When is a Good Time to Review Your Group Retirement Plan?

Apr 20, 2015

An employer who offers a group retirement program to its employees has the responsibility to review it periodically. Unfortunately, most employers do not know when they should review the retirement program or what should be reviewed.

The timing for the review of the retirement program may be dependent on, or a result of any of the following trigger points:

  • Growth – organizational growth will increase cash flow and assets under administration, which will impact the management expense ratios (MER)
  • Assets – if assets have grown more than $25,000 per participant
  • Time – typically after 3-4 years, the assets have grown enough to warrant a review
  • Acquisition – the client has acquired another company

When reviewing the retirement program, the plan sponsor should start with a review of their current service provider to ensure that their investment management fees (IMFs) are competitive, their technology platform is up-to-date for easy navigation, their service standards are upheld, and that the program set-up is aligned with the plan sponsor’s vision.

Secondly, the plan sponsor will want to look into the investment options available in the plan, to see if there are any new options applicable to the plan members.

An employer who is compliant with the CAP guidelines will also take into account records maintenance and decision-making tools for plan members during the review.

Another key aspect to managing a well-functioning group retirement plan includes an annual plan member education session made by either the plan sponsor and/or the service provider. A separate education session on administrative support could also be made to the plan sponsor by the service provider if needed.

Employers that provide a good offering in their retirement program will enhance the corporate value proposition to their employees and regular reviews of the program could certainly help the employer achieve this goal.

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