Case Study
Retirement Plan Consulting

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Situation: As the size of an organization grows, its benefits infrastructure can become complex. This is especially true in industries where mergers and acquisitions, joint partnerships, and different operating entities have historically led to multiple unrelated plans within the same entity. Within these acquired plans, the new plans sponsor often tries to maintain the existing benefits of the acquired organization without impacting the benefits for existing employees.

In not-for-profit organizations, the challenges of maintaining multiple plans can be especially acute; ERISA enforcement and the increasing costs of administration can challenge organizations that are already operating at thin margins. Cornerstone ran into one such situation with a healthcare client who operated six distinct plans that had overlapping employee bases and multiple vendors. This led to a variety of fiduciary issues, administrative difficulties, investment monitoring headaches, and suboptimal pricing.

Solution: Cornerstone assisted this client, as it does with many clients, in forming a “fiduciary committee” that was tasked with managing these plans more efficiently. Once the committee was formed, we followed our four-step fiduciary process – organize, formalize, implement, and monitor – to begin addressing the organization’s inefficiencies.
After a review of the plans’ documentation and governance, the first step was to perform a thorough analysis of the involved service providers. This enabled the committee to understand where redundancies and mispricings existed. Cornerstone then helped the committee identify the goals of the organization, which included creating a more engaged workforce and more cost-effective solutions for its employees’ retirement plans. With this in mind, we used our plan design expertise to combine four of the existing six plans, obtain more favorable vendor pricing through skilled negotiation, streamline the core fund offerings to participants, and implement industry best practices, including qualified investment default alternatives, auto-enrollments and auto-escalation of contributions.
Results: The consolidation of plans allowed Cornerstone to leverage economies of scale across the various vendors in order to reduce the hard dollar costs paid by participants. We were also able to reduce the number of regulatory filings and 5500 submissions by 50%, thereby eliminating the related fees charged by outside advisors. The cost savings to the organization were significant, but perhaps more importantly, employees now receive fewer statements to track, can more effectively plan for retirement, and pay significantly less for the previously duplicative services.

In addition, freeing up the time of the plans’ administrators allows them to focus on leveraging their employee benefits to attract and retain core talent. Sponsoring employee benefit plans can be an arduous process, especially when newly acquired plans are laid next to existing ones; however, there is hope for plan sponsors willing to put in the time to identify and eliminate inefficiencies.