Retirement plan compliance got you worried? You’re not alone …

March 20, 2012 ( – Eighty-four percent of professional service firms say compliance with regulations is their top concern when sponsoring retirement plans for their employees.

plan complianceAccording to research from Nationwide Financial Services, Inc., 28% of firms with fewer than 50 employees do not feel that their fiduciary requirements are being met. Tiffany Grinstead, associate vice president of Retirement Plans marketing at Nationwide, told PLANSPONSOR she thinks firms feel this way because the topic of fiduciary requirements can be overwhelming. These businesses run many different parts of the business, not just employee retirement plans. “The entire concept of being legally liable makes them very nervous,” she noted.

Additionally, 28% of plan sponsors were unable to show a complete understanding of the Employee Retirement Income Security Act of 1974 (ERISA). “ERISA is a fairly complex act,” said Grinstead. “They [plan sponsors] misunderstand what their personal responsibilities are. They tend to not realize that they are liable.” ‘’

Based on the research, firms also say they need financial advisers who are experts on regulatory and legislative issues. Grinstead added that plan sponsors of small firms need advisers to spend a lot of time doing hand-holding. “This is a great opportunity for advisers to make sure they are strong in the industry,” she said. “Folks who learn for the first time that they have this responsibility will look to their adviser [for guidance].”

While ensuring plans are in compliance with regulations was the most important service advisers can provide for all small businesses, other services were ranked differently based on firm size and tenure. For example, firms with fewer than 50 employees ranked “timely resolution of operational issues” as the second most important service they expect to be provided, while larger firms placed more value on the “selection and monitoring of investment options.”

Firms that have been in business for more than 50 years ranked “investment selection and monitoring” as the second most important service to support their plan, while businesses less than 10 years old cited “providing participant advice” as their second priority, behind keeping the plan in compliance.

Overall, 69% of professional services firms expect an annual or quarterly plan review, and 67% expect educational materials to be available for their participants.

Tara Cantore

About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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