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CCH® PENSION — 2/1/08

Plan Sponsors Show Growing Interest In Retirement Plan Automated Investment Features

From Spencer's Benefits Reports: According to the latest installment in the Survey & Sample Series issued by the International Foundation of Employee Benefit Plans (IFEBP), there is growing interest in the use of automated investment features in the administration of both defined benefit plans and defined contribution plans. The survey, Investment Management Services, includes eight samples and 167 survey responses submitted by members of the IFEBP and the International Society of Certified Employee Benefit Specialists.

Investment management services are used in one form or another for both defined benefit and defined contribution plans by most respondents, the survey found. Defined benefit plan respondents (94%) overwhelmingly use outside investment managers to invest plan assets. Most defined benefit plans that use investment managers (65%) review their performance on a quarterly basis. In addition, most (88%) of the surveyed defined benefit plan sponsors use an investment management consultant. Popular consultant services included monitoring of investment managers (99%); investment policy development and asset allocation (91%); and identification of potential investment managers (90%).

Of the defined contribution plan sponsors that participated in the survey, most (54%) rely on a bundled service provider arrangement. Unbundled arrangements are used by 31% of the plan sponsors, and alliance arrangements are used by 8%. Popular investment products or services used by defined contribution plans are targeted retirement date or lifecycle funds (45%); automatic rebalancing (41%); targeted risk or lifestyle funds (36%); managed accounts (34%); and investment advice (31%).

Many defined contribution plan sponsors (69%) use investment management consultants. As in the case of defined benefit plans, the top two consultant services used by defined contribution plan sponsors are monitoring of investment managers (84%) and investment policy development and asset allocation (70%).

The survey responses, which were collected in September and October 2007, are from corporations, multiemployer trust funds, and public/governmental employers in the United States and Canada. For more information, visit http://www.ifebp.org/surveysample.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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