PLANSPONSOR - June/July 2019 - 23

Rouse says, fee levelization can occur in many different forms.
For example, how often is the rebalancing performed at the fee
level? Is it done quarterly, monthly or weekly?
" There are complications if you don't rebalance on a
regular basis, and there are issues of participants moving in
and out of funds, " Rouse says. " But it's kind of a table stakes
feature that recordkeepers are, by and large, able to offer. " Plan
sponsors compiling an RFP might therefore want to ensure the
recordkeeper can accommodate their frequency of levelization.
5.
Loan Repayments. Edwards says plan sponsors
should check the vendor's capability to provide loan repayments
for terminated participants. Most loan repayments come
through payroll deductions. The question is, she says, can a
recordkeeper allow for a former employee to still make loan
repayments by coupon or automated clearing house (ACH).
This can be a benefit for plan participants, and not all recordkeepers
can do this, she notes. Normally when a participant
leaves an employer, his loan becomes due and payable within
60 days. Enabling loan repayments after employee termination
" Every recordkeeper has
to indicate how it protects
this PPI from not only
hackers and cyber crime,
but from internal partners
cross-selling services. "
allows the participant to continue to repay the loan and not have
to take a taxable distribution for that amount if he is unable to
pay it back in full at one time.
" Many plan sponsors are looking at this and amending
their plan. The industry is trying to have participants keep as
many assets as possible in the plan. That's the directive. It's not
a given that all recordkeepers will do that, but it's something we
advocate for, " Edwards says. -Judy Faust Hartnett
See what products and services each provider offers on pages 24-39.
Other RFP Considerations
W
hen contemplating changing
providers or benchmarking your
plan, there are a multitude of services,
regulations and technologies to inquire
about in preparing your request for
proposals (RFP). Here are a few additional
points about commonly discussed
features that, sources say, can help plan
sponsors go deeper with their questions:
PLAN ANALYTICS. " In the old days, we
measured plans by using plan participation,
average deferral rates and average
account balance stats, " says Marina
Edwards of Willis Towers Watson. " But
we can use data in a much deeper capacity
today. " One way recordkeepers can help
plan sponsors apply plan analytics is to
determine differences in saving behaviors
across genders, age brackets or site locations,
among other criteria.
Once that analysis is complete, she
notes, " if we're finding pockets within
our population that need special attention,
we can create direct and constant
communication programs. " Plan sponsors
interested in this area can say as much in
the RFP, asking how customizable is the
vendor's dashboard and how often can it
push out reports, she says.
READINESS TOOLS. Retirement readiness
tools have become a given, sources
agree. Vendors have developed retirement
readiness scores or projections for future
account balances that employees can view
on their employer's participant website
and mobile apps. According to Edwards,
" We're beginning to dive into the details of
the assumptions and the data that's used
to create these retirement readiness projections.
The inputs from the data used for the
assumptions are not all created equal. So,
in an RFP, it can be very helpful to understand
what assumptions and metrics are
going into those projection tools. "
LIFETIME INCOME. As to lifetime
income, " There's a demand coming
from plan participants that plan sponsors
are sensitive to; at the same time, the
sponsors are sensitive to their fiduciary
responsibilities, and recordkeepers are
just trying to meet the demand, " says Tim
Rouse of The SPARK Institute. Sponsors
have been discouraged from offering
such products for fear of having fiduciary
responsibilities for the product or its
provider years down the road, he says.
This will become a critical area of
RFP focus for plan sponsors if the Setting
Every Community Up for Retirement
Enhancement Act of 2019 (SECURE
Act) or the Senate's similar Retirement
Enhancement and Savings Act (RESA)
passes both houses, as either act creates
a safe haven for offering in-plan annuities.
Both House and Senate are said to be
eager to move forward.
The safe harbor would shift the onus
from plan sponsors to insurers and rely
on the assurances of state insurance regulators
that a carrier is adequately capitalized.
" In the end, Rouse says, " maybe,
participants will have to engage in some
form of a contractual way; therefore, the
responsibility for the products will be
clearly delineated. " -JFH
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