Through Institutionalization, DC Plans Can Deliver Better Outcomes for Participants, Resulting in Better Fiduciary and Risk Management Profiles for Plan Sponsors

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To gather insights on fiduciary issues related to institutionalizing DC plans, the Defined Contribution Institutional Investment Association (“DCIIA”) hosted a Legal Roundtable in Washington, D.C., last year; participating were 10 Employee Retirement Income Security Act of 1974 (ERISA) attorneys and consulting specialists. The collective input from these experts provides a framework for plan sponsors and fiduciaries interested in exploring perspectives on institutionalizing their DC plans and is outlined in a newly released paper entitled “Institutionalizing DC Plans: A Starting Point for Addressing Fiduciary Issues”.

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We are excited to be able to share the thoughts of the tremendous panel of experts that came together to create this guide for plan sponsors and fiduciaries as they institutionalize their DC plans.

The “Institutionalizing DC Plans: A Starting Point for Addressing Fiduciary Issues” paper expands on the definition of institutionalization that was defined in a previous paper published by DCIIA in October 2011. That paper, “Institutionalizing DC Plans: Reasons Why and Methods How”, defines institutionalization as a broad mindset that applies beyond investment options and proposed a “hierarchy” of institutionalization levels for DC plans: governance, funding, investment structure, engagement and education, and distribution and decumulation.

In this latest paper, each “hierarchy” is discussed from a fiduciary perspective and provides issues to consider and actions to implement. Lew Minsky, DCIIA’s Executive Director, commented that “we are excited to be able to share the thoughts of the tremendous panel of experts that came together to create this guide for plan sponsors and fiduciaries as they institutionalize their DC plans.”

Whether it is adopting automatic features, implementing institutional investment structures, personalized messaging, estimated retirement income, or adopting retirement income solutions, plan sponsors should - as part of their overall process of evaluating their plans - consider how their plans could benefit from institutionalization.

Roundtable Participants included: Bradford Campbell of Drinker Biddle & Reath LLP, Todd Castleton and Jim Napoli and Steve Weinstein of Proskauer Rose LLP, Claudia Hinsch and Marla Kreindler and Greg Needles of Morgan Lewis & Bockius, LLP, David Levine of Groom Law Group, Lori Lucas of Callan Associates, Inc., and Daniel Notto of AllianceBernstein LP.

The full report is available online at http://www.dciia.org or through the following link: http://www.dciia.org/info/publications/Pages/default.aspx/ .

About DCIIA

The Defined Contribution Institutional Investment Association (DCIIA) is a nonprofit association dedicated to enhancing the retirement security of American workers. Toward this end, DCIIA fosters a dialogue among the leaders of the defined contribution community who are passionate about improving defined contribution plan design. DCIIA members include investment managers, consultants, law firms, record keepers, insurance companies, plan sponsors and others committed to the best interests of plan participants. For more information, go to: http://www.dciia.org/ .

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