 8.1. Does your primary provider support transaction processing via smartphone or other mobile device? No, but planning on starting within the next 24 months 8% No, not currently 21% Yes, only specific smartphone/mobile devices are supported 12% Exhibit 8.2. Does your plan offer participants the option to elect automatic fund rebalancing (a feature where the employee can elect a target allocation percentage among the fund offerings and the system will automatically initiate interfund transfers on a regular basis to achieve the target allocation)? Yes 67% 72% 79% No, unavailable 18% 13% 7% No, uninterested 6% 4% 7% No, but considering it 4% 4% 5% Yes, all smartphone/- mobile devices are supported 59% n=153 No, we were unaware of this feature 5% 7% 2% n=153 Exhibit 8.3. Approximately what percentage of your participants uses this automatic fund rebalancing service? 11% to 25% 4% More than 25% 11% Less than 1% 17% Exhibit 8.4. How many outstanding loans can a participant have at any time (considering both Primary Residence and General Purpose Loans)? 0 10% 8% 9% 1 46% 50% 42% 2 37% 35% 41% 3 or more 7% 7% 8% 6% to 10% 29% 1% to 5% 39% n=106 n=152 30

31 Exhibit 8.5. Do participants receive retirement income projections illustrating anticipated annual income in retirement? Yes, provided online 48% 54% 66% Yes via participant statements Yes via separate communication No, we are considering adding this feature in the next 12 months No, we are considering adding this feature in the next months No, this feature is not offered by our vendor No, we are not considering adding this feature 10% 15% 11% 15% 8% 5% 6% 6% 3% 6% 1% 1% 9% 9% 5% 6% 7% 9% n=152 Exhibit 8.6. What data and/or functionality does your provider give you access to via a plan sponsor website (check all that apply)? Plan data 95% 96% 95% Participant data 95% 95% 97% Plan-level statement information 84% 89% 92% Participant-level statement information View individual participant-level transactions Post payroll contribution/loan repayment files 85% 89% 90% 83% 85% 84% 69% 75% 76% Post compliance information 63% 69% 66% Process indicative data updates 51% 56% 62% Investment performance 83% 82% 86% Plan benchmarks 43% 52% 56% Ad hoc queries and reports 75% 81% 82% Payroll ACH funding 46% 51% 50% Other 1% 1% 1% n=153 31

32 Section I Innovative tools Exhibit 9.1. Do you believe participants are interested in interacting with retirement providers via social media channels? Exhibit 9.2.: Have participants interacted with your recordkeeper through any of the following methods? (check all that apply) Yes, they are doing this now 8% 9% 15% Not yet, but they will be in the near future 37% 21% 17% No 23% 26% 18% Unsure 32% 44% 50% n=152 Hand-held devices are used in group and individual meetings to allow immediate participant action (enrollment, investment changes, allocation changes, etc.) Participants use Social Media to interact with our recordkeeper (Facebook, LinkedIn, Twitter, etc.) Participants use instant chat via the recordkeeper's secure participant website Participants use smartphone and/or tablet applications to interact with our recordkeeper (via iphone, ipad, Android, Blackberry, etc.) % 14% 25% 5% 4% 7% 8% 13% 12% 31% 40% 48% No 28% 20% 18% Unsure 39% 38% 31% n=153 32

33 Section J Provider relationship Exhibit What is your plan recordkeeper structure? Bundled (all services and funds coordinated through one vendor, investments may include multiple fund families) Alliance (services and funds provided by different vendors under an alliance agreement, with the coordination of trust, investment, and recordkeeping services handled by the primary vendor, not the plan sponsor) Unbundled (services and funds provided by unrelated vendors; plan sponsor plays a role in the coordination of trust, investment, and recordkeeping services) Exhibit How long have you been with your recordkeeper? Less than 2 years 10% 10% 3% 2 5 years 12% 18% 17% 5 10 years 33% 27% 27% More than 10 years % 71% 69% 8% 8% 9% 21% 21% 22% 45% 45% 53% n=14 n=153 Exhibit What is the length of your current service agreement? Less than 3 years 32% 28% 23% 3 years 22% 23% 33% 4 years 4% 5% 3% 5 years 13% 18% 20% More than 5 years 29% 26% 21% n=149 Exhibit If you have made a change in recordkeepers in the last five years, please list the primary or most compelling reason for the change: Vendor consolidation 10% 9% 3% A change in your organizational structure 0% 8% 3% Local presence 0% 1% 0% Quality of service representatives Quality of recordkeeping services Quality of investment choices 10% 5% 6% 23% 27% 36% 0% 4% 3% Overall cost to plan 15% 14% 7% Overall cost to participants 10% 5% 6% Overall relationship 8% 11% 13% Other 23% 16% 23% n=31 33

34 Exhibit In general, how satisfied are you with the services provided by your recordkeeper? Very satisfied 47% 47% 53% Satisfied 40% 44% 41% Neither satisfied nor dissatisfied 9% 6% 4% Dissatisfied 4% 3% 1% Very dissatisfied 0% 0% 1% n=151 Exhibit How would you rate your current recordkeeper on the following? N/A Investment fund performance 1% 0% 7% 38% 26% 28% Fees compared to marketplace 1% 0% 11% 45% 43% 0% Fee disclosure 1% 0% 10% 39% 50% 0% Administration/recordkeeping 1% 1% 11% 38% 49% 0% Employee communication/education 1% 5% 19% 40% 34% 1% Plan sponsor support and relationship management 1% 3% 8% 32% 55% 1% Call center services 2% 2% 16% 47% 32% 1% Voice response system 1% 2% 18% 41% 26% 12% Plan website for participants 1% 2% 12% 44% 40% 1% Plan website for sponsors 1% 5% 14% 40% 37% 3% Compliance/regulatory 1% 2% 9% 41% 45% 2% Consulting 1% 4% 20% 37% 29% 9% Investment advice tools 1% 0% 24% 41% 28% 6% Innovation 1% 3% 23% 46% 25% 2% Overall 1% 1% 11% 48% 39% 0% n=147 34

35 Exhibit Select the top five changes/improvements that your recordkeeper could make in the order of importance, with 1 being the most important and 5 being the least important Reduce direct fees to plan sponsor 13% 9% 10% 9% 8% Offer investment options with lower fees and/or better performance 8% 3% 5% 3% 5% Add/enhance plan sponsor website and tools 14% 15% 9% 16% 11% Add/enhance participant website and tools 9% 14% 11% 9% 13% Improve participant experience (enhanced website, expanded call center hours, targeted communications) 9% 11% 14% 14% 11% Improve participant readiness for retirement 16% 13% 14% 9% 10% Improve communications/participant education 15% 11% 7% 14% 13% Products and services for other benefit programs (defined benefit, health and welfare, and nonqualified) 3% 6% 5% 5% 5% Improve accuracy of information 1% 2% 4% 3% 2% Improve turnaround times for reports and statements Improve relationship management and responsiveness to plan sponsor inquiries/issues 2% 6% 5% 5% 4% 4% 2% 7% 3% 7% Fee transparency 4% 6% 5% 3% 5% Other 2% 2% 3% 4% 5% n=149 35

36 Exhibit Which service levels are being measured? (check all that apply) Statement and report turnaround time 51% 43% 41% Accuracy 63% 51% 54% Loan, distribution, and withdrawal check processing time 50% 35% 42% Participation rate 34% 26% 24% Fund diversification at the participant level 25% 18% 18% Call center statistics 58% 47% 50% Other 12% 5% 3% n=153 Exhibit Does your recordkeeper agree to maintain specific levels of service or performance with the risk of sacrificing fees or providing additional services should these levels not be met? Exhibit If you have not changed recordkeepers in more than five years, please list the primary or most compelling reason you stay with the current vendor: Local presence 1% 3% 0% Quality of service representatives Quality of recordkeeping services Quality of investment choices 5% 3% 5% 19% 17% 20% 5% 1% 1% Overall cost to participants 2% 5% 13% Overall cost to plan 6% 4% 2% Overall relationship 32% 32% 30% No compelling reason to change 26% 26% 24% Other 4% 9% 5% n=120 Yes 49% 49% 53% No 31% 31% 30% Don't know 20% 20% 17% n=151 36

37 Section K Plan effectiveness Exhibit 11.1 Do you feel that your 401(k) plan is an effective recruiting tool? Unsure 16% Exhibit Do you feel that your 401(k) plan assists in retaining your existing employees? Unsure 20% No 10% Yes 74% No 18% Yes 62% n=153 n=146 Exhibit Rank the following primary indicators of an effective 401(k) plan, with 1 being the most important and 5 being the least important High level of participation 64% 14% 10% 7% 5% Easy accessibility/technology 6% 11% 21% 27% 35% Employee appreciation 8% 26% 14% 20% 32% Cost-effectiveness 10% 18% 26% 29% 17% Investment performance 12% 31% 28% 18% 11% n=148 37

38 Exhibit Do you feel there are any barriers to making your 401(k)/403(b) plan a more effective recruiting tool? (check all that apply) A 401(k)/403(b) plan is required just to do business in my industry Our plan does not provide a competitive level of benefits (eligibility period, match, vesting, profit-sharing, etc.) Most individuals do not understand how such a plan works Participants do not value this benefit 29% 16% 18% 19% 15% 17% 19% 11% 11% 19% 11% 8% Other 14% 6% 7% No barriers N/A 50% 48% Exhibit Do you feel there are any barriers to making your 401(k)/403(b) plan a more effective employee retention tool? (check all that apply) It is not a differentiator all of our competitors have similar plans Participants do not have an adequate understanding of the benefits of our plan Our plan is not competitive (eligibility, match, profit-sharing, etc.) 74% 24% 30% 13% 16% 18% 3% 11% 12% Other 10% 5% 1% No barriers N/A 50% 47% n=148 n=148 38

39 Exhibit What is the primary barrier to making your plan more effective? (Please check your top three barriers) #1 #2 #3 Ineffective employee communications 10% 7% 13% Administrative costs 10% 3% 3% Lack of employee understanding 18% 22% 13% Lack of employee interest 11% 11% 11% Employee demographics (age, salary, education level, language barrier, etc.) Low company matching formula/waiting period for matching contribution 20% 11% 22% 8% 5% 5% Waiting period for matching contribution 3% 3% 3% Investment performance 1% 3% 1% Employee turnover 5% 10% 13% Current market/economic trends 7% 18% 11% Lack of provider support/internal resources 5% 4% 4% n=148 39

40 Exhibit In your opinion, are your employees saving adequately for retirement? Most employees are or will be financially prepared for retirement No. 1 No. 2 No. 3 12% 19% 19% Exhibit Have you conducted a retirement readiness assessment in the past 12 months to determine expected income replacement ratios for employees in retirement? No, unaware of this 13% Yes 35% Some employees are or will be financially prepared for retirement Very few employees are or will be financially prepared for retirement 72% 67% 65% 15% 13% 15% No, not interested 13% Other 1% 1% 1% n=144 No, but considering 31% n=145 40

41 Exhibit Please indicate whether you agree with the following statements: Employees are well informed of plan features and investment options An employee education campaign, either through targeted communications or meetings, would be highly utilized and valuable to our employees Our recordkeeper/plan administrator offers valuable tools to educate employees on investment fundamentals and retirement readiness We utilize the latest communication methods (e.g., Social media, smartphone/tablet applications) to educate employees on retirement readiness Strongly Agree Agree Neither Agree nor Disagree Disagree Strongly Disagree 18% 48% 23% 9% 2% 16% 47% 28% 7% 2% 26% 55% 14% 4% 1% 7% 25% 32% 32% 4% n=142 Exhibit Please indicate whether you feel the following will positively impact employee retiree readiness: Not at all likely Not sure Somewhat likely Enactment of the auto Individual retirement account (IRA) 31% 46% 23% Expanding auto enrollment to cover all employees (not just new hires) 23% 11% 66% Expanding auto step-up as the default option with auto enrollment 18% 11% 71% Improving company match 16% 9% 75% Enhancing participant communication/education strategy 11% 11% 78% Simplifying investment choices 32% 21% 47% n=136 41

42 Exhibit If you have ever solicited or received feedback from your employees regarding aspects of the plan that they found to be confusing, please indicate those items here. (check all that apply) Where to invest/which funds to use 55% 40% 39% How much to save for retirement 35% 30% 34% Loans 21% 16% 24% Company contributions 24% 20% 22% Rollovers 18% 13% 20% Withdrawals 24% 17% 19% Vesting 11% 12% 16% Impacts of contribution limitations/discrimination testing 13% 9% 14% Enrollment 11% 9% 13% Website 16% 16% 12% Employee contributions 6% 5% 11% Fees 10% 14% 11% Financial planning tools 22% 17% 11% Fund transfers/reallocations 13% 13% 9% Participant statements/confirmation statements 6% 3% 7% Conversion/blackout periods 5% 5% 4% Voice Response System 2% 2% 4% Forceout conditions 1% 2% 1% Other 9% 3% 1% Have never solicited/received feedback N/A 32% 27% n=148 42

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