you’ve got your plan’s fee - p&i events€¦ · - amy reynolds, partner, mercer speakers: -...
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Moderator:
- Amy Reynolds, Partner, Mercer
Speakers:
- Mary Nell Billings, Director, Retirement Benefits, the Americas, Hilton
Worldwide
- Jaime Erickson, Executive Director, Retirement Benefit Plans,
NBCUniversal/Comcast
- Marla Kreindler, Partner, Morgan Lewis & Bockius LLP
You’ve got your plan’s fee information. What’s the next step?
Special thanks to our Diamond Sponsor
When was the last time you benchmarked your plan’s administration fees?
1. Benchmarking this year
2. Benchmarked in 2013
3. Benchmarked in 2012
4. Benchmarked before 2012
5. Haven’t benchmarked fees in recent memory
Mary Nell BillingsDirector, Retirement Benefits, the Americas
Who Are We?
• Leading global hospitality company
• Over 90 year commitment to excellence in service
• Hilton’s Mission - We will be the preeminent global hospitality
company – the first choice of guests, team members, and owners
• More than 4,000 hotels in 90 countries
• 64,700 domestic employees
– 9,200 exempt & 55,500 non-exempt
• Our 10 brands range from luxury hotels/resorts to mid-priced
hotels/extended-stay suites
Hilton Worldwide 401(k) Plan
• Safe Harbor Plan
• Company match - 100% on the 1st 3% / 50% on the next 2%
• $1.1 Billion Assets
– Tier 1 - Target Date (Active)
– Tier 2 - Passive & Active Core Options ( 11 total)
– Tier 3 - Brokerage Window
• 42% Participation Rate
• 36,600 Eligible Team Members; 1,400 HCEs
• 1 loan allowed (previously 2) since August 2012
2012 - 8,400 loans 2013 - 6,300 loans
Best Practices Implemented
• Bid administrative fees on a per participant basis
• Benchmarked and negotiated:
– Recordkeeping and investment fees separately
– Investment fees regularly; vehicle and asset size
– Recordkeeping and trustee fees reviewed
• Be a good fiduciary:
– Participants and beneficiaries come 1st
– Monitor actual fees against contracts
– Review services annually
– Identify opportunities to reduce administrative costs
Current Focus
• Monitoring of revenue sharing arrangement
• On-going management of ERISA Spending account
• Evaluation of participant fee methodology
• Review content of fee policy and expand to include additional
guidelines
• Oversight of “covered providers”
• Continued monitoring of administrative and investment
management fees via a documented ongoing process
Biggest Take Away
Not a Destination But a Journey
Comcast/NBCUniversal
Jaime EricksonExecutive Director, Retirement Benefit Plans
Who We Are –
Growth Through Acquisition
Employee Base
EligibleEmployees
Average age
Customer Care
22,562 39.4
Tech 33,553 40.3
Other 20,603 42.5
NBCU 16,918 40.5
Total US 93,634 40.6
NBCUniversal Properties
Comcast 401(k) Plan• Safe Harbor Plan
• Company Match:
– 4.5% Match, plus additional 3% Retirement Contribution for
NBCUniversal employees
• $5.4 Billion Assets
– Tier 1 - Target Date (Passive)
– Tier 2 - Passive Options (3 total)• S&P 500, Small Cap and International
– Tier 3 - Active Options ( 6 total)• Stable Value, Total Return, Aggregate Bond, Small/Mid Cap, Large Cap, and International
– Plus Company Stock, for a total of 11 investment fund options
• 82% Participation
• Auto Enrollment and Auto Increase
• 1 Loan Option
Best Practices Implemented
• Increased Auto-Enrollment Rate from 2% to 3%, effective
1/1/2013
• Implemented 1% Auto-Increase, capping at 10%, effective
1/1/2013
• Eliminated Revenue Share, effective 10/1/2012
– Participants pay quarterly recordkeeping fee
• Reduced Investment Fund Options and added Multi-Manager
and White Label Funds, effective 10/1/2012
• Created Master Trust, effective 10/1/2013, so underlying plans
can benefit from reduced investment management fees
• Annual fiduciary training for all committee members
Special thanks to our Diamond Sponsor
How are administrative fees (excluding participanttransaction fees like loan and withdrawal fees) paid?
1. Plan sponsor pays all fees (no revenue sharing)
2. Revenue sharing pays all fees
3. Revenue sharing pays a portion of administrative fees, remainder are paid by plan sponsor
4. Revenue sharing pays a portion of administrative fees, remainder are paid directly by participants
5. No revenue sharing; participants pay all fees directly
Special thanks to our Diamond Sponsor
If participants pay a portion of the administrative fees beyond revenue sharing, how are they paid?
1. Dollar amount charged against participant accounts
2. Asset based charge applied against funds
3. Neither
Morgan Lewis & Bockius LLPMarla Kreindler, Partner
Legal Considerations:
Think top down, bottom up analysisTop down:
1. What do the plan’s governing instruments provide?
- Plan and trust documents
- Investment policy
- Fee and expense policies
- Provider agreements
2. Are governing documents consistent? Are amendments
required?
3. What has the named fiduciary reviewed?
4. What has been disclosed to participants?
5. How good are your records of decisions made?
Legal Considerations:
Think top down, bottom up analysisBottom up - Review the types of fees paid to providers:
1. Administration Expenses
- Plan level expenses
- Participant level expenses
2. Investment Option Expenses
- Annual operating expenses (advisory fees, custody & admin.)
- Transaction expenses (Brokerage fees, commissions, F/X)- Wrap fees or spreads on stable value products
- AFFEs (Acquired Fund Fees & Expenses)
3. Other types of compensation
- Revenue sharing
- Indirect compensation (float, error correction, soft dollars)
- Managed accounts or other services?
Coordinate process with legal need
Create checklist of responsibilities for 404(a) disclosures:
1. Obtain information from providers
2. Collect and collate information received
3. Cross check against plan documents and provider agreements
4. Create participant communication(s)
- Review provider templates against plan practices – what is
unique about your plan?
- Address other required information
5. Communicate finished product to participants
6. Update information and communications
Who can best assist with each step? Do the governance structure,
process, contracts and plan record reflect desired allocation of duties?
Coordinate process with legal need
Who should own responsibility for fee reviews?
- Admin vs. investment committees?
- Named fiduciaries vs. consultants vs. investment
managers?
- Example: Custom white label investment options - Who
is/are the “responsible plan fiduciary/ies”?
Does the governance structure, contracts, process and plan
records reflect the desired allocation of responsibilities?
Special thanks to our Diamond Sponsor
Do you have a fee policy statement?
1. Yes
2. No; Committee expects to develop one this year
3. No; Committee not in favor of having a fee policy
4. No; Committee hasn’t considered creating a fee policy
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