Cowden Associates Survey Finds Significant Changes in Investment
Decision-Making Process
PITTSBURGH, Aug. 7 /PRNewswire/ -- Significantly more senior executives
are taking a direct role in decisions regarding their organization's 401(k)
plans than in the past, according to Cowden Associates, Inc.'s Second Annual
Tri-State Defined Contribution Plan Sponsor Survey.
Of the survey respondents, 94 percent indicated that their senior
executives are involved in the investment decision-making process, compared
with 30 percent in 2007.
More than 125 employers throughout the tri-state region participated in
this year's survey, providing information on their location, size, total plan
assets, type of organization, and eligibility for and participation in the
plan.
"Recent legislation, including the Pension Protection Act and the Supreme
Court's ruling that individuals can sue defined-contribution plan sponsors who
mismanage their funds, has been a real wake-up call for plan sponsors," said
Jim Bartoszewicz, executive vice president of Defined Contribution &
Investment Advisory Services. "In just one year, we're seeing a significant
shift in the way defined-contribution plans are managed."
According to the survey, more senior managers are serving on their
organization's Investment/Retirement Committees. In doing so, they are taking
responsibility for selecting and monitoring the investments offered in their
plans, participating in any plan design changes and overseeing plan service
providers and their fees -- all fiduciary responsibilities of such committees.
Still, there are areas where plan sponsors need considerable improvement,
according to the survey results. Although the number of respondents who either
did not have an Investment Policy Statement (IPS) or did not know what their
IPS contained dropped from 52 percent in 2007 to 41 percent in 2008, 25
percent of respondents reported not having an IPS. An IPS provides the general
investment goals and objectives of a retirement plan.
Survey results also show an increase in the number of defined-contribution
plan sponsors who implemented an automatic enrollment program, up from 16
percent in 2007 to 25 percent in 2008. Automatic annual increases were more
prevalent in 2008, up from 7 percent in 2007 to 10 percent in 2008.
"One clear goal of the Pension Protection Act was to increase the savings
rate in defined-contribution plans by encouraging plan sponsors to
automatically enroll employees in their plan and to automatically increase the
participant's deferral rates," Bartoszewicz said. "We're seeing a modest
increase in both areas."
In its second year, Cowden Associate's survey provides an accurate
baseline to measure improvement and trends in 401(k), 403(b) and 457 plan
sponsorship and participation in the Eastern Ohio, Western Pennsylvania and
Northern West Virginia region. It also illustrates where the greatest needs
are to achieve strong retirement plans.
About Cowden Associates, Inc.
Cowden Associates is a Pittsburgh-based consulting and actuarial firm with
a dedicated and experienced team of professionals with extensive experience in
health and benefits, retirement, plan design, compensation, employee
communications, benefits enrollment, actuarial and technology services. The
firm is committed to providing the highest level of service through industry-
leading professionals with experience and expertise equal to or greater than
typically expected at the largest national firms. Cowden Associates is a
charter member of United Benefit Advisors (UBA), an alliance of the premier
independent benefit advisory firms in the nation. For more information, visit
www.cowdenassociates.com or call 1-888-889-9432.
SOURCE Cowden Associates, Inc.
Jim Bartoszewicz of Executive Vice President, Defined Contribution &
Investment Advisory Services of Cowden Associates, +1-412-394-9355, or
jimb@cowdenassociates.com; or Jason Snyder of WordWrite Communications LLC,
+1-724-935-7580, or cell, +1-412-292-2658, or jason.snyder@wordwritepr.com
