Why Benchmark Your Company 401(k) Plan?
See how your company 401(k) compares with other companies’ 401(k) plans by using retirement plan benchmarking. In this introduction to the educational Benchmarking Your Company’s 401(k) video series, you’ll discover why making the right decisions for your company’s 401(k) plan shouldn’t be guesswork. This video reveals ways plan and adviser benchmarking can help you improve your company’s retirement plan.
Why Benchmark Your Company 401(k) Plan? Welcome to Uncovering the Truth: Benchmarking Your Company’s 401(k) Plan. This introduction is the first in a three part series about retirement plan benchmarking. Benchmarking is simply the process of organizing, reviewing, and then evaluating to learn if your plan is competitive and provides an objective look at your 401(k) as a whole.
Benchmarking helps you to know:
- What you’re paying for…
- In fact, a 2018 survey by The Pew Charitable Trusts shows that only 19% of small employers are very familiar with their retirement plan investment fees.
Benchmarking also helps you know:
- That you provide a quality employee benefit
- And that you support your top talent.
It’s a chance to see where your 401(k) is and determine if you need to consider changing or switching it in order to get a better fit with your company. Think of it like this—are you still using the same phone from 2008? Probably not, right? It’s because technology has improved. The interfaces, security features, and functionality have come a long way in 10 years. And, just as phones have come a long way…
So have cell phone services. Think of benchmarking your 401(k) service like reviewing your cell phone service. You setup a cell phone plan and it was competitive at the time, then a few years go by and it's still working fine; however, it might not be as competitive as you think. You could be paying thousands of dollars per year for an old data plan—like 1 GB a month. But for the same price (or less), you can upgrade to a better plan.
Being able to track changing trends is a good reason to benchmark your plan. Trends to watch include:
- A reduction of average plan costs over time
- Provider consolidation through acquisitions and partnerships
- Technology enhancements that may continue to change how you manage your company 401(k)
- The shift among companies of all sizes from pensions, called defined-benefit retirement plans, to 401(k) plans
- And 401(k)’s are becoming the primary way to save for retirement
For people responsible for managing their company's 401(k) plan, benchmarking is more relevant than ever between avoiding lawsuits, hiring and retaining employees, and contending with budgetary and investment pressures.
A little bit about us, we provide ongoing educational services and customized support for 401(k) plan managers, and offer comprehensive plan services that are designed to help employees optimize their retirement savings while easing the company's risk and administrative burden.
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