Only 60% of executives at 403(b) plans review and evaluate investment options in their plans, the Plan Sponsor Council of America and Principal Financial Group announced in a report Thursday.
In a survey of 426 plans, PSCA and Principal found that the largest plans — with more than 1,000 participants — had the highest percentage (75.4%) of plan executive involvement in reviewing and evaluating investment options. The lowest percentage (40.1%) of executives participating in the review and evaluation was in plans with fewer than 50 participants.
However, a report on the survey's results pointed out that sponsors weren't the only evaluators and reviewers of investment options. Among all plans, for example, executives said 30.1% of providers and 41.2% of investment consultants played a role in reviewing and evaluating investment options. Among the largest plans, the respective percentages were 30.4% and 63.8%. Respondents were allowed to select more than one answer. “More than 90% of organizations indicate someone is reviewing and evaluating funds,” said Hattie Greenan, PSCA's director of research and communications, in a news release.
For all plans, 8.7% of executives said no one reviews or evaluates investment options — ranging from 16.3% for the smallest plans to 2.9% for the largest plans.
The report said 25% of all plans didn't create or have an investment policy statement. Among the smallest plans, 37.9% lacked such a document; among the largest plans, 7.2% did not have a policy statement.
“There is still a lower level of pickup on this best practice,” said Aaron Friedman, national tax-exempt practice leader at Principal Financial Group, in an interview.
Mr. Friedman expressed disappointment with the response by plan executives about their RFP policies. The survey report said 42.4% of all plans — and 22.7% of the largest plans — don't conduct periodic requests for proposals. “In this day and age, you would hope to see more due diligence,” he said. “Some organizations have never gone to an RFP.”
The survey was conducted online in October and November; just over three-fourths of the respondents belonged to ERISA-covered plans.