NEPC recently completed its fifth annual Defined Contribution Plan and Fee Survey. The survey is a critical component of the research we do for our DC clients, providing them important benchmarks and metrics for use in exercising their fiduciary duty. Improved fee disclosure is a particularly timely issue given the recently issued Proposed Final Fee Disclosure Regulations by the Department of Labor on July 16, 2010.
In the Survey, we analyze trends in expenses and fees and summarize the prevalence of plan features such as auto-enrollment, target date funds, and the number and type of plan investment offerings. The survey captures the 2009 plan year experience of 91 defined contribution programs of varying size and complexity. Collectively they use twenty different record keepers and have over one million participants. The key findings in this year’s Survey include:
- The average asset-weighted expense ratio is 0.55%, up from 0.53% in 2008.
- The median cost of administration per participant is $103, up from $78 in 2008.
- Target Date Funds (TDFs) continue to be the primary default option for plan sponsors, with 84% of plans using a TDF as the QDIA.
- The majority of Plans use TDFs that are not their record keepers proprietary offering.
- Plans continue the trend towards auto-enrollment, with 51% of plan sponsors choosing to auto enroll new hires.
- 14% of plans made a change to their capital preservation offering in 2009.
- Many plan sponsors are considering adding TIPS to their investment menus.
A webinar for clients, prospects, and other survey participants summarizing the results was held on July 27th.
We would welcome the opportunity to talk with you more about the work we are doing. If you have questions about our findings or would like to learn more about our firm, please contact Phedra Bigot at 617-374-1300.