Does your DC plan measure up to its peers?
August 20, 2013
What is the average plan participation rate in my industry? How many of those plans use automatic enrollment? What do their investment menus look like? And, is my plan keeping pace?
Answering these questions and keeping abreast of industry best practices are just part of the due diligence process for plan sponsors. Defined contribution (DC) plans vary in their size, scope of services, and investment objectives, but data-driven benchmarks can help sponsors assess their plan in context. Using industry-specific data from approximately 2,000 Vanguard-recordkept plans, the benchmarking tool available on the Vanguard institutional website allows plan sponsors to produce a customized report showing how their plan measures up in the marketplace.
"Plan sponsors want to know where they stand," said Bill Doughty of Vanguard Strategic Retirement Consulting, who heads the custom benchmarking team. "This tool allows sponsors to quickly answer the question, 'What are my competitors doing?' and share that information with key stakeholders in their organization."
Plan sponsors can filter data by industry, plan size, and preferred metrics to create a succinct summary of relevant benchmarks. Participation rates, deferral rates, plan design strategies, and investment options are just a few of the categories available as part of the data analysis. Taken together, plan sponsors get a sense of standard practices in their industry.
Users can enter specific plan data to further customize the report. It's a quick way to see how a plan stacks up against its peers and serves as an objective foundation on which to consider a plan's potential opportunities. A fully designed version of the report suitable for presentation to an investment committee is available for download at any point in the benchmarking process.
Benchmarking data is updated annually in concert with the publication of How America Saves, Vanguard's definitive report on DC plan data. How America Saves 2013 was released in June.
"We encourage plan sponsors to assess their plan once a year," Mr. Doughty said. "It's important to take a look at what's going on in your industry and use that competitive intelligence to help inform decisions specific to your plan."
- All investing is subject to risk, including the possible loss of the money you invest.
More about Plan design