Goal Setting and Action Planning 2 Service Scope 8 Annual Calendar 12
Pg 2 Strategic Plan Goal Setting and Action Planning Goal Setting and Action Planning It is important to identify your plan-level goals and the specific steps necessary to reach them. The findings from this eercise will serve as the basis for creating your strategic plan. Driving Participant Outcomes Plan Design Considerations: Is this your sole retirement plan, and if so, what goals do you have for this plan (e.g., participation rate, average savings rates, replacement income ratio, percentage-maimizing match, and 402(g) limit)? Is your plan s design and your participants behavior helping to achieve the replacement income ratios you desire? What defaults can you reconsider for greater impact? Are your participants inquiring about the ability to make Roth contributions to the plan? Are your plan s loan and withdrawal provisions compatible with a long-term savings strategy (e.g., age-65 forceouts, installments, etc.)? Discussion points: Many financial eperts suggest that individuals need to save at least 15% of their annual income throughout their working years for retirement, and that most people will need anywhere from 70% to 100% of their preretirement income to maintain their current lifestyle in retirement. A safe harbor plan design can eliminate the need for nondiscrimination testing and contribution caps for highly compensated employees (HCEs). There are multiple design approaches that can be used to provide comprehensive automatic features and still contain and manage employers' costs (e.g., restructuring company contributions, modifying eligibility and/or vesting requirements). Over 58% of clients offer automatic enrollment. For these plans, 95% of participants remained in the plan.* For plans offering automatic increase on an opt-out basis, 65% of participants remained in the program. When offered on an opt-in basis, only 7% of participants have selected the automatic increase program.* Retirement Income Manager SM is an interactive, online program designed to help participants plan for and manage their retirement plan savings during their working years and throughout retirement. Combining elements of automation and education, this solution can help simplify the distribution phase of retirement planning.** * Based on information as of September 2012. ** Participants subject to qualified joint survivor annuity requirements are not eligible for the service. Goals Target completion date Responsible party(ies) Status 1 2 3
Pg 3 Strategic Plan Goal Setting and Action Planning Investments Considerations: Do you have an Investment Policy Statement for your plan? Is there any opportunity for you to offer lower-cost investment options while maintaining your plan s investment strategy? Does your core investment lineup cover the primary asset classes? Or is there a need to consider streamlining your investment offerings? Might there be an opportunity to implement a target-date reset strategy to help with asset allocation? Have you considered placing a limit on investing in company stock? Discussion Points: While an Investment Policy Statement is not required by ERISA, it can be a very valuable plan document because it establishes procedures governing how the plan will select and review investment options. When constructing an investment lineup, it s important to consider: o o o o Plan objectives Corporate culture Demographics of the participant population Participant behavior and investment utilization Plan fiduciaries should ensure that investment costs are reasonable and balanced with performance and risk factors. Goals Target completion date Responsible party(ies) Status 1 2 3
Pg 4 Strategic Plan Goal Setting and Action Planning Participant Communications Considerations: What is your biggest concern in terms of your employees retirement readiness? What are the most prevalent competing priorities that can detract from your employees' focus on retirement savings? What do you believe motivates your employees to take action? Are there opportunities to integrate retirement savings messaging with other benefits programs? Is the scope of employee communications that currently offers appropriate for your employee base? How else can we help? Discussion points: Sponsors and participants alike ranked two things the highest one-on-one consultation and online tools that provide personalized recommendations as methods most likely to trigger action.* When asked, If you had etra money after paying your monthly epenses, what would you do with it?, only 17.1% of participants responded: "Add it to my retirement plan."* One of the greatest concerns for many individuals is the cost of health care, which is projected to rise at a rate beyond average inflation meaning many participants may be underestimating their retirement income needs. Personalized communications can help drive positive participant behavior. About 6.6% of participants who received personalized communications from responded by increasing their deferrals.** Since 1999, interaction via digital channels has increased from 19% to 85% of all participant interactions with. Digital channels include tablets, mobile devices, traditional desktop and laptop computers, as well as chat interactions. * Participant Pulse survey results. ** data through 3/12/12. Average deferral rate increased from 4.74% to 8.68%. Goals Target completion date Responsible party(ies) Status 1 2 3
Pg 5 Strategic Plan Goal Setting and Action Planning Managing Fiduciary Risk Considerations: Are you familiar with and meeting all of the requirements with respect to fee disclosure regulations? How are you educating your fiduciaries/committee members on an ongoing basis? Are you familiar with our fiduciary training resources (e.g., online videos)? Do you have fiduciary concerns related to participants investment in company stock? Discussion Points: Under ERISA, plan fiduciaries are accountable for prudent and diligent plan governance. They must: o o o Identify risks and challenges facing their retirement plans Assess the effectiveness of plan decision-making processes, oversight, and operations Fi any issues in a timely manner For plan fiduciaries to keep up with changing regulatory requirements and provide effective plan governance, they must be well trained. Plan fiduciaries have a duty to assess the reasonableness of the fees paid to service providers in comparison with the service providers delivery of services and performance. Disclosure regulations under ERISA Section 404a-5 are intended to ensure that plan participants understand all of the costs associated with participating in their retirement plan so they can make informed decisions about whether to participate and how to invest if they do. Goals Target completion date Responsible party(ies) Status 1 2 3
Pg 6 Strategic Plan Goal Setting and Action Planning Streamlining Recordkeeping Considerations: What processes have your administrative staff and 's service team identified as opportunities for improvement? Is the frequency of data transmissions meeting your needs? Are you taking advantage of industry best practices to help minimize your plan s risk eposure (e.g., elimination of manual procedures)? Have you provided your most recent plan amendments to? Discussion Points: Client Access File Echange (CAFÉ) or Secure FTP is recommended for safe and reliable echange of files with. Manual processing and allowing eceptions may increase chances for plan data errors. Use of paperless loans and withdrawals allows participants to receive their proceeds sooner and reduces risk of manual errors. Periodically reviewing all processes and procedures is recommended to ensure compliance with the plan document and to identify opportunities for process improvements. Goals Target completion date Responsible party(ies) Status 1 2 3
Pg 7 Strategic Plan Goal Setting and Action Planning Measuring Effectiveness Considerations: What are your most important indicators of plan success? Overall, how do you think is doing as your plan s service provider? What can we do better? Are s plan sponsor communications effective in keeping you up to date on current industry trends, legislative developments, etc.? Discussion Points: Successful plan improvements begin with a careful review of fiduciary concerns, employee response, and cost considerations. Plan Meter is a retirement preparedness analysis tool designed to quantify the ability of plan participants to replace their current income at retirement and compares eisting plan design and participant behaviors with projected outcomes from adopting program features. The Retirement Income Manager SM modeling tool is challenging participants to rethink their assumptions about retirement. After using the service: o 66% said they will work longer o 20% responded that they will increase eposure to equities o 9% assumed their money will need to last longer in retirement o 5% stated that they will reduce their withdrawal rate (Source: Online survey conducted by ongoing.) When asked to rank the top improvements that recordkeepers can help plan sponsors with, improve participant readiness for retirement ranked number one. (Source: Deloitte, 2011.) Goals Target completion date Responsible party(ies) Status 1 2 3
Pg 8 Strategic Plan Service Scope Service Scope Client, Inc. The following provides an overview of products and services to help you create a checklist of those currently in use by your plan. You are encouraged to use the Comments section to make notes about additional products and services you you may want to discuss further with your representative. Participant Resources In use Comments Automated Services Automatic enrollment Retroactive auto-enrollment for nonparticipants Automatic reenrollment periodically for nonparticipants Automatic increase opt out Automatic increase opt in AutoBoost Auto-rollover Auto-restart for post-hardship suspension period Automatic rebalancing Automatic investments target-date investment option default Automatic reset for investments Participant Communications Cross-plan webinars Employee meetings/webinars One-on-one retirement consultations Personalized statements
Pg 9 Strategic Plan Service Scope In use Comments Quick cards/e-mails Customizable e-mails New-hire materials Distribution materials Distribution and Retirement Income Tools Retirement Income Manager SM modeling tool Retirement Income Manager SM withdrawal payment program Hueler Income Solutions Investments and Investment Advice TradeLink Trading Privileges (third-party account access) Morningstar Retirement Manager Advice Services Financial Engines Managed Accounts Advice Services
Pg 10 Strategic Plan Service Scope Sponsor Resources In use Comments Fiduciary Support Plan & Investment Review Fund Report Card Plan Cost Analysis Plan Meter FiduciarySource Guide Service Provider Disclosure Summary 408(b)(2) Outsourcing Enrollment Salary deferral Paperless withdrawals Paperless loans Hardship distributions Distribution outsourcing Required minimum distribution (RMD) Beneficiary tracking QDRO outsourcing Form 5500 preparation service Compliance QDIA annual notice distribution QACA notice distribution Safe harbor notice distribution EACA notice distribution 404(a) participant fee disclosure notification: Annual Newly eligibles Plan change notices 401(k)/401(m) ADP/ACP testing 415 annual additions testing
Pg 11 Strategic Plan Service Scope In use Comments Top-heavy testing 410(b) coverage testing Signature-ready Form 5500 Prototype document (with SPD) Other Resources College savings plans Nonqualified plans Directed trustee services Defined benefit plans Investment management defined benefit
Pg 12 Strategic Plan Annual Calendar Annual Calendar Client, Inc. The annual calendar provides a practical overview of what you can epect from to help keep you informed about important industry trends and the status of your plan. Biannual Annual Semiannual Quarterly Ongoing Planning and Monitoring Strategic Planning Communications Planning Plan & Investment Review Pricing Review Plan Trends and Comparison Review Fiduciary Review/Training Fee Summary Investments Capital Markets Webinar Investment Performance Update Investment Lineup Construction Plan Sponsor Communications and Events Plan Sponsor Resource Center Updates Sponsor Updates Compliance Products and Services Industry Trends Best Practice Considerations PlanLink Magazine Legislative and Regulatory Update Webinars 2013 Client Forum Indian Wells, CA (May 13 15, 2013) 2013 Investment Symposium Baltimore, MD (November 13 15, 2013)
Pg 13 Strategic Plan Annual Calendar Biannual Annual Semiannual Quarterly Ongoing Employees Global e-mails and webinars Participant disclosures/notices 404(a): Annual Newly eligible employees Plan changes Initial annual notice requirements (e.g., QDIA, safe harbor)
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