The defined contribution industry needs a dictionary to sort out different interpretations of auto features, and a prominent trade group has come to the rescue.
The Defined Contribution Institutional Investment Association has prepared a “definitional framework” so sponsors, providers and others can find common ground in defining such DC plan practices as auto enrollment, auto escalation and re-enrollment.
“Everyone comes at it from a different perspective,” said Joshua Dietch, co-chairman of DCIIA's retirement research board and primary author of the auto-features dictionary. “We found that in many cases, a lack of consensus caused confusion,” and confusion inhibits sponsors' offerings of auto features.
Terms causing the most confusion are “qualified default investment alternative re-enrollment” and “non-safe harbor re-enrollment,” Mr. Dietch said, the New York-based head of retirement and institutional research at Strategic Insight, an investment research firm that is a DCIIA member.
DCIIA acted after conducting a survey of 471 sponsors about auto features in 2014 and 2015. “It became readily apparent that they weren't all talking about the same thing,” Mr. Dietch said.
The two-page DCIIA dictionary is “not intended to be all-encompassing,” the introduction to the document says. “Rather, they represent a common framework for discussing auto features” to improve sponsor adoption rates.
The dictionary is available on ">DCIIA