A Custom Retirement Plan Benchmarking Report For ABC Company

Transcription

1 [1.1] A Custom Retirement Plan Benchmarking Report For ABC Company [Date] John Smith Firm Name AllianceBernstein Investments, Inc. (ABI) is the distributor of the AllianceBernstein family of funds. ABI is a member of FINRA and an affiliate of AllianceBernstein L.P., the manager of the funds. Investments Product Offered: Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed For plan sponsor, pension consultant or financial advisor use only. Not for inspection by, distribution or quotation to, the general public. There is no guarantee that any forecasts or opinions in this material will be realized. Information should not be construed as legal or investment advice.

2 CUSTOM BENCHMARKING REPORT Table of Contents Introduction...2 Benchmarks and Analysis...4 Research Methodology...23

3 CUSTOM BENCHMARKING REPORT [3.1] Introduction: Making Defined Contribution Plans More Effective Leading plan sponsors are taking steps to make their defined contribution plans more effective. The motivations: the passage of the Pension Protection Act of 2006; continued concerns regarding fiduciary issues; and the need to offer benefit programs that help employees achieve their objectives. As we discussed at our last meeting, these plan sponsors start by asking themselves critical questions that cut to the heart of their plan s performance: Are we getting the best value for our plan? Are we meeting all of our fiduciary obligations? Do we have the right investment lineup? Do we provide a communications program that works? Are we receiving the type of service we need? Is the plan effectively meeting our goals? After answering these questions, they benchmark them against the answers of other plan sponsors. This step not only provides insights into how their plans compare on a national basis, but it also helps them meet their obligations as plan fiduciaries. Specifically, benchmarking helps them meet the fiduciary standard known as the prudent man rule a rule that requires fiduciaries to perform their duties with the care, skill prudence, and diligence that a person knowledgeable in this field would use. Finally, they define a timeline to implement changes or conduct additional analysis. They do what s needed to ensure the plan is in the best position to meet their needs and those of their employees. You ve already taken two important steps in making your plan more effective: you ve evaluated the research provided by AllianceBernstein at our last meeting and you ve provided the input required to generate this customized report.

4 CUSTOM BENCHMARKING REPORT Your Custom Report In the first quarter of 2009, AllianceBernstein surveyed 1,026 plan sponsors, asking them the same questions you answered in the Strategic Plan Review Questionnaire. In this report, you ll see how your responses compare to the national survey of plan sponsors. The report also includes information from other industry sources related to each of the following topics: 1. Pension Protection Act of Fees and Fiduciary Responsibility 3. Plan Investments 4. Plan Communications 5. Plan Services 6. Plan Goals These insights follow the benchmark comparison. Each of these sections also includes a list of areas for potential plan enhancement. Your Action Plan Worksheet Along with this report, you ll receive a worksheet that summarizes potential actions you should consider taking to make sure your plan is best positioned to meet your goals. Working together, we can create an Action Plan by prioritizing these items and establishing a timeline for next steps. Your Fiduciary File If you haven t already done so, we encourage you to start a Fiduciary File for your plan. You should maintain this report in the file. As you continue to enhance your plan, you can add information to it. By doing so, you ll be taking an important measure in documenting your efforts as a plan fiduciary to act solely in the interest of your plan s participants and meet the standards required by the prudent man rule.

5 CUSTOM BENCHMARKING REPORT [4.1] Benchmarks and Analysis The following information compares your Strategic Plan Review Questionnaire responses to those provided to AllianceBernstein through its national survey of plan sponsors. AllianceBernstein conducted the survey in the first quarter of 2009.

6 CUSTOM BENCHMARKING REPORT [4.2.A-Q1] Topic 1: Pension Protection Act of 2006: Benchmarks Only 44% of plan sponsors said that they were familiar or very familiar with the Pension Protection Act of 2006 (the PPA). This suggests that the majority of plan sponsors would benefit from a thorough review of the legislation s provisions as they relate to defined contribution plans. If very familiar / familiar: You indicated a high degree of familiarity with the PPA. As you re aware, the PPA included a number of provisions of critical importance to 401(k) plan sponsors including: Providing a framework for modernizing plans by using automatic plan features an encouragement to plan sponsors to consider adopting this important plan design enhancement Clarifying guidance regarding qualified plan investment defaults, an encouragement to plan sponsors to evaluate their current selection If somewhat, not very, not at all familiar: Many plan sponsors are familiarizing themselves with the provisions of the PPA the Act included a number of provisions of critical importance to 401(k) plan sponsors, including: Providing a framework for modernizing plans by using automatic plan features an encouragement to plan sponsors to consider adopting this important plan design enhancement Clarifying guidance regarding qualified plan investment defaults, an encouragement to plan sponsors to evaluate their current selection

7 CUSTOM BENCHMARKING REPORT [4.3.A - Q2] The impact of the PPA on plan design appears to be far reaching, with 13% of plan sponsors already having made a change and another 62% plan sponsors surveyed indicating that they were somewhat likely, likely, or very likely to make changes to their plan. This result is even more impressive given the substantial number of plan sponsors who are still familiarizing themselves with the PPA s provisions. If already made changes: You indicated that you have already made changes to your plan as a result of the PPA. It s clear that the PPA offers plan sponsors many opportunities to modernize their plans and create better participant outcomes. Among the most significant, as mentioned above, is adopting automatic enrollment. Many plan sponsors are also adopting target-date retirement funds for their plans investment default options. If Very/likely: You indicated a high likelihood that you ll make changes to your plan as a result of the PPA. It s clear that the PPA offers plan sponsors many opportunities to modernize their plans and create better participant outcomes. Among the most significant, as mentioned above, is adopting automatic enrollment. Many plan sponsors are also adopting target-date retirement funds for their plans investment default options. If somewhat/ not very/ not at all: Many plan sponsors are in the process of evaluating whether or not to make changes to their plans based on the provisions of the PPA. It s clear that the PPA offers plan sponsors many opportunities to modernize their plans and create better participant outcomes. Among the most significant, as mentioned above, is adopting automatic enrollment. Many plan sponsors are also adopting target-date retirement funds for their plans investment default options.

8 CUSTOM BENCHMARKING REPORT [4.4] The Pension Protection Act of 2006: Additional Insights Provided below are additional insights from respected industry sources related to the Pension Protection Act of AllianceBernstein Investments: Inside the Minds of Plan Sponsors Twenty-three percent of plan sponsors said their plan didn t have a default investment option. At 36%, the most popular default investment options were stable value funds. Target-date funds appeal to both active, experienced investors and accidental investors (for example, people who only invest in their company s plan). Profit Sharing/401(k) Council of America s 52 th Annual Survey Following a big increase in 2007, the rate of addition of automatic enrollment has slowed but continued percent of all plans and more than half of large plans currently use automatic enrollment. EBRI Policy Forum: Defined Contribution Plans in a Post- PPA Environment (2008) Automatic enrollment can nearly double participation in some defined contribution plans. Experience and research has long shown that when 401(k) enrollment is voluntary and workers must actively decide to take part in the savings plan, a significant number fail to enroll, or, if they do, to save and diversify appropriately. Enactment of the PPA was designed to overcome workers indecisiveness and inaction by automating their participation, savings, and diversification in the employer s retirement plan. [4.5] POTENTIAL ACTION ITEMS Review all relevant provisions of the Pension Protection Act of o Conduct a complete review of your plan s design and services. o Consider adding automated features to enhance participant outcomes, including automatic enrollment and automatic salary deferral increases.

9 CUSTOM BENCHMARKING REPORT [4.6.A Q3] Topic 2: Fees and Fiduciary Responsibility: Benchmarks Nearly half of survey respondents said that they were somewhat, not very or not at all confident that they understood all of their plan fees. Given the importance of understanding fees to meeting all of their duties as fiduciaries, this finding suggests that there will be mounting pressure on all service providers to disclose all fees as clearly as possible. If very confident/ confident: You indicated a high degree of confidence that you understand all of the fees that you and your participants are paying for your 401(k) plan. A critical responsibility of a plan fiduciary is to ensure that the plan s fees are reasonable. It s important that you periodically review all of the fees paid by the plan and evaluate them relative to this fiduciary requirement. If somewhat, not very, not at all: Many plan sponsors are in the process of gaining a better understanding of all the fees that they and their participants are paying. A critical responsibility of a plan fiduciary is to ensure that the plan s fees are reasonable. It s important that you periodically review all of the fees paid by the plan and evaluate them relative to this fiduciary requirement.

10 CUSTOM BENCHMARKING REPORT [4.7.A Q4] Perhaps the most surprising result from this question is that only 37% of plan indicated they were confident or very confident in the value they were receiving. On the other side, 20% of plan sponsors say they are not confident or don t know if they are getting the best value. If very confident, very confident: You indicated a high degree of confidence that your plan is getting the best value for the fees that you and your participants are paying. To meet your responsibilities as a plan fiduciary, it s critical that you understanding all of these fees, benchmark them against industry standards and determine that they are reasonable. If somewhat, not very, not at all, don t know: As shown above, many plan sponsors don t feel that they re getting the best value for the fees that they and their participants are paying. In some cases, this is because they don t understand all of the fees. In other cases, they feel they re paying too much for the services they receive. In either case, these plan sponsors need to take steps to ensure that they understand all fees, benchmark them against industry standards, and determine that they are reasonable.

11 CUSTOM BENCHMARKING REPORT [4.8.A Q5] Seventy-five percent of those surveyed indicated that fiduciary matters were important or very important at this time. Given recent legislative and regulatory developments, it s clear that pl an sponsors are increasingly concerned about fully meeting their fiduciary obligations. If very important, important: You indicated that fiduciary matters are an important priority, a response that s consistent with the majority of those surveyed. There are a number of factors contributing to this trend, including: High-profile litigation regarding the appropriate handling of retirement plan assets More and more participants reaching retirement age and potentially feeling that they re unprepared for retirement Intense regulatory scrutiny of fees and fiduciary issues. Make sure you ve identified all fiduciaries for your plan and that you re taking all actions possible to enable them to meet the standards of fiduciary conduct. If somewhat, not very, not at all: Due to the heightened awareness of fiduciary issues, many plan sponsors are taking substantial steps to ensure that they re fulfilling all of their fiduciary responsibilities. They ve clearly identified all of the fiduciaries for their plans and taken action to enable them to meet the standards of fiduciary conduct. So while fiduciary issues may not be a high priority for their plan right now, it s because they ve already put strong processes in place to meet their fiduciary obligations.

12 CUSTOM BENCHMARKING REPORT [4.9] Fees and Fiduciary Responsibility: Additional Insights Additional insights from respected industry sources related to fees and fiduciary responsibility are provided below: AllianceBernstein Investments, Inside the Minds of Plan Sponsors Only 53% of plan sponsors considered themselves confident or very confident that they understood all of the fees they pay for their plans. Thirty-seven of plan sponsors don t consider themselves fiduciaries. Fifty-nine percent of respondents agreed with the statement, Issues related to fiduciary responsibility keep me up at night POTENTIAL ACTION ITEMS Conduct a complete review of your plan from a fiduciary perspective. o Review all fees paid to plan service providers both directly and indirectly. Evaluate these fees to ensure that they are reasonable. o Identify all plan fiduciaries and document their roles. o Provide training to fiduciaries to ensure that they understand the standards of fiduciary conduct (e.g., exclusive benefit rules, prudent man rule, diversification rule, plan documents rule). Important Note: The action items listed here don t cover every duty required of a fiduciary. We encourage you to work with your financial advisor to conduct a complete review of your plan from a fiduciary perspective. We also strongly encourage you to consult with your attorney as you evaluate your fiduciary duties.

13 CUSTOM BENCHMARKING REPORT [4.11.A Q6] Topic 3: Plan Investments: Benchmarks Over half of plan sponsors feel that their plan has the right amount investment options. The trend toward adding more funds has begun to change. However, 24% of those surveyed still believe that they need more funds in their plan. If too many: You indicated that you believe your plan has too many investment options. Recently, the average number of options for plans is beginning to decline. Leading plan sponsors are now focusing on putting in place the right investment menus that enable participants to diversify and achieve their long-term investing goals as simply as possible. For many years, the average number of plan investment options consistently increased. This If needs more: trend reflected a wide range of factors, including two key factors: plan sponsors desire to provide a wide range of diversified choices to participants, and the feeling that more choice was better for plan participants. But in recent years, many plan sponsors have realized that their plans have too many options. As a result, the average number of options for plans is already beginning to decline. If right amount, I don t know: In recent years, many plan sponsors have taken steps to ensure that their plans have the right amount of investment options to enable participants to diversify and achieve their long-term investing goals as simply as possible. In many cases, plan sponsors have decreased the number of investment options in their plans. As a result, the average number of options for plans is already beginning to decline.

14 CUSTOM BENCHMARKING REPORT [4.12.A Q7] Forty-two percent of those surveyed said it was important or very important to improve their plan s investment lineup at this time. Clearly, designing and maintaining an effective plan investment lineup remains a priority for many plan sponsors. If very important, important: You also indicated that improving your plan s investment lineup was an important objective. Plan sponsors are looking at how to provide an appropriate range of investment options to meet the needs of all employee segments. As mentioned above, many are concerned about having too many investment choices. And as we ll discuss, many are considering adding target-date funds to their plans. If somewhat not very, not at all or don t know: Many plan sponsors are looking at ways to provide an appropriate range of investment options that meets the needs of all employee segments. As mentioned above, many are concerned about having too many investment choices. And as we ll discuss, many are considering adding target-date funds to their plans.

15 CUSTOM BENCHMARKING REPORT [4.13.A Q8: Yes] Forty percent of the survey respondents indicated that they currently offer target-date funds in their plan. Of those who don t currently offer target-date funds, 53% plan to add them in the future. You indicated that your plan currently offers target-date funds. In the past five years, the use of these funds has increased substantially, as plan sponsors have sought out simple and effective ways to help their employees save and invest for the future. More and more plan sponsors are also choosing these funds as the default investment option for their plan.

16 CUSTOM BENCHMARKING REPORT [4.13.B Q8: No & Q9: Yes] Forty percent of the survey respondents indicated that they currently offer target-date funds in their plan. Of those who don t currently offer target-date funds, 53% plan to add them in the future. In the past five years, the use of these funds has increased substantially, as plan sponsors have sought out simple and effective ways to help their employees save and invest for the future. More and more plan sponsors are also choosing these funds as the default investment option for their plan.

17 CUSTOM BENCHMARKING REPORT [4.13.C Q8: No & Q9: No] Forty percent of the survey respondents indicated that they currently offer target-date funds in their plan. Of those who don t currently offer target-date funds, 53% plan to add them in the future. In the past five years, the use of these funds has increased substantially, as plan sponsors have sought out simple and effective ways to help their employees save and invest for the future. More and more plan sponsors are also choosing these funds as the default investment option for their plan. Some plan sponsors have decided to use a risked-based fund rather than a target-date fund.

18 CUSTOM BENCHMARKING REPORT [4.14.A Q10] The most frequently mentioned default investment option among survey respondents was still a stable value/money market fund although clearly on the decline. However, nearly one quarter of those surveyed indicated that their plan did not have a default investment option. For all responses: Due to recent legislation, many plan sponsors are now in the process of evaluating the default investment option offered by the plan. Among the funds that are receiving more attention given their ability to meet employees long-term investing needs are target-date funds.

19 CUSTOM BENCHMARKING REPORT [4.15] Plan Investments: Additional Insights Additional insights from respected industry sources related to plan investments are provided below: AllianceBernstein Investments, Inside the Minds of Plan Sponsors Twenty-one percent of plan sponsors feel a diverse plan should offer at least 16 investment options. Profit Sharing/401(k) Council of America s 52 nd Annual Survey The average number of funds available for participant contributions is 18. The availability and use of target-date funds continues to grow percent of plans now offer them. [4.16]POTENTIAL ACTION ITEMS Conduct a complete review of your plan s investment lineup to determine if you need to make any modifications to meet your objectives. o Evaluate your plan s investment default option to ensure it s best suited to meet the long-term investing goals of participants. o Assess how target-date funds are being used in plans as a simple and effective solution to help participants meet their long-term investing goals.

20 CUSTOM BENCHMARKING REPORT [4.17.A Q11: if very effective] Topic 4: Plan Communications: Benchmarks Less than half of the plan sponsors surveyed felt that their plan s communications program was effective or very effective in increasing deferrals. The majority indicated that their communications program was not currently helping them to improve employee savings levels. If very effective, effective: You indicated that your communications program has been effective in increasing deferrals. By offering simple and effective communications that address the needs of both Active and Accidental investors, plan sponsors have been able to improve employees saving rates. If somewhat, not very, not at all, don t know: Increasing deferrals is critical to all participants if they re going to achieve their desired lifestyle in retirement. By offering simple and effective communications that address the needs of both Active and Accidental investors, plan sponsors have been able to improve employees saving rates. Active investors tend to have the following characteristics: They take an interest in investing early in their careers. They truly enjoy investing. They re comfortable with their current financial situation. They actively manage their investments. They generally have a positive view of their prospects for a comfortable retirement. In contrast, Accidental investors typically have these characteristics: They only invest because they participate in their company s DC plan. They lack confidence in their ability to make good investment decisions. They invest inconsistently.

21 CUSTOM BENCHMARKING REPORT They don t actively participate in the investment process. They generally have a negative view of their prospects for a comfortable retirement. Increasing deferrals is critical to all participants if they re going to achieve their desired lifestyle in retirement. Increasing deferrals is critical to all participants if they re going to achieve their desired lifestyle in retirement.

22 CUSTOM BENCHMARKING REPORT [4.18.A Q12] Less than half of those surveyed said that their communications program was very effective or effective in helping participants create a more appropriate asset allocation. This result is particularly disturbing, given the effort many plan sponsors have dedicated to communications programs to help employees make better investing decisions. If very effective, effective: You indicated that your communications program has been effective in helping participants create a more appropriate asset allocation. Many plan sponsors have dedicated substantial resources to improving participants investing decisions. In addition to reviewing their communications program, these plan sponsors have often adopted target-date funds to simplify the investing process for many participants. If somewhat, not very, not at all, don t know: Helping participants create a more appropriate asset allocation is a critical goal for many plan sponsors. To achieve this goal, plan sponsors review their communications program to assess whether they have the right tools to simplify the investing process. In addition to evaluating plan communications, many plan sponsors have also adopted target-date funds to provide a simple and effective means to help participants achieve their long-term goals.

23 CUSTOM BENCHMARKING REPORT [4.19.A Q13] Given the lack of communications effectiveness discussed in the prior questions, it s hardly surprising that the vast majority of plan sponsors believe it s important to improve their plan s communications program at this time. In fact, 62% of those surveyed indicated it was a very important or important objective, while only 9% answered that it wasn t very important or not at all important. If very important, important: You indicated that improving your plan s communications program is important. Working with knowledgeable partners, you can put in place a communications program that reflects a deep understanding of behavioral finance concepts and is best suited to meet the needs of your participants. The process starts with conducting a complete review of your current communications program, assessing the needs of your employees, and then defining a simple and effective approach to meeting those needs. If somewhat, not very, not at all, don t know: Plan communications have been at the top of many plan sponsors priority list for the past several years. As such, they ve taken the steps to put in place a communications program that reflects a deep understanding of behavioral finance concepts and is best suited to meet the needs of their participants. They ve conducted a complete review of their current communications program, assessed the needs of their employees, and then defined a simple and effective approach to meeting those needs.

24 CUSTOM BENCHMARKING REPORT [4.20.1] Plan Communications: Additional Insights Additional insights from respected industry sources related to plan communications are provided below: AllianceBernstein Investments, inside the Minds of Plan Participants, 2009 Sixty-two percent of employees eligible to participate in defined contribution plans consider themselves accidental investors they only invest because they participate in their company s DC plan. However, they lack confidence in their ability to make good investment decisions. Only 7% of accidental investors were confident or very confident in their ability to retire comfortably. Profit Sharing/401(k) Council of America s 52 nd Annual Survey The most common primary reasons for providing plan education are to increase participation (32.5%), to increase appreciation for the plan (21.3%), and to improve asset allocation (12.2%) POTENTIAL ACTION ITEMS Conduct a complete review of your plan s communications program to determine if you can make improvements to help participants save and invest more effectively. o Learn more about the field of behavioral finance and its implications for participants investing decisions. Use this knowledge to evaluate your communications materials. o Evaluate the use of target-date funds to help participants achieve their long-term investing goals.

25 CUSTOM BENCHMARKING REPORT [4.22.A Q14] Topic 5: Plan Services: Benchmarks Over seventy percent of plan sponsors surveyed rated the quality of service they receive from their recordkeeper as excellent or very good. All responses: Plan sponsors who are satisfied with the level of service they receive from their recordkeepers share some common views. First, they believe that they receive the right amount of personal service from knowledgeable individuals. Second, they believe that they have access to the right services to help them manage the plan on a day-to-day basis, thereby reducing their burden and allowing them to focus on other issues of strategic importance to their businesses. These plan sponsors periodically review the services they receive from their current recordkeeper and benchmark them against those available from other providers.

26 CUSTOM BENCHMARKING REPORT [4.23.A Q15] Again, over seventy percent of plan sponsors surveyed rated the quality of service their employees receive from their recordkeeper as excellent or very good. All responses: The quality of service employees receive from the plan s recordkeeper is a critical factor in the success of your plan. Plan sponsors who see employee issues handled in a timely and accurate manner by recordkeepers are generally satisfied with their service level. To the extent that problems arise, they re resolved efficiently. And new services are regularly added to enhance the employee service experience. These plan sponsors review the services provided by their recordkeeper on a regular basis and benchmark them against those offered by other providers.

27 CUSTOM BENCHMARKING REPORT [4.24.1] Plan Services: Additional Insights Additional insights from respected industry sources related to plan services are provided below: AllianceBernstein Investments, inside the Minds of Plan sponsors: What They Care about and Want, 2009 Plan sponsors considered their providers as trusted partners to a much greater extent when plan sponsors were in touch with them regularly. [4.25.1]POTENTIAL ACTION ITEMS Conduct a complete review of the services offered by your current providers to determine if they re fully meeting your needs.

28 CUSTOM BENCHMARKING REPORT [4.26.A Q16] Topic 6: Plan Goals: Benchmarks Seventy-six percent of those surveyed indicated that it was important or very important to increase plan participation. This focus on improving participation rates reflects the continued persistence of relatively low participation in a substantial number of plans. If very important, important: You indicated that increasing plan participation is important at this time. Many plan sponsors have achieved higher plan participation levels through a combination of changes to the plan s design and the plan s communications program. One highly successful strategy has been to adopt automatic enrollment. As discussed earlier, the PPA clarified rules regarding automatic enrollment, and encourages plan sponsors to consider adopting this effective approach. If somewhat, not very, not at all: Many plan sponsors have achieved higher plan participation levels through a combination of changes to the plan s design and the plan s communications program. One highly successful strategy has been to adopt automatic enrollment. As discussed above, the PPA clarified rules regarding automatic enrollment, and encourages plan sponsors to consider adopting this effective approach. If you have not already done so, you may want to consider automatic enrollment as an approach that could further enhance your plan s participation rate.

29 CUSTOM BENCHMARKING REPORT [4.27.A Q17] Eighty-two percent of those surveyed believe it s important or very important to increase employee savings levels at this time. As the population ages and more employees reach retirement, plan sponsors are increasingly focusing on ensuring that employees have accumulated adequate savings to achieve their desired retirement lifestyle. If very important, important: You indicated that increasing employee savings levels is important at this time. Once again, plan sponsors are using a combination of smart plan design and effective plan communications to improve deferral rates. One highly effective approach is to couple automatic enrollment with automatic salary deferral increases. Using this strategy, employee deferrals are increased from a starting default percentage (e.g. 3%) until they reach a specific deferral rate (e.g., 10%). Increases often occur annually in 1% increments. If somewhat, not very, not at all: Plan sponsors are using a combination of smart plan design and effective plan communications to improve deferral rates. One highly effective approach is to couple automatic enrollment with automatic salary deferral increases. Using this strategy, employee deferrals are increased from a starting default percentage (e.g. 3%) until they reach a specific deferral rate (e.g., 10%). Increases often occur annually in 1% increments. You may want to consider this approach to enhance your employees savings level even further.

30 CUSTOM BENCHMARKING REPORT [4.28.A Q18] As with the other measures of plan success (such as participation rates and savings levels), those surveyed indicated a high level of concern with helping employees make better investment decisions. Eighty-six percent said it was an important or very important objective. If very important, important: You indicated that it s important to you to help your employees make better investment decisions. One approach that many plan sponsors are using is to add target-date retirement funds to their plan. These funds provide a simple and effective way for employees to invest for retirement. And, as mentioned previously, plan sponsors are streamlining their plan s investment lineup. If somewhat, not very, not at all: One approach that many plan sponsors are using to help employees make better investment decisions is to add target-date retirement funds to their plan. These funds provide a simple and effective way for employees to invest for retirement. And, as mentioned previously, plan sponsors are streamlining their plan s investment lineup. You may want to consider both of these approaches to enhance your employees investing decisions if you haven t already done so.

31 CUSTOM BENCHMARKING REPORT [4.29.1] Plan Goals: Additional Insights Additional insights from respected industry sources related to strategic plan metrics are provided below: Profit Sharing/401(k) Council of America s 52 nd Annual Survey The average plan-participation rate for 401(k) plans is 82.7%. Smaller plans tend to have the highest participation rates. Lower-paid participants (as defined by the ADP tests) contributed an average of 5.5% of pre-tax pay, while higher paid participants contributed an average of 6.6% of pre-tax pay. Participant deferrals tend to be highest in smaller companies. The average plan has approximately 60% of assets invested in equities POTENTIAL ACTION ITEMS Conduct a complete review of your plan s communications program. Conduct a complete review of your plan s investments. Conduct a complete review of your plan s service providers.

32 CUSTOM BENCHMARKING REPORT [4.32.1] In Closing Congratulations on taking this important step to evaluate and enhance the performance of your plan. This Strategic Plan Review Report demonstrates your commitment not only to meeting your fiduciary duties but also to taking the necessary actions for your plan to create better outcomes for you and your employees.

33 CUSTOM BENCHMARKING REPORT [4.33.1] Research Methodology The extensive research study underlying this report was conducted among defined contribution plan sponsors. Our intent was to find out what plan sponsors are thinking, in regards to what they want versus what they ve been getting from their plan providers. It is our hope that plan sponsors, financial advisors and others in the DC industry will use our conclusions to serve participants more successfully and help them do a better job of saving for retirement. We categorized the five asset-based plan segments in our study as follows: Micro plans: less than $1 million in plan assets Small plans: $1 10 million in plan assets Mid-size plans: $10 50 million in plan assets Large plans: $ million in plan assets Mega plans: greater than $250 million in plan assets

34 CUSTOM BENCHMARKING REPORT [4.34.1] Important Disclosure Your participants should consider the investment objectives, risks, charges and expenses of any AllianceBernstein fund/portfolio carefully before investing. For free copies of our prospectuses, which contains this and other information, visit us online at or contact your AllianceBernstein Investments representative. Please instruct your participants to read the prospectus carefully before investing. Investments in target-date funds are not guaranteed against loss of principal; at any time, the account value can be more or less that the original amount contributed - including at the time of the fund s target date.