A series of diverse topics — including fiduciaries, annuities, mergers and acquisitions, fees, social media, stable value and inflation protection — was tackled by panelists at Pensions & Investments' 18th annual East Coast Defined Contribution Conference, held March 7-9 in Miami.
Marla Kreindler, a partner at Winston & Strawn LLP in Chicago, pointed out that while there are many definitions of a fiduciary, “some of them mean nothing.” Panelists noted if a plan executive is unsure whether a service provider is a fiduciary, wording can be put into the provider's contract to ensure the firm and its employees act prudently and in the best interest of participants.
As to which providers are fiduciaries, panelists agreed managers of separately managed accounts are, collective fund trustees generally are, mutual fund advisers generally aren't, managers of insurance company separate accounts might be, and managers of insurance company general accounts generally are not fiduciaries.
During the general session on retirement income options, Martha L. Tejera, search consultant with Tejera & Associates LLC, Bainbridge, Wash., acknowledged that DC plan executives are frustrated that record keepers' platforms don't contain enough choices of annuity options. “That's temporary,” she assured them.
Ms. Tejera also noted that a participant who bought an out-of-plan annuity at the end of 2008 would have bought half the value of an annuity purchased at the end of 2007.
A concurrent session, “How You, Your Plan and Your Participants Can Thrive Following a Merger or Acquisition,” featured three DC plan executives. Jaime Erickson, defined contribution manager at Akzo Nobel Inc., Chicago, said that following the acquisition of Imperial Chemical Industries PLC, London, in January 2008, Akzo Nobel officials successfully mapped all of ICI's investment options except for stable value. The problem, she said, is that ICI's stable value portfolio contains traditional guaranteed investment contracts, while Akzo Nobel has all synthetic GICs.
Joseph Masterson, senior vice president at Diversified Investment Advisors, Purchase, N.Y., said during the concurrent session on fees that fee revenue has been coming from the active investment options in a DC plan. As a result, he said, “the active investors are paying for the passive investors.”
In discussing fee disclosure, Mary Ann Tweddle, retirement, relocation and financial portfolio manager at United Parcel Service of America Inc. in Atlanta, said UPS discloses fees for all fund options. Still, “if you ask participants what their fees are, they can't answer,” Ms. Tweddle said.
And, Marina Edwards, senior consultant at Towers Watson & Co. in Chicago, suggested that defined contribution plan executives review their plans' fees every two to three years.