PLANSPONSOR - February/March 2021 - 36
PLAN DESIGN | PLAN ASSETS
When
'Herding'
Helps
Amassing all prior-plan
assets in one's new plan
aids the saver and plan
I
n the vast ecosystem of defined contribution
(DC) plans in the U.S., a significant
amount of money is adrift-for
instance, where participants' assets are
stuck in the plan of a previous employer-
reports Neal Ringquist, executive vice
president at Retirement Clearinghouse
(RCH) in Charlotte, North Carolina. " The
Department of Labor [DOL] counted 80
million participants with balances in 2018,
and, of those, 21.2 million, or 27%, were
separated or retired. Depending on what
you assume for an average balance, that
adds up to about $300 billion at the low end
and $1.6 trillion at the high end. "
DC sponsors and service providers,
including Ringquist's firm, are working
to streamline the process of transferring
assets from participants' former employers
to their new jobs (roll-ins), as well as to
encourage retiring employees to keep their
savings in their company plan (stay-ins). In
properly sorting out and consolidating the
assets, both sponsors and employees can
capture substantial benefits.
As for stay-in retirees, " The mindset
of sponsors has been changing, " says
Dave Stinnett, head of strategic retirement
consulting at Vanguard Group, in
Valley Forge, Pennsylvania. Until recently,
" when participants retired, many sponsors
would prefer to get those balances out of
the plan. But retiring Baby Boomers have
built up high balances, and preserving
those in the plan helps secure more attractive
pricing from recordkeepers. "
The benefits to retirees of consolidating
assets from their former
employers' plans can be many. " They
retain the professional fiduciary oversight, "
says Stinnett, " through the
committee of people who monitor the
investments and the providers. And,
if the plan is of sufficient size, retirees
may invest in institutional share classes,
which can provide better pricing than if
they are left to their own devices in an
IRA [individual retirement account]. " He
also points to low-cost advice services
offered by many plans, as well as simpler
36 PLANSPONSOR.COM February - March 2021 Art by Iris van den Akker
handling of required minimum distributions
(RMDs).
Making It Work for Retirees
But to best handle retiree accounts, the
industry has some catching up to do, says
Katherine Roy, chief retirement strategist
for J.P. Morgan Asset Management, in
New York City. " Keeping retirees in place is
where the puck is moving, but retirees want
access to investments that generate current
income. Many times, that income is automatically
reinvested, rather than building
up a cash reserve and getting distributed
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PLANSPONSOR - February/March 2021
Table of Contents for the Digital Edition of PLANSPONSOR - February/March 2021
Service for a Crowd
2020 PLANSPONSOR Best in Class 401(k) Plans
Shelter From a Storm
From Volatility to Stability
Are Annuities Good for All?
Regrowth Factor
When 'Herding' Helps
PLANSPONSOR - February/March 2021 - Cover1
PLANSPONSOR - February/March 2021 - Cover2
PLANSPONSOR - February/March 2021 - 1
PLANSPONSOR - February/March 2021 - 2
PLANSPONSOR - February/March 2021 - 3
PLANSPONSOR - February/March 2021 - 4
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PLANSPONSOR - February/March 2021 - 12
PLANSPONSOR - February/March 2021 - 13
PLANSPONSOR - February/March 2021 - Service for a Crowd
PLANSPONSOR - February/March 2021 - 15
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PLANSPONSOR - February/March 2021 - 17
PLANSPONSOR - February/March 2021 - 18
PLANSPONSOR - February/March 2021 - 19
PLANSPONSOR - February/March 2021 - 2020 PLANSPONSOR Best in Class 401(k) Plans
PLANSPONSOR - February/March 2021 - 21
PLANSPONSOR - February/March 2021 - 22
PLANSPONSOR - February/March 2021 - 23
PLANSPONSOR - February/March 2021 - 24
PLANSPONSOR - February/March 2021 - 25
PLANSPONSOR - February/March 2021 - Shelter From a Storm
PLANSPONSOR - February/March 2021 - 27
PLANSPONSOR - February/March 2021 - From Volatility to Stability
PLANSPONSOR - February/March 2021 - 29
PLANSPONSOR - February/March 2021 - 30
PLANSPONSOR - February/March 2021 - 31
PLANSPONSOR - February/March 2021 - Are Annuities Good for All?
PLANSPONSOR - February/March 2021 - 33
PLANSPONSOR - February/March 2021 - Regrowth Factor
PLANSPONSOR - February/March 2021 - 35
PLANSPONSOR - February/March 2021 - When 'Herding' Helps
PLANSPONSOR - February/March 2021 - 37
PLANSPONSOR - February/March 2021 - 38
PLANSPONSOR - February/March 2021 - 39
PLANSPONSOR - February/March 2021 - 40
PLANSPONSOR - February/March 2021 - Cover3
PLANSPONSOR - February/March 2021 - Cover4
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