WINDSOR, Conn. -- While most defined contribution plan sponsors pay all administrative expenses for their plans, the number of companies charging plan expenses to participants has increased significantly in the past two years, according to the 1997 Access Research 401(k)/DC Market Needs Study.
In 1997, 64% of companies sponsoring 401(k) plans paid all administrative expenses, compared with 73% in 1995, when the last Access survey was done. But, in 1997, 24% of plan sponsors charged all administrative expenses to participants, compared with only 10% in 1995.
The study also found more than 60% of 401(k) plans now obtain investment options from two or more investment providers, compared with about 25% in 1992, according to an Access estimate.
During the past 12 months, 19% of plan sponsors added new investment options. International/global funds were most frequently added by DC plans of large employers (with more than 2,500 participants). According to the Access study, 8% of plans say they will add one or more investment funds in the next 12 months.
Plan participants now have an average of about 6.8 investment options available to them, up from less than five in 1993. The number of investment options is higher in plans that use mutual funds or insurance companies as provider, than in plans with other types of investment managers.
401(k) education questioned
PHILADELPHIA -- Eighty-six percent of employers provide investment education to their 401(k) plan participants, but only 44% believe it is working, according to a new survey by Sedgwick Noble Lowndes.
Another 36% of plan sponsors indicated they did not know if their investment education programs were working. Of those employers who believe investment education is working, 78% used plan participation rates as indicator, the survey showed.
Insurer, consultant ally
OMAHA, Neb. -- Mutual of Omaha expects to release an investment package designed for midsized plans -- in conjunction with Callan Associates Inc., San Francisco -- before the end of the year. Callan is assisting in designing the investment options, which will include five asset allocation funds and eight individual mutual funds. Callan will have ongoing responsibility for oversight and performance monitoring.
Funds which will be offered include State Street Global Advisors International Emerging Markets, Stock Market Index Fund and Bond Index Funds; Wellington Management Co.'s Small Company Fund; Hotchkis and Wiley's International Developed Countries Fund; Nicholas-Applegate Capital Management's Growth Fund; KPM Investment Management's Value Fund; American Express Trust Co.'s Stable Value Fund; and a guaranteed account from United of Omaha Life Insurance Co.
All except the guaranteed account are components of the asset allocation models; and all except the stable value fund will be available as individual investment options.
Web site launched
SAN FRANCISCO -- Union Bank of California has established a World Wide Web page providing Internet users with retirement planning tools and information at its 401(k) Resource Center site.
The site includes an investment tutorial, a glossary of investment terms, responses to frequently asked investment questions and interactive tools for retirement planning, tax savings calculations and investment risk evaluation. The World Wide Web address is: www.401kresource.com.
New package from Sun Life
WELLESLEY HILLS, Mass. -- Sun Life of Canada (U.S.) has introduced RQ-USA, a new version of its Regatta Q, the company's benefit responsive 401(k) program. RQ-USA allows a third-party administrator to handle a plan's administration while Sun Life manages participant record keeping.
The package, designed for small and midsized 401(k) plans, includes employee education, voice-response, as well as 30 investment options from five mutual fund families: American Century; Fidelity Investments; Massachusetts Financial Services; Neuberger & Berman; and Sun LIfe (U.S.).
Plan sponsors may select up to a total of eight investment options.
Education materials offered
PORTLAND, Ore. -- Arnerich Massena & Associates Inc. has developed an array of defined contribution education materials and workshops to assist plan participants develop improved savings and investment decisions.
The materials were developed because of the growth in account balances and participant demand for simple and helpful information.
Among the offerings: printed materials on savings targeting non-savers and new plan participants and an asset allocation guide that offers ongoing education and expanded information to assist participants in developing and maintaining long-term investment strategies.
A pre-retirement guide and a group of targeted materials on such issues as dollar cost averaging and the benefits of joining retirement savings plans also are available.
A Spanish language workbook was expected to be released last month. Three new workshops are available on saving, asset allocation and pre-retirement planning.