Benefits administrators seek updates at Pension Focus 2008

It’s a big responsibility, but Brown feels she has a resource to help her keep up with the complex issues of her field in Pension Focus 2008.

The proximity of Pension Focus – at Branson’s Chateau on the Lake May 15–16 – and the quality of the speakers are bringing Brown back to the conference for her third year.

“As with any business, you have budgets as to where you can go for conferences, and there’s a lot of (Web seminars) and that type of thing you can listen to, but having a conference that is this close with this level of presenters is just very beneficial,” she said.

Allan Johnson, human resource manager for Cobalt Boats in Neodesha, Kan., agrees.

As HR manager for Cobalt Boats, a J.D. Power & Associates Award-winning manufacturer of 22- to 32-foot luxury craft with around 800 employees, “I’m a department of one as far as the 401(k) is concerned,” Johnson said.

Johnson has attended Pension Focus for six years and calls it the best conference in this part of the country.

“Most of the outside speakers are (Internal Revenue Service), Department of Labor and various lawyers that cover this field, and it’s just an awfully good resource that I haven’t found anywhere else,” he said.

Repeat attendees such as Brown and Johnson have helped Pension Focus grow about 10 percent per year since it began in 1996, said Brian Allen, president of conference sponsor Pension Consultants Inc.

He expects about 120 attendees, primarily from Arkansas, Missouri, Oklahoma and Kansas, but also from Nebraska, North Carolina, Indiana and Illinois.

The common theme of Pension Focus each year is fiduciary responsibility and limiting liability. Other key topics of this year’s conference are new fee disclosure mandates, updates from the IRS and Department of Labor – including a presentation by Assistant Secretary of Labor Bradford Campbell – and an overview of industry trends by Pensions & Investments Editor Nancy K. Webman.

Trend: Recovering excess fees

“Almost every plan ends up paying excess fees – except they don’t know it,” Webman said. “Companies are starting to hire consultants to do a fee study or fee analysis and take a look at just how much the plan sponsor, the 401(k) plan itself, is leaving on the table.”

She gave an illustration of how these fees are generated: “Let’s say Fidelity is the record keeper of our 401(k) plan and we use some Fidelity mutual funds, but we’ve also chosen some funds from outside of Fidelity. Fidelity pays a fee – with our money – to the outside provider, and that’s where a lot of the excess fees are coming from. What Fidelity didn’t do was negotiate a lower fee.”

Now, armed with fee analyses, employers are negotiating ways to get excess fees back – whether through in-kind services, such as more face-to-face investment education for employees, or reduced fees, based on the evidence of overpayment. Under law, these dollars must benefit plan participants; they cannot simply be returned to employers.

“This has only been done in the very recent past, and it’s gaining a lot of steam,” Webman said. McDonald’s, Akzo Nobel and Michigan’s Trinity Health have pursued excess fee recovery, and “more and more companies are going to do this because it’s their money that’s being left on the table,” she said.

Trend: Not dad’s 401(k)

Defined benefit plans are vanishing in favor of defined contribution 401(k) plans, “yet studies have shown over and over how much better the defined benefit plans perform,” Webman said.

As a result, “All over the country, public pension fund and corporate pension funds are trying to make their defined contribution plans look more like defined benefit plans,” she said.

One way that’s happening, with the blessing of the federal government, is through automatic enrollment, a standard practice in defined benefit plans but an innovation in 401(k)s.

Through the Pension Protection Act of 2006, the federal government allowed 401(k) plans to be structured so that employees are automatically enrolled.

The issue is inertia. No matter how simple the process, regardless of company matching funds, some people simply will not make the effort to enroll.

Automatic enrollment makes inertia into a positive: The individual is automatically enrolled unless they make the effort to opt out.

“And just in case you have more inertia, and you don’t want to pick how you want that money invested because you don’t care, they have default options,” Webman said. “They decide how to invest it if you won’t.”

Pension Focus 2008

Location: Chateau on the Lake, Branson

Hours: 12:30-5:20 p.m. May 15; 7:55 a.m.-noon May 16

Cost: $235 per attendee until May 4th; $275 per attendee after May 4th. Second conference registration is $175 before May 4th and $215 thereafter. Price includes Friday breakfast and course materials.

More info: www.pension-consultants.com/pensionfocus

On the Agenda

Thursday, May 15

12:30-1:20 p.m.: 401(k) Fees & The New Disclosure Mandates

1:30-2:20 p.m. – Break Out Sessions: Issues Commonly Discovered in a DOL Audit; Automatic Enrollment – The New Frontier

2:30-3:20 p.m.: IRS Employee Plans Update

3:30-4:20 p.m. – Break Out Sessions: Counting Compensation After Severance; Meeting Your Fiduciary Responsibilities

4:30-5:20 p.m.: Labor Department EBSA Regulatory Update

Friday, May 16

7:30 a.m.: Breakfast

7:55-8:45 a.m.: Industry Trends – Big News Current and Future

9-10:15 a.m.: The Importance of Selecting the Right Plan Default Investment (How to Properly Select a QDIA)

10:30 a.m.–noon: Roundtable Session