New York-based consultant Mercer’s “10 for 2011” New Year’s resolutions for defined-contribution plan providers sheds some light on how those product may be evolving going forward.
Mercer’s first resolution calls for fee transparency—rules coming down the pike for 2012 mandate clearer participant fee disclosure, so plan providers need to put the procedures in place now, the consultant says.
With greater fee transparency comes the need for more accurate benchmarking, another resolution for the industry, as are stable value wrap contracts.
Product-wise, Mercer would like to see more inflation hedge options and retirement income solutions, i.e. annuities. The consultant also suggests plan providers provide specific advice to workers nearing retirement, and says low-cost plan enhancements such as a Roth 401(k) option would be a good idea.
Other tweaks include adding managed-account options, a rethink about the contribution level for auto-enrollment and regular benchmarking against governmental requirements.
“Looking forward, we expect continued focus by participants and regulators on defined-contribution plans,” Amy Reynolds, a partner at Mercer, said in a statement. “Sponsors need to stay abreast of changes and trends and respond appropriately,” this year.
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