2016 SPARK Journal_4th Quarter

www.sparkusa.org 1

The SPARK JournalA Quarterly Journal for the Retirement Plan Industry

VOL. 26 NO. 4 FOURTH QUARTER 2016

C O V E R S T O R Y

The More They Know: When Participants Understand Auto Features, Satisfaction and Outcomes ImproveSrinivas Reddy, CFA, Prudential Retirement

SPARK

2 www.sparkinstitute.org

100 Matawan Road Suite 330 | Matawan, NJ 07747 | Phone: 888.242.4682 | Fax: 908.349.3449 | www.enterpriseiron.com

Facing the Headache of Manual Client OnBoarding? Having Data Issues? Looking to Reduce Your Overall Cost and Timeline to OnBoarding New Clients?

Would you like Full Automation while Eliminating Reliance on IT?

Our Solution Set Promises To:

• Reduce overall Cost Per Participant (CPP) for OnBoarding and Remittance Processing

• Reduce or eliminate reliance on IT in the OnBoarding process

• Consolidate efforts into a single process for both Plan Sponsor and Plan Provider RecordKeeper via a bi-lateral data exchange including certification and pre-edit processes

• Significantly improve client experience by reducing the interaction points, simplifying the process and reducing overall time to market

• Increase Straight Thru Processing (STP) for Remittances and reduce Not-In-Good-Order (NIGO) rates

...Then let Enterprise Iron help!

Join us at Booth #35 for our session during the SPARK Forum!If you are unable to attend contact us for more information:

704-999-5779 or [email protected]

Client Experience

Cost Quality

RiskIssues:• Building new relati onships• Custom requests, feeds, reporti ng and carryover from prior Record Keeper

Mandates:• Seamless transiti ons • Reducti on in transiti on cycle ti me • Off er simplicity

Issues:• Opportunity cost• Reduce Recordkeeping costs• High consumpti on of most valuable resources

Mandates:• Reduce process variati on• Reduce Recordkeeping expenses• Year Over Year reducti on in Operati ng expenses

Issues:• Data accuracy

• Poor data may not manifest for years• Translate plan documents into admin rules

Mandates:• Reduce iterati ons of fi le testi ng

• Improve data quality at the source• Zero defects at conversion

Issues:• Data reconciliati on and validati on

• Client readiness for conversion• Implementi ng new regulati ons

Mandates:• Zero tolerance for Compliance fails

• Speed to implement vs. accuracy• Data Quality

saleto

service

presale

sale

define

design

developtest

deliver

service

www.sparkusa.org 3www.sparkusa.org 1

INSIDE THIS ISSUE

The SPARK Journal is published quarterly by The SPARK Institute, Inc.

9 Phelps Lane, Simsbury, CT 06070, 860-658-5058.

© 2016 The SPARK Journal and The SPARK Institute, Inc.

All rights reserved.

8

3 Executive Director’s Message Tim Rouse, The SPARK Institute, Inc.

4 COVER STORY

The More They Know: When Participants Understand Auto Features, Satisfaction and Outcomes Improve

Srinivas Reddy, CFA, Prudential Retirement

8 Consultant’s Corner

Data Driven Participant Engagement

Peter Cesario, Jr., Chris Eassa, Caitlin O’Connor, Lynda Shaw, Julie West, Envisage Information Systems

11 Washington Update

Agencies Propose Major Changes to 5500 Reporting

Michael Kreps, Groom Law Group

George M. Sepsakos, Groom Law Group

14 Research Commentary Financial Wellness and Retirement Readiness:

Insights from OneAmerica Participant Research

Marsha Whitehead, OneAmerica Companies

18 The SPARK Institute Perspective

Policymakers Eye “Pokemon GO” Approach for Missing Participants

Michael Hadley, Davis & Harman LLP

Adam McMahon, Davis & Harman LLP

24 SPARK Member Profile Ralph Ferraro, Lincoln Financial Group

29 SPARK Certifications

14

4

100 Matawan Road Suite 330 | Matawan, NJ 07747 | Phone: 888.242.4682 | Fax: 908.349.3449 | www.enterpriseiron.com

Facing the Headache of Manual Client OnBoarding? Having Data Issues? Looking to Reduce Your Overall Cost and Timeline to OnBoarding New Clients?

Would you like Full Automation while Eliminating Reliance on IT?

Our Solution Set Promises To:

• Reduce overall Cost Per Participant (CPP) for OnBoarding and Remittance Processing

• Reduce or eliminate reliance on IT in the OnBoarding process

• Consolidate efforts into a single process for both Plan Sponsor and Plan Provider RecordKeeper via a bi-lateral data exchange including certification and pre-edit processes

• Significantly improve client experience by reducing the interaction points, simplifying the process and reducing overall time to market

• Increase Straight Thru Processing (STP) for Remittances and reduce Not-In-Good-Order (NIGO) rates

...Then let Enterprise Iron help!

Join us at Booth #35 for our session during the SPARK Forum!If you are unable to attend contact us for more information:

704-999-5779 or [email protected]

Client Experience

Cost Quality

RiskIssues:• Building new relati onships• Custom requests, feeds, reporti ng and carryover from prior Record Keeper

Mandates:• Seamless transiti ons • Reducti on in transiti on cycle ti me • Off er simplicity

Issues:• Opportunity cost• Reduce Recordkeeping costs• High consumpti on of most valuable resources

Mandates:• Reduce process variati on• Reduce Recordkeeping expenses• Year Over Year reducti on in Operati ng expenses

Issues:• Data accuracy

• Poor data may not manifest for years• Translate plan documents into admin rules

Mandates:• Reduce iterati ons of fi le testi ng

• Improve data quality at the source• Zero defects at conversion

Issues:• Data reconciliati on and validati on

• Client readiness for conversion• Implementi ng new regulati ons

Mandates:• Zero tolerance for Compliance fails

• Speed to implement vs. accuracy• Data Quality

saleto

service

presale

sale

define

design

developtest

deliver

service

11

4 www.sparkinstitute.org2 www.sparkinstitute.org

www.sparkusa.org 3

Plan design has come a long way since the Pension Protection Act was passed 10 years ago, so it is especially timely that our cover story addresses ways in which we can enhance and build upon the beneficial features of the original law. Srinivas Reddy, Senior Vice President at Prudential Retirement, makes the case that, despite the widespread adoption of auto enrollment and use of target date funds that were facilitated by the Act, improvements in plan design can and should be made. He suggests that more plan sponsors adopt re-enrollment of existing employees to complement the auto enrollment of new workers. Based on the company’s research, he notes that once they are familiar with auto features, participants recognize their value in helping achieve retirement savings goals and tend to have higher deferral rates. Srinivas also urges the use of a guaranteed lifetime income solution as part of a default investment.

In our “Consultant’s Corner” commentary, a team from Envisage Information Systems outlines a proposal for improving participant engagement through data aggregation of all their finances – including retirement plans. They note that a connected financial network would include information on more than just retirement plans. Adding banking, insurance and healthcare data creates a holistic financial picture. This access to financial data would make planning, saving, implementing and tracking retirement at all levels easier.

Continuing the theme of financial wellness and retirement readiness, Marsha Whitehead, Vice President of Marketing for Retirement Services at the OneAmerica Companies, delves into the company’s recent participant survey in a “Research Commentary” to discuss the need for expanded participant education efforts. Despite years of work by plan sponsors and providers to educate participants on a variety of retirement and investing issues, the level of self-reported knowledge on many issues was low. She notes, for example, that knowledge about such things as the taxation of Social Security benefits, the Savers Tax Credit and retirement account withdrawals all scored at the bottom. Marsha outlines specific areas for improvement that can help employees get control of their financial lives and focus on preparing for retirement.

In their “Washington Update,” Michael Kreps and George Sepsakos of the Groom Law Group discuss the major changes to Form 5500 recently proposed by the DOL, IRS and PBGC. They stress that the proposed revisions are exceptionally complex

and, if adopted, will require plan administrators, record keepers and custodians to collect more information and devote more resources than ever before. In particular, they note that record keepers may need to improve technology systems to collect more data and potentially add to staff to answer compliance questions from clients.

Policymakers’ efforts to locate missing retirement plan participants and reduce the number of abandoned retirement accounts are the focus of “The SPARK Institute Perspective” in this issue. Michael Hadley and Adam McMahon of Davis & Harman LLP discuss a Senate bill that calls for

a national retirement savings lost and found registry where participants and beneficiaries could go to search for benefits owed to them. They also outline the PBGC’s work on expanding a missing participant program for DB plans to cover participants in terminated DC plans.

Our “Member Profile” in this issue features Ralph Ferraro, Senior Vice President and Head of Product for Retirement Plan Services at Lincoln Financial Group. The fact that Ralph was a star running back at Princeton University comes as no surprise considering the way he has successfully moved through a variety of technology, consulting and retirement product positions during his career. The flexibility and sense of team play that he displayed on the football field served him well in business. After 12 years at Prudential Financial in a variety of product positions, he joined American Management Systems as a consultant managing a large individual annuity and DC plan provider. In 1998 he joined the Copeland Companies (then part of Travelers) and over the next 18 years went through four transitions as Travelers merged with Citigroup and then became CitiStreet which was acquired by ING in 2008, subsequently becoming Voya Financial. Ralph joined Lincoln Financial this past April in his current position. I am sure you will find both the business and personal aspects of his story interesting.

E x E c u t i v E D i r E c t o r ’ s

M e s s a g e

Tim RouseExecutive Director

The SPARK Institute, Inc.



Srinivas Reddy, CFASenior Vice President

Institutional Income

Prudential Retirement

COVER STORY

Plan design has come a long way in the 10 years since the Pension Protection Act (PPA) of 2006

was enacted, but there is still more work to be done, particularly when it comes to re-enrollment and

adoption of guaranteed lifetime income solutions. And the stakes are high. A recent survey by Prudential

Retirement1 found that 8 out of 10 participants intend to rely on their workplace retirement plan as a

source of retirement income – more than any other source, including Social Security.

____________________________________

1 Prudential Proprietary Research, 2015 Defined Contribution Research Report.

www.sparkusa.org 5

The good news is that when participants are educated on

and exposed to automatic features and guaranteed lifetime

income solutions, plan satisfaction and outcomes are

elevated accordingly, as Prudential’s recent survey found. The

PPA was a linchpin in enabling DC plans to be designed so

they could work to counter participants’ natural biases and

behaviors, which we know can hurt their retirement savings.

It included a number of provisions that strengthened the

defined contribution plan structure, including safe harbors

that allowed employers to automatically enroll participants

into a plan and automatically increase their contributions

on a pre-determined formula and schedule (auto escalation)

to keep their contributions to the plan growing over time.

Workers still have the opportunity to opt out or elect a

different contribution rate, but must take action to do so.

Participants have a natural tendency to defer actions such

as enrolling and (once enrolled) increasing their contributions.

Plan designs that implement automatic enrollment and

automatic contribution escalation can counter these

tendencies. At the same time, the creation of QDIAs has

allowed plans to default participants into target-date funds

(TDFs), thus helping to counter improper diversification by

putting participants into TDFs aligned to their retirement

timeline. And indeed, 86 percent of plans that use QDIAs are

using TDFs.2

Recent figures indicate that 61 percent of plan sponsors

currently offer automatic enrollment and four out of five

of those also auto-escalate.3 This is a 221 percent increase

from the 19 percent of 401(k) plans that offered automatic

enrollment in 2005, one year prior to the enactment of the

PPA.4

While plan design has come a long way, improvements

can still be made, and indeed, are necessary. One of the issues

often cited as holding plan sponsors back from incorporating

automatic features is the fear of participant backlash due to

perceived loss of control. But often lost in the discussion are

the participants’ voices. What do they want? Are participants

generally in favor of automatic plan design features? Do they

see auto solutions as helping them achieve their retirement

savings goals?

At Prudential, we wanted to find out and so we designed

a survey to ask participants how they felt about plan

design features such as auto enrollment, auto escalation,

and guaranteed lifetime income solutions. We surveyed

more than 1,000 DC plan participants on a variety of

record keeping platforms, and the findings have important

implications for plan sponsors and advisors.

We discovered in our survey that when participants are

familiar with automatic features, they consider them a very

important plan design feature in helping them to save for

retirement. The key, we found, is familiarity. That is, when

participants have experience with or understand how auto

features work, they tend to favor them.

____________________________________

2 Callan 2016 DC Trends Report. 3 Ibid.4 Aon Hewitt, 2011, Hot Topics in Retirement and Trends and Experience in 401(k) Plan Survey.

VERY FAMILIAR

SLIGHTLY/NOT FAMILIAR AT ALL

SOMEWHAT FAMILIAR

77%

41%

23%

The likelihood that participants would use guaranteed lifetime income solutions

based on their familiarity with them.

FAMILIARITY GENERATES ADOPTION



COVER STORY

For example, while 44 percent of all participants

considered auto enrollment very important, nearly three

quarters of those who were familiar with it felt the same.

And while 39 percent of all participants overall considered

re-enrollment very important, that figure jumped 61 percent

with familiarity, to 63 percent of participants.

This is good news, particularly when it comes to

re-enrollment. The number of plan sponsors re-enrolling

all employees is still small. Of those that offer automatic

enrollment, just 45 percent enroll employees on a

retrospective basis, meaning they enroll all who are eligible,

not just those who are newly eligible. Auto enrollment

without re-enrollment does not address the inertia of longer

term employees who may have been with the employer since

before auto enrollment was instituted. Greater adoption of

re-enrollment will help all employees, not just the newly

eligible. Getting plans that have adopted autos to switch to

versions of these features that result in more inclusivity, such

as re-enrollment, will help further improve participation and

savings rates.

Crucially, we found that once familiar with auto features,

participants see them driving better saving and investing

behaviors – a good thing, since nearly half of participants

said they were worried about meeting retirement savings

goals. Compared to all participants surveyed, about 20

percent more of those who are very familiar with auto

enrollment said that it helps participants achieve a financially

secure retirement, ensures employees are putting money into

their retirement plan and investing it the right way, and

helps employees pay attention to and monitor their progress

toward retirement goals.

Additionally, we found that auto enrollment and auto

escalation track with better outcomes. Auto escalation can

be particularly important in helping employees save at a

high enough rate to meet their retirement goals. This is

of particular concern considering more than 60 percent of

participants in our survey were contributing less than 10

percent of their income to their plans, well below the 15

percent rate recommended by the Defined Contribution

Investment Association of America.

Plan satisfaction and participant contribution rates alike

were higher among participants who had access to and

experience with automatic features. Participants who had

experience with auto enrollment contributed, at the median,

10 percent of their pay to their plan, 30 percent more

than those without experience. We also discovered that

Millennials, though notoriously conservative when it comes

to investing, were the most enthusiastic about auto features

of any age group, boding well for their continued and

increased acceptance.

Total No With Experience Experience

47%

42%

54%

8% 7%10%

Current Contribution RateMedian Percentage

Overall Plan Satisfaction% Highly Satisfied (8-10 Rating)

Total No With Experience Experience

Experience with auto enrollment tracks with better outcomes

www.sparkusa.org 7

AMONG VERY AMONG WITH FAMILIAR EXPERIENCE TOTAL WITH GLI WITH GLI

They achieve better than average retirement outcomes 34% 54% 62%

They achieve similar retirement outcomes as the average employee 25% 27% 29%

They achieve below average retirement outcomes 13% 10% 4%

Not sure 28% 9% 5%

Majority of participants familiar with guaranteed lifetime income (GLI) say it creates above-average retirement outcomes

Participants who have had experience with either auto

enrollment or auto escalation contribute, at the median, 43

percent more of their pay to their retirement plan than those

without that experience. In addition, we found that concern

about the affordability of auto escalation is not widespread.

Among those who were offered auto escalation but never used

it or opted out, only 25 percent cited lack of affordability as a

reason. Instead, the most common reason given was wanting

to make decisions independently/not needing the feature,

a rationale that can be partially countered by educating

participants that they retain the right to change their increase

rate. Finally, we also found that although guaranteed income

solutions are significantly less well known and less used than

auto enrollment among plan participants, more than three-

quarters of those who are familiar consider it very important

to include them in workplace retirement plans. In fact, a

majority of plan participants who understand guaranteed

income solutions say being defaulted into them (as part of

a QDIA) leads to better-than-average retirement outcomes.

familiar with them, and only five percent could confirm they

used them.

If we could sum up our research findings in one sentence,

the takeaway would be this: When participants are educated

on and exposed to automatic features and guaranteed

lifetime income solutions, plan satisfaction and outcomes

are elevated accordingly. This suggests that there are several

ways plan sponsors can collaborate with intermediaries and

product providers to better meet participant needs and

expectations and continue the good work that began 10

years ago with the PPA:

• Make greater use of auto enrollment and auto

escalation, and pair them with guaranteed lifetime

income solutions that are part of a default investment

• Reframethedefaultdebatetocounterthemisconception

that auto features equate to a loss of control

• Make re-enrollment a feature of best-practice plan

design as a means of helping both new and existing

employees

• Generate increased awareness of diversified asset

allocation strategies that incorporate a guaranteed

lifetime income solution.

For more on the results of Prudential’s study and to read

the full paper, “The Ease of Automation and Guaranteed

Lifetime Income,” visit http://research.prudential.com.

Indeed, it seems that one of the main reasons participants

don’t make much use of guaranteed income solutions today

is that few have access to them. Only about a third were

If we could sum up our research findings in one sentence,

the takeaway would be this: When participants are

educated on and exposed to automatic features and

guaranteed lifetime income solutions, plan satisfaction

and outcomes are elevated accordingly.


Data Driven Participant EngagementData is integral to every aspect of retirement. The plan sponsor, the advisor,

the record keeper, and the participants themselves all require timely access

to accurate, up-to-date participant, plan and investment data to successfully

service participants toward retirement. The retirement industry is armed

with more data than ever before thanks to technology that can transfer vast

amounts of data at increasingly rapid speeds.

C O N S U LTA N T ’ S C O R N E R

www.sparkusa.org 9

Data Aggregation

Data is expected instantly and holistically with the ability to be accessed anywhere from any device. If you look at the shift in the way organizations outside of the financial services industry are engaging their customers, it should come as no surprise to stakeholders in the financial industry that they should also expect to be a part of the new data driven revolution.

To effectively advance the retirement industry, participant data must be available, portable and mobile. There must be a communication network with a unified back end system that allows for all business groups in the industry to speak to each other – trading transfers, enrollments, rollovers to name a few would all be accessible. Establishing an ATM-like system for the retirement industry would mean that a Millennial, by retirement, could feasibly have a singular view of all retirement programs they have been a part of throughout their professional career.

This connected financial network would be inclusive of more than just the retirement industry. It would include participant banking, insurance and healthcare information. Including the financial information from these sectors, in addition to retirement, provides a holistic financial picture that would help the retirement industry better service the participant.

Creating this financial network’s unified back end systems would provide structure and simplicity, which could translate into increasing participant engagement and would provide increased interoperability. Such large scale unprecedented access to financial data would make planning, saving, implementing and tracking retirement at all levels easier. Data flow in a unified financial network would provide

data that is not only comprehensive, but strategic.

Millennials’ financial assets are projected to grow from $1.4 trillion in 2015 to $11.3 trillion in 2030, a compound annual growth rate of nearly 15 percent.1 At the same time, however, the four biggest bank brands are among the “least loved” brands by Millennials today. Millennials have emerged into adulthood with low levels of social trust. In response to a long-standing social science survey question, “Generally speaking, would you say that most people can be trusted or that you can’t be too careful in dealing with people,” just 19% of Millennials say most people can be trusted, as compared to 40% of Baby Boomers. (Source: Pew Research).

The Millennial generation does not simply trust someone because they are deemed an expert. With a unified financial network, however, an institution would have the opportunity to not only understand a participant’s holistic financial picture, but share that back to them – to be able to make the best financial decisions and then explain why. That level of understanding would go a long way in building trust, which in turn could result in a far greater piece of that $11.3 trillion invested in financial assets.

In an industry where very little separates competitors, record keepers and financial institutions will need to look at innovative ways to differentiate themselves. The

Peter Cesario, Jr.Business Analyst

Chris EassaBusiness Analyst

Caitlin O’ConnorBusiness Development

Specialist

Lynda ShawBusiness Development

Specialist

Julie WestBusiness Analyst

To successfully engage participants, the financial industry must embrace the many opportunities that a

data-driven revolution offers.

_________________1 “The Future of Wealth in the United States,” Deloitte University Press, November 2015.

Envisage Information Systems


Millennial generation who expect this type of data to be aggregated in a single place will be more prone to invest assets with a participating entity.

Participant Engagement

To successfully engage participants, the financial industry must embrace the many opportunities that a data-driven revolution offers. We must be able to effectively send targeted messages and relevant information to participants. Meaningful conversations with a participant are made difficult when a participant’s financial picture includes only name, date of birth, gender, and contribution levels. We need to access a participant’s comprehensive financial picture to understand what they need now, 10 years from now, 25 years from now, and beyond.

If we could link the retirement industry’s back end systems to create a connected financial network, we would have the ability to aggregate a rich series of data points for every participant: loans, credit card debt, insurance, banking, mortgages, etc. With meaningful data points, we can look at a book of business, identify, and then strategically service financial profiles by segment. For example:

Paycheck-to-paycheck spenders: They contribute the minimum to their employer-sponsored retirement plan, or not at all. Looking at their holistic financial picture, does this participant have credit card debt? High student loan payments? Not saving at all? Offer these participants access to a financial education course. We can build their trust while improving their financial savvy.

Early savers: They likely have many large purchases to make before retirement: car, home, paying off college loans. This group could appropriately benefit from personal guidance about making the

immediate purchases while not forgetting about retirement goals.

Mature savers: They have been saving for a while and likely have assets spread in many places: cars, vacation homes, retirement accounts. They are informed but now may need assistance with a strategy going forward and how to prioritize and effectively leverage assets.

Transition planners: Retirement is not far off for them, and they need to know that their financials will align with their retirement goals and needs. This includes not only projections, but approaches to consider that will help fill in any potential gaps.

Retirees: They need help monitoring their savings, making sure that unplanned healthcare or other events can still be amply covered, etc. Part of this monitoring of their “spend-down” of assets will include a gut-check of their comfort level as well.

The ability to access data in a connected financial network provides advisors and record keepers with not only insights, but opportunity for improved operational processes. Algorithms could be tailored to send communications to specific participant segments for updates or educational sessions. Additionally, automated plan features such as auto enroll and auto save could be utilized more efficiently and effectively by targeting participants based on this holistic financial picture.

Think about the relationships an advisor or financial service entity could build with clients if you could congratulate them on paying off credit card debt or a student loan, packaged with marketing materials focused on retirement savings.

With the impending fiduciary regulations, it is also pragmatic to

pursue improved data access in our industry. Financial advisors will need to prove what is best for their client – something that is made much easier if an advisor has access to more than 4-5 data points per participant. It is rapidly becoming more apparent that a connected financial network would not just be helpful, but essential.

The utilization of technology and data will position financial institutions to implement focused approaches to assist current and future savers alike. The approach of looking at a participant’s financial health holistically and targeting strategies based on this view is more important now than it ever has been. Individuals must take control of their retirement savings. Gone are the days of relying on traditional defined benefit plans. Accumulating a large retirement balance with one employer has also become a thing of the past. The staggering number of Baby Boomers who are not prepared to retire comfortably should be an indication that solely putting the onus on the individual is not today’s solution. Incorporating automated technologies based on data which is readily available will allow current and future participants to collaborate with financial partners to ensure their financial needs are effectively met.

Data Driven Participant Engagement

C O N S U LTA N T ’ S C O R N E R

The ability to access data in a connected financial

network provides advisors and record keepers with not only insights, but

opportunity for improved operational processes.


WAShIngTOn UpdateWAShIngTOn Update

Agencies Propose Major Changes to 5500 Reporting

Michael KrepsPrincipal, Groom Law Group

George M. SepsakosAssociate, Groom Law Group

On Monday, July 11, 2016, the Department of Labor (“DOL”), the Internal Revenue Service (“IRS”), and the Pension Benefit Guaranty Corporation (“PBGC”) (collectively, the “Agencies”) proposed substantial revisions to the forms and regulations governing the Form 5500 annual reporting process for employee benefit plans (“Proposed Revisions”). These Proposed Revisions, if implemented, would be the most significant overhaul of the Form 5500 since the Agencies’ last Form 5500 update, effective with the 2009 plan year (the “2009 Update”).

The Proposed Revisions would affect employee pension and welfare benefit plans, plan sponsors, administrators, and service providers to plans (including record keepers and trustees) subject to annual reporting requirements under the Employee Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“Code”). If adopted on schedule, the revised reporting requirements would generally apply to plan years beginning on or after January 1, 2019. We discuss some of the key changes and their effect on record keepers below.

A. Executive Summary The Proposed Revisions greatly expand the scope of

information captured by the Form 5500 for nearly every type of employee benefit plan, including defined benefit plans, defined contribution plans, large and small group health plans, and ESOPs. The Proposed Revisions are exceptionally complex and it is clear that plan administrators, record keepers and custodians will need to collect more data and devote more resources than before to file a complete

These Proposed Revisions, if

implemented, would be the most

significant overhaul of the Form 5500

since the Agencies’ last Form 5500

update, effective with the 2009 plan

year (the “2009 Update”).


Form 5500 if these changes are adopted. It is clear that plan sponsors will look to their recordkeeping partners to assist them in meeting these new reporting challenges.

Some of the takeaways from the Agencies’ proposals include:

• The Proposed Revisions make clear that the Agenciesare increasingly relying on the Form 5500 as a key component of their enforcement efforts.

• TheAgenciesareseekingmoreinformationrelatedtotheplan’s investments. They are expanding the Schedule H categories of plan assets to reflect new asset categories and sub-categories, intended to more closely reflect the variety of alternative and complex investments held by plans.

• The Agencies are attempting to harmonize the feedisclosure requirements (Schedule C) with the disclosure regime under ERISA section 408(b)(2) that applies to ERISA pension plans. As a result, the rules regarding the reporting of “indirect compensation” earned by service providers have been simplified and made more consistent with information already required to be disclosed under DOL’s 408(b)(2) regulations.

We describe these changes in more detail in the remainder of this column.

B. Changes to Schedule H (Financial Information) The Proposed Revisions would retain the asset/liability and

income/expense structure currently in place in Parts I and II of Schedule H. However, the balance sheet component of Schedule H would be modified to include additional categories and sub-categories of assets. The Agencies intend to improve transparency for the current “other” categories which plans have been using to cover a wide variety of unspecified assets and are proposing to change the way alternative investments, hard-to-value assets, and investments through collective investment vehicles are reported. The Agencies believe these changes are necessary due to the changing nature of plan investments, particularly the increased use of sophisticated and complex investments that do not fit neatly into any of the existing reporting categories.

Specifically, the Proposed Revisions include the following changes:

• The Proposed Revisions would add new categories for“derivatives” and “foreign investments.” In addition, new sub-categories would be added to the existing

“Partnership/Joint Venture Interests” category to separately delineate the value of a plan’s investment in “limited partnerships,” “venture capital operating companies,” “private equity,” “hedge funds,” and “other partnership/joint venture interests.”

• The Proposed Revisions would require additionalreporting of assets held through self-directed brokerage accounts.

• TheProposedRevisionswouldaddnewsub-categoriestothe “Administrative Expenses” category of the “Income and Expenses” section of Schedule H to capture amounts paid for salaries, audit fees, recordkeeping fees, trustee and custodial fees, actuarial fees, legal fees, valuation fees, and trustee expenses, including travel and meetings (regardless of whether taxable). Further, new lines would require the plan administrator to specify how plan expenses were allocated to the plan, meaning whether expenses were paid by the plan directly or charged against participant accounts.

C. Changes to Schedule H, Line 4i Schedules of Assets The Proposed Revisions include structural, data element,

and instructional changes to the Form’s schedules of assets (currently the “Schedule of Assets Held for Investment at End of Year” and “Schedule of Assets Acquired and Disposed Within Year”), which are filed by plans and by certain DFEs. The Proposed Revisions would retain the two separate schedules of assets but would change the existing “Schedule of Assets Acquired and Disposed of Within Year” to a “Schedule of Assets Disposed of During the Plan Year.” According to the Agencies, the change would capture information about alternative investments and hard-to-value assets purchased in one year and sold in

The Proposed Revisions would retain the asset/

liability and income/expense structure currently in

place in Parts I and II of Schedule H. However,

the balance sheet component of Schedule H would

be modified to include additional categories and

sub-categories of assets.

WAShIngTOn UpdateWAShIngTOn Update


the middle of a subsequent year that is not captured by the current schedules.

D. Schedule C – Service Provider Information In a helpful change, Schedule C (used to report service

provider information), has been rewritten to more closely align with the disclosure requirements for service providers under ERISA section 408(b)(2). In the 2009 Update, the Agencies completely revised Schedule C, adopting complicated new rules for the reporting of “indirect” compensation. The Schedule C rules for indirect compensation reporting were so complex that the DOL ultimately issued over 60 FAQs to assist Schedule C filers.

For the most part, the revised Schedule C significantly reduces the complexity of indirect compensation reporting, but it has created some new challenges as well. Some of the key changes to Schedule C are as follows:

plan investments). This is consistent with the section 408(b)(2) disclosure rules that require record keepers to provide cost estimates.

• WhilepriorversionsofScheduleCallowedforreportingof indirect compensation as a formula, formulaic reporting would no longer be an option. Schedule C would continue to require filers to identify certain payers of indirect compensation consistent with the section 408(b)(2) disclosure rules. However, the new Schedule C would require the reporting of a specific dollar amount (or an estimate) paid by each payer of indirect compensation. If finalized, this requirement would be particularly challenging for record keepers who currently report much indirect compensation in the form of a formula (e.g., mutual fund revenue sharing payments).

E. Financial Transaction Reporting Changes on Schedule G To improve the uniformity and reporting of investment

and financial transaction information, the Agencies have proposed changes to Schedule G, which reports information on loans, fixed income obligations, leases in default or uncollectible, and nonexempt prohibited transactions. The revised Schedule G would collect additional information about plans’ transactions and relationships, especially nonexempt prohibited transactions. Regarding prohibited transactions, new boxes would be added to indicate the specific type of transaction involved, such as whether it involves a purchase or sale of property, an exchange of property, a lease, extension of credit, or a furnishing of goods to or from the plan.

F. Effect on Record Keepers If finalized, record keepers will need to devote a significant

number of resources in order to comply with the changes. In this respect, we would expect that record keepers would be one of the primary business partners that plan sponsors would rely upon to assist them comply with the massive changes. This may require record keepers to improve IT systems to collect more data and potentially employ a greater number of staff members to answer compliance questions from clients. We expect that these changes will force record keepers who offer Form 5500 preparation assistance as an accommodation to reevaluate whether continuing to do so makes sense in light of the burden and potential liability associated with the Proposed Revisions.

We also expect that the changes to record keeper’s reporting of indirect compensation will require that record keepers devote significant resources to comply with the Agencies Proposed Revisions surrounding the reporting of indirect compensation. These changes are truly massive and will require a great deal of analysis and consideration prior to the Agencies proposed implementation on January 1, 2019.

In a helpful change, Schedule C (used to

report service provider information), has

been rewritten to more closely align with the

disclosure requirements for service providers

under ERISA section 408(b)(2).

• Schedule C would require the reporting of indirectcompensation information only for “covered service providers” within the meaning of DOL’s section 408(b)(2) regulations, and the instructions have been harmonized to more closely track the section 408(b)(2) regulation. This change alone will have a dramatic impact on the number of entities required to be reflected on the Schedule C and the scope of materials that must be reviewed in order to complete the Schedule C.

• Schedule C would retain the requirement to reportservice providers that earn more than $5,000 in direct compensation from the plan.

• Serviceproviderstowelfareplanswouldbereportedonlyif they earned more than $5,000 in direct compensation from the plan.

• The alternative reporting rules for “eligible indirectcompensation” (i.e., a simplified reporting method for float, commissions, soft dollars, fees charged against funds and other forms of indirect compensation) would be eliminated.

• Schedule C would include a new line asking if thearrangement includes recordkeeping services without explicit compensation for such services or where compensation has been offset based on other compensation received by the provider (such as from


Financial Wellness and Retirement Readiness:Insights from OneAmerica® Participant Research

R E S E A R C H C O M M E N TA R Y

Marsha WhiteheadVice President of Marketing for Retirement Services

OneAmerica


www.sparkusa.org 15

OneAmerica regularly provides plan sponsors and advisors with insights to connect with plan participants and provide effective communications to drive positive retirement outcomes. We frequently seek feedback and solicit input, both in person and through virtual channels.

Our newest participant survey, which resulted in more

than 10,500 respondents, queried participants about their

attitudes and behaviors toward preparing for retirement and

their levels of knowledge about various personal finance

topics. We asked participants to share their thoughts and

insights about:

The frequency of monitoring and the importance of

understanding progress toward retirement goals

Triggers for attention to retirement planning

Plan features that are important and encourage

retirement planning

Factors that are most likely to delay retirement

Knowledge level about specific financial topics

Incidence of hardship withdrawals and loans

Interest in receiving regular retirement planning

communications and the preferred channels

For this survey we worked with Peter Dunn, also known

as Pete the Planner®, to review the results and explore ways

for plan sponsors to better serve their participants in a

variety of demographics. Based on the survey findings, we

have provided suggestions for ways plan sponsors can better

engage with their employees to help them become more

retirement ready.

A need for more educationWe asked participants to self-report their levels of

financial knowledge of common personal finance and

retirement topics. Those topics ran the gamut: growing

your retirement account; using the power of compounding

with contributions; understanding the consequences of

taking a loan or withdrawal on a retirement account;

assessing how taxation on benefits will impact Social

Security. Across the board, the level of self-reported

knowledge on these topics was low.

Even people who are actively engaged with retirement

planning were admittedly in dire need of education about

financial topics. The survey data tell us that even as we’ve

made retirement readiness easier to understand through

the availability of online calculators and helpful videos,

we can still do a better job at making participants more

knowledgeable.

To illustrate the point, student loan debt – cited by experts

as a common barrier to saving for retirement, particularly

among Millennials – is perhaps the most well-known

financial topic, yet in the survey, only 4 in 10 admitted to

fully understanding it.

Self-reported knowledge on such things as taxation on

Social Security benefits, the Savers Tax Credit and retirement

account withdrawals all scored in the bottom, a key indicator

of weaknesses that should be addressed. Plan sponsors need

to understand and act on these weaknesses.

What is encouraging is participants across the board

indicated they would like to receive more information

and education about these topics. Plan sponsors have

an opportunity to engage participants by expanding

communications beyond basic retirement messages and

addressing personal finance topics, such as student loans,

compounding and how retirement income is generated.

The survey data tell us that even as

we’ve made retirement readiness easier

to understand through the availability

of online calculators and helpful videos,

we can still do a better job at making

participants more knowledgeable.


Target messages to make the most of communications

We analyzed the survey results by gender and age, and

we saw workers have clear preferences based on these

demographics.

Differences between gendersRegarding gender in retirement planning, our survey

revealed men thought about retirement more often than

women; 69 percent of men reported thinking about it

at least monthly, compared to 55 percent of women.

Men also reported talking about retirement frequently

with work colleagues and believing they were more

educated about tools needed to prosper in their golden

years. In the most dramatic example of the difference

between the sexes, men self-scored themselves as having

a significantly higher level of knowledge than women

across the personal finance and retirement topics,

including student loans and taxation on Social Security

benefits.

We’ve known for quite some time that men and women

don’t just think about retirement differently, they also talk

about it differently. By understanding these differences, plan

sponsors can tailor their education programs to increase the

influence they have on male and female participants.

Two substantial differences in past triggers were evident.

Men were more likely to discuss retirement with work

colleagues (29 percent) compared to women (22 percent)

and to cite a story in the news or media (16 percent vs. 11

percent of women) about retirement.

The results also showed some similarities between

genders. When it comes to retirement plan features, men

and women both placed the highest priority on a common

workplace perk – an employer match on the employee’s

contribution to the retirement plan being offered. It was

ranked No. 1 by both sexes, although women were more

likely to place higher importance on the employer match

(64 percent vs. 61 percent of men), while men were more

likely to place importance on investment options (29

percent vs. 21 percent of women).

What is clear is that men and women display clear

differences in how they think about and prepare for

retirement. Plan sponsors should consider developing

participant communication and education programs that

cater to the specific interests and preferences of each gender.

For example, plan sponsors could share a news story

about retirement planning with their male population,

because men are more likely to be influenced by news stories

in the media. Alternatively, educational communications

that are tied to significant life events – such as marriages,

births, divorces – may be more influential and effective for

women.

R E S E A R C H C O M M E N TA R Y

Financial Wellness and Retirement Readiness

Generational preferences The survey results show age-specific strategies, rather

than a one-size-fits-all approach, may be the most effective

method for plan sponsors to address retirement readiness;

the survey illustrated the difference between Millennials in

the workforce and those closer to the end of their careers.

Not surprisingly, we found frequency of retirement

thought clearly increases throughout life, with a particularly

steep increase between participants 35-49 years old and

those 50 years or older. Twenty-three percent of men

and women younger than 35 years considered it weekly,

compared to 27 percent of those 35-49 and 45 percent of

those 50 and beyond.

What is clear is that men and women

display clear differences in how they think

about and prepare for retirement.

www.sparkusa.org 17

The survey also showed that younger participants

were more open to “new and interactive” types of

communication and engagement. Participants younger

than 35 are almost two times as likely to welcome text

message notifications than respondents age 50 and older.

Plan sponsors should consider facilitating a “friends

and family discussion” by providing materials that help

introduce topics and guide the conversation, especially for

the youngest age group, due to the influential nature of

so-called water cooler chats.

Plan sponsors can build upon their communication

approach by going beyond merely offering retirement

benefits to their employees; employers should actively

promote the advantages of signing up – a task that

becomes progressively more difficult as their workforce ages.

Employer promotion of the retirement plan is most effective

at spurring those younger than 35 (40 percent), followed by

35- to 49-year-olds (32 percent) and lastly those aged 50

and older (32 percent).

The older participants get, the less effective workplace

promotion of retirement benefits is. It’s imperative that

plan sponsors and financial professionals get involved early.

They need to think of themselves as a trusted resource

for their employees – particularly those younger than

35. They have an opportunity for an influential role that

includes guidance, retirement education, communications

and resources to promote financial wellness. They can be

advocates.

For employees 35 and older, plan sponsors should consider

tying communications to other, more influential retirement

thought triggers. For example, sending information to

participants’ homes, where friends and family are more

likely to see the communications and have discussions about

them, may be an effective way to leave an impression on

older employees.

Plan sponsors may also want to educate participants

about how certain plan features can affect retirement

outcomes. Participants may not be placing importance

on certain plan features because they don’t understand

the role those features play in affecting their retirement

income. Given American workers’ lack of financial

knowledge, communication is especially important.

Misunderstanding how time plays into retirement

preparation is an irreversible problem. Lost time is

worse than lost money. Participants can earn more

money, but they cannot earn back more time. Without

compounding, $100 cannot transform into $800 over

time with moderate returns, for example.

Based on these survey results and our experience in

the retirement industry, we believe by providing not only

retirement education, but also comprehensive financial

wellness education, plan sponsors and financial professionals

can help employees get control of their financial lives,

address immediately pressing financial concerns and focus

on preparing for retirement.

Note: OneAmerica is the marketing name for the

companies of OneAmerica. Products issued and underwritten

by American United Life Insurance Company® (AUL), a

OneAmerica company. Administrative and recordkeeping

services provided by McCready and Keene, Inc. or OneAmerica

Retirement Services LLC, companies of OneAmerica which

are not broker/dealers or investment advisors.

Participants may not be placing

importance on certain plan features

because they don’t understand the role

those features play in affecting their

retirement income.


Michael HadleyPartner, Davis & Harman LLP

Counsel to The SPARK Institute, Inc.

THE SPARK INSTITUTE PERSPECTIVE


Over the summer, Pokemon GO captivated the curiosity of millions of Americans who became addicted to the popular cellphone game that tells devoted

players that they “gotta catch ‘em all.” This mantra seems, at times, how the industry feels about missing retirement plan participants. Policymakers are starting to notice. Over the past year, a wave of legislative and regulatory activity has focused on locating missing participants and dealing with cashed out and abandoned retirement accounts. We are taking a break this quarter from the fiduciary rule to bring you up to speed on those efforts, intended to reduce the number of participants

that lose contact with their retirement benefits.

Senate Bill Calls for National Retirement Savings Lost and Found Registry

To help reduce the number of missing participants, Senators Elizabeth Warren (D-MA) and Steve Daines (R-MT) recently introduced a bill – the Retirement Savings Lost and Found Act of 2016 (S. 3078) – that would create a national online registry where retirement

Adam McMahonAssociate

Davis & Harman LLP

plan participants and beneficiaries could go to search for retirement benefits owed to them. The Warren-Daines legislation and a companion bill introduced in the House of Representatives, follow recommendations offered by a 2014 United States Government Accountability Office (GAO) report. That GAO report, requested by Warren and now-retired Senator Tom Harkin (D-IA), recommended the creation of a national registry to help reduce the “forgotten

www.sparkusa.org 19

over the past year, a wave of legislative and

regulatory activity has focused on locating

missing participants and dealing with cashed

out and abandoned retirement accounts.

accounts, missing participants, and ultimately lost retirement savings,” that result from “workplace mobility and frequent changes in corporate structure[s].” As proposed, the new Retirement Savings Lost and Found would be a joint effort between the Treasury Department and the Social Security Administration and would require enhanced reporting by plan administrators.

In addition to creating a missing participant database, the legislation also includes a number of provisions aimed at changing the rules governing automatic cash outs of small retirement plan account balances. Under current law, a plan may generally cash out a participant who terminates employment if the value of his or her benefit does not exceed $5,000. If the cash out amount exceeds $1,000 and the participant does not elect otherwise, the cashed out amount must be rolled over into an IRA established in the participant’s name. Pursuant to a Department of Labor (DOL) safe harbor, the assets cashed out to an employer-

other words, these very small accounts would escheat to the federal government.

Beyond the Retirement Savings Lost and Found Act, Members of Congress are also considering new approaches that could help avoid the problem of missing participants altogether. Last fall, a group of eleven congressional Democrats led by Ranking Member of the Senate HELP Committee Senator Patty Murray (D-WA) and Ranking Member of the House Education and the Workforce Committee Congressman Bobby Scott (D-VA) sent a letter to Secretary of Labor Tom Perez urging him to issue guidance that would “address plan leakage, facilitate portability, and promote the consolidation of small retirement accounts.” Although the letter did not specify how Secretary Perez should accomplish those objectives, the letter did contemplate the creation of a new system that would facilitate “automatic portability.” Under the arrangement described in the letter, automatic retirement plan cash outs of less than $5,000 would first be transferred to a safe harbor account and then transferred to the retirement plan account of the affected individual’s new employer.

PBGC Working on Missing Participant Program for Defined Contribution Plans

Other parts of the federal government have also been tasked with “catching ‘em all.” Currently, the Pension Benefit Guaranty Corporation (PBGC) operates a missing participant program for terminated single employer defined benefit plans unable to locate missing participants who are owed a benefit. Under that program, the PBGC accepts benefits owed to missing participants and lists identifying information regarding those missing participants on a searchable online registry made available to the public.

In the Pension Protection Act of 2006, Congress directed the PBGC to expand its missing participant program to terminated defined contribution plans, like terminated 401(k) plans. PBGC has proceeded at a very slow pace to implement this directive. In 2013, the PBGC issued a Request for Information seeking public input on a number of topics, including the extent of the demand for such a program, the demand for a database of missing participants,

selected IRA are typically invested in a product that seeks to maintain a dollar value that is equal to the amount invested in the product, like a money market fund or an interest-bearing FDIC-insured bank account.

The Warren-Daines bill raises the threshold dollar amount for cash outs from $5,000 to $6,000 and requires regulatory guidance permitting such amounts to be invested in a target date or life cycle fund. In addition, in a significant change from current law, if a participant does not claim his or her benefits within six months of being notified of an impending cash out, amounts less than $1,000 would be distributed either to the Director of the Retirement Lost and Found or to an IRA established by Treasury (presumably a myRA). In


THE SPARK INSTITUTE PERSPECTIVE

the availability of private-sector missing participant services, potential program costs and fees, electronic filing, and the contours of diligent search requirements.

PBGC has been reticent to publicly discuss the specific details of its expected program. However, comments from PBGC officials, including Director Thomas Reeder, have indicated that the missing participant program for defined contribution plans is currently a top PBGC priority. A proposed regulation was sent to the White House’s Office of Management and Budget on July 21 for review, with expected release prior to the end of the year.

SPARK has also been closely reviewing a very significant proposal to overhaul the Form 5500 released by DOL, IRS, and PBGC in July. More to come on this proposal, but we will just note here that among the dozens of significant changes, the proposed Form 5500 revisions include changes that will affect the reporting of missing participants. The proposal specifically seeks to add a question asking whether, as part of the procedures for a terminating plan, the plan transferred plan assets to interest-bearing federally-insured bank accounts in the name of missing participants. If the answer is “yes,” the filer would be required to provide the name and EIN of the financial institution, the date the assets were transferred to the institution, the number of accounts established, and the total amount transferred.

Given the depth of the proposed Form 5500 changes and, in recognition of the fact that most firms responsible for filing Form 5500 are currently working hard to prepare the 2015 reports and to implement DOL’s fiduciary rule, SPARK spearheaded a joint letter requesting a 90-day extension to the Form 5500 comment deadline. SPARK was joined in the extension request by the Investment Company Institute (ICI), the American Benefits Council (ABC), and the Plan Sponsor Council of America (PSCA).

sPArK has also been closely reviewing a very

significant proposal to overhaul the Form 5500

released by DoL, irs, and PBGc in July.

Form 5500 Reporting of Missing Participants Missing participants also flared up this year during

the Form 5500 filing season. For many years, Lines 4l of Schedule H and I (Financial Information) and Line 10f of Form 5500-SF have asked: “[h]as the plan failed to provide any benefit when due under the plan?” This apparently straightforward and innocuous question created uncertainty when a change to the 2015 instructions suggested the question should be answered “yes” for unpaid required minimum distribution payments (RMDs) for missing participants. We weighed in with regulators on this problem, and are happy to report that the Internal Revenue Service (IRS) recently issued guidance clarifying that filers do not need to report unpaid RMDs on Lines 4l and 10f for participants who have retired or separated from service who cannot be located after reasonable efforts or where the plan is in the process of engaging in reasonable efforts to locate them. But IRS used the guidance to remind plan sponsors of their obligation to make these efforts to locate participants who are missing.

sPArK spearheaded a joint letter requesting

a 90-day extension to the Form 5500

comment deadline.

ConclusionLong after Pokemon GO is no longer in the public

consciousness, plan sponsors and the SPARK members that support them will still be focused on “catching ‘em all.” In the meantime, however, it is clear that policymakers have pegged missing participants and cash outs as a significant retirement policy priority.


www.sparkusa.org 21

Stay competitive and meet client demands BenefitsPRO.com gives you the latest retirement strategies and advice from industry experts, critical compliance

updates and information on all types of plans including 401(k), 403(b) and defined benefits.

Become a member and get unlimited access to BenefitsPRO content, including educational webcasts and videos,

informative enewsletters and form 5500 data found on FreeERISA.

Maintain your competitive edge and keep clients informed. Visit BenefitsPRO.com today!

SBM 16011 BPro ad FP M.indd 1 6/24/16 2:39 PM


ENTERPRISEIRON

Smart data that speaks to your markets

SOLUTIONS FROMC O N G R U E N T

CORE

educating policy makers about the benefits of the employer-based retirement system, and developing practical solutions, best practices and standards for the efficient delivery of retirement plan services and benefits through the workplace. Our members play a key role in identifying our priorities and in developing our positions.

Current InitiativesSome of our current initiatives include:

Educating legislators, regulators and the media about the important and substantial benefits of employer-sponsored retirement plans.

Addressing the challenge of improving the retirement readiness of many American workers.

Working with members and the Employee Benefit Research Institute to create a comprehensive database of information on the U.S. employer plan market.

Developing standardized audit guidelines for Form 5500 filings.

Who We AreThe SPARK Institute is a member-driven, non-profit

organization that is the leading voice in Washington for the retirement plan industry. We help shape national retirement policy by developing and advancing positions on critical issues that affect plan sponsors, participants, service providers, and investment providers. Our members include record keepers, mutual fund companies, brokerage firms, insurance companies, banks, consultants, trade clearing firms and investment managers. Collectively, our members serve approximately 83 million participants in 401(k) and other defined contribution plans.

What We DoThe SPARK Institute plays a critical role in the retirement plan

community by promoting widely supported positions among a diverse group of member companies and by developing practical and balanced solutions on important employer-based retirement plan issues. Our important initiatives include informing and

SPARK Institute Advisory Board Member Companies

www.sparkusa.org 23

ContactsFor membership information or questions, please contact:

Tim Rouse Marlene Jung Executive Director COO, CFO(508) 838-1919 (860) [email protected] [email protected] Benefits

Help shape the direction of the Institute through our Board of Directors, Government Relations Committee and task forces.

Best Practices and Other Industry StandardsThe SPARK Institute develops and maintains best practices and industry standards, including:

A retirement plan industry glossary of investment terms for participant disclosures.

Remittance and census data elements for 403(b) and other retirement plans.

Data layouts for lifetime income solutions in retirement plans. Data layouts for sharing non-registered investment product

disclosure information. An RFP Guide for plan sponsors covering the Corporate, Tax

Exempt, Government and Taft-Hartley markets.

Meet and network with senior business leaders and key decision makers at SPARK Institute Board meetings.

Receive regular updates on critical industry issues. Other benefits include complimentary conference

registrations, SPARK Institute publications, member surveys and more.

SPARK Institute Advisory Board Member Companies


Ralph Ferraro

S PA R K M e M b e R P R o f i l e

Growing up in a working class family in

Ridgefield Park, NJ, Ralph Ferraro learned early on

the value of hard work and a good education. By the

time he was seven years old, he was putting together

cardboard pastry boxes at his father’s bakery. By age

11, he was helping make cannolis. Later, he pumped

gas, cleaned gutters and hauled garbage for the town

public works department. “I had lots of jobs that

made me appreciate my education. At the same time,

I was fortunate to have a father and mother who

were role models for hard work,” he says. “I was the

second oldest of four children and was fortunate to

grow up in a great family atmosphere.”

Ralph Ferraro

Senior Vice President, Head of Product

Retirement Plan Services

Lincoln Financial Group

A football and track-and-field star in high school, Ralph was recruited by Princeton University, where he continued his sports career – setting three school records as a running back, one of which stood for 30 years. After graduating with a Bachelor of Arts degree in history, he joined a management development program at Prudential Financial, where he had interned during college.

A Foundation in Insurance, Investments and Technology

During his 12 years at Prudential, Ralph held managerial roles for a variety of insurance and investment products. He learned about technology “on the job, on the fly” and parlayed that experience into his final assignment leading the technology teams that supported investment portfolio managers and traders. While at Prudential, he also obtained a Master of Business Administration degree in finance from Seton Hall University.

Ralph’s entry into the retirement business came in 1996 when he joined American Management Systems, a business and technology consulting firm.

www.sparkusa.org 25

“Our research tells us that participants truly value in-person meetings as the best way to motivate them to

save more, which is the key to a successful and dignified

retirement.”

He served as the on-site manager for one of the company’s largest clients, an individual annuity and defined contribution provider. “My role as a consultant meant I was responsible not only for satisfying the needs of the client, but also for generating revenue. So there definitely was an entrepreneurial aspect.”

But, much as he appreciates the role of consultants, after two-and-a-half years he was ready for a change. “No offence to consultants, but I wanted to be back on the client side. Probably going back to my athletic days, I enjoy being part of a team.”

Experience in a Changing Retirement Industry

In 1998, Ralph joined what was then the Copeland Companies (part of the Travelers Group) as vice president of information technology for the retirement services division. Within three months, the company merged with Citigroup. Then came CitiSreet LLC, a multi-national joint venture of Citigroup and State Street Bank. CitiStreet was acquired by ING in 2008, and ING has since become Voya Financial, Inc.

“Having gone through four name changes in the course of an 18-year career, I’ve learned to adapt, to be flexible and to see other perspectives,” he reflects. “Change is constant and I’m fortunate to have had success through all of the changes I’ve encountered. For me, one of the primary lessons is to check your ego at the door if you’re entering a new organization or the organization has changed. You first have to want to be part of a team before you’re asked to lead a portion of that team.”

While at CitiStreet, Ralph was chief information officer for one of the retirement services divisions from

2001 – 2006. As such, he managed the development and operations of a defined contribution recordkeeping platform that administered over 12,000 plans for more than 1.2 million participants and $17.5 billion in assets. He next served as executive vice president of the division and managed P&L for multiple market segments that had $42 billion in assets under administration.

When ING (now Voya) acquired CitiStreet in 2008, Ralph became head of product for the small/mid corporate retirement market, which included the $37 billion stable value business and a unique outsourced relationship with the American Bar Association that delivered marketing, sales and administration of a custom defined contribution benefits program to law firms. Responsible for profitability, he headed a team of 95 employees and oversaw a book of business that increased operating earnings in excess of 14 percent on a year-over-year basis from 2012 to 2014. “I’m also proud that I was able to mentor and coach my team to develop in their careers and move up to larger roles in the organization.”

Executing Lincoln’s Strategic Vision

In April 2016, Ralph joined Lincoln Financial Group’s Retirement Plan Services (RPS) as head of product, executing on the strategic vision of the business and ensuring the effective implementation and integration of specific plan initiatives. He also manages RPS’s suite of products and provides thought leadership to drive the development of new products as well as enhance existing products. “What I like about my job is the balance between improving the services we provide

to working Americans today with envisioning and planning for innovative products down the road that will engage participants even more and put them on a path to a secure retirement.”

Ralph was attracted to Lincoln by its strong business profile. A Fortune 250 company and financial services leader, it serves approximately 1.4 million retirement plan participants through 22,000 plan sponsors with $55 billion in assets as of June 30, 2016. He also liked its optimistic, collegial culture and customer focus. Lincoln’s current ad campaign about the social responsibility of love matches the atmosphere he’s found at the company.

A focus on the customer is reflected in Lincoln’s high-touch service model that Ralph says is a unique value proposition in the marketplace. “Our research tells us that participants truly value in-person meetings as the best way to motivate them to save more, which is the key to a successful and dignified retirement. One-on-one meetings also help them translate these savings into retirement income. We find that the more personalized the interaction – the more it deals with individual circumstances – the better able we are to craft a meaningful solution that will resonate with the participant.”


S PA R K M e M b e R P R o f i l e – Ralph Ferraro

Lincoln Financial Group

Built on Abraham Lincoln’s ideals of courage, strength and optimism, Lincoln Financial Group’s Retirement Plan Services has been a proven provider of retirement solutions for over 60 years, managing thousands of retirement plans that enroll millions of participants in organizations of all sizes in the small-business, corporate, healthcare, education and nonprofit sectors. As thought leaders, we are committed to offering our partners a broad array of retirement plan solutions to meet their needs. Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE:LNC) and its affiliates. With headquarters in the Philadelphia region, the companies of Lincoln Financial Group had assets under management of $223 billion as of June 30, 2016.

Besides Lincoln’s 105 retirement consultants who develop long-term, personalized relationships through meetings with employees at their work sites, online and by phone, Lincoln’s participant website features engaging and motivating technology aimed at driving positive outcomes. “This balance, which we refer to as an omni-channel approach, means we can reach our customers when they’re ready to take action, wherever and whenever that is.”

Under Ralph’s leadership, Lincoln is making innovations to its long-standing stable value offering and, earlier this year, rolled out enhancements to its Lincoln Director retirement plan program for small businesses. “The enhanced Lincoln Director program includes a broad investment universe of revenue-neutral funds typically available only to large institutional plans,” says Ralph. “Very important is that the product is quite transparent about fees and offers a level fee structure, making it easy for advisors, small business owners and their participants to understand the cost of their retirement plan, which is especially important given the new Department of Labor fiduciary regulations.”

Hand-in-hand with Lincoln’s partici-pant focus is a focus on the needs of plan sponsors that includes helping them manage their workforces so their employees can achieve their retirement goals. “Some studies indicate a number of people think they are going to have to work beyond retirement age. Working with employers, we want to address this issue and help get participants on a track to retire at the age they would like, rather than feeling they have to work longer,” he says. “One of the ways we do that is by helping plan sponsors design retirement plan offerings with best practices that facilitate increased savings levels, which help drive positive outcomes.

“At the end of the day, how prepared a participant will be for retirement has a lot to do with best practices. It is important for plan sponsors to establish a strong savings program that puts an employee on the right path from the time they enter the workforce. It is also important to continue to reach out to employees through a high-touch model and provide ongoing education that reinforces the importance of saving throughout their working careers.”

On the Personal SideRalph and his wife, Veronica, live

in Villanova, PA, and have four grown children and two grandchildren. One reason Ralph joined Lincoln was to move from Boston, where he had lived for 10 years, back to the New Jersey area so he could be near his extended family. Most of his free time is focused on his family, which often gathers to enjoy the beach in Avalon, NJ.

For relaxation, Ralph enjoys playing golf. “I try to fit it in on weekends. For those four hours or so, it’s a great way to stop thinking about work by just focusing on trying to hit that little white ball. It takes a lot of concentration.”

Hand-in-hand with Lincoln’s participant focus is a focus on the needs of

plan sponsors that includes helping them manage

their workforces so their employees can achieve their

retirement goals.

www.sparkusa.org 27

Our website includes active message boards, industry

news, an extensive calendar of conferences and webcasts,

and much more!

When you’re on the move, the BenefitsLink App (for iPad,

iPhone, iPod touch) keeps you in the know with the same great information from our newsletters.

28,000 Employee Benefits Professionals rely on us to keep them up to date.

Do you?

Visit our sites, sign-up for our e-newsletters, download our app and find out how we can help you!

Get started today!

Together with our sister site, EmployeeBenefitsJobs.com, we offer the best-informed benefits professionals exciting and relevant opportunities

for career development in this niche field.

The BenefitsLink free daily e-newsletters provide employee benefits professionals with the latest developments and analysis in plan compliance, administration, policy and design. Every day, we comb the web to deliver the most relevant

and informative articles. Since 1995, our readers have relied on us to keep them up-to-date in this ever-changing field.

BenefitsLink.com, Inc. | 1298 Minnesota Avenue, Suite H | Winter Park, Florida 32789 407.644.4146 | [email protected]

Compliance • Trends • Jobs • Webcasts • Industry News


ADVANCE YOUR CAREER WITH A S PA R K D E S I G N AT I O N

The SPARK Institute can

help retirement industry

professionals further their

careers through our two

professional designations:

The SPARK Accredited Retirement Plan Consultant (ARPC) designation is awarded to sales and marketing professionals who have met the eligibility requirements and successfully completed an examination.

The SPARK Accredited Retirement Plan Specialist (ARPS) designation is earned by administrative and recordkeeping professionals who have demonstrated their proficiency in plan operations by completing the required coursework and exams.

Benefits of Certification

A SPARK designation: Verifies knowledge Signifies professionalism Enhances credibility Demonstrates proficiency

In addition to the knowledge and skills gained through SPARK’s professional designation programs, earning a SPARK designation also provides:

The right to publish the designation on business cards, stationery and other professional documents

Verification of the designation on the SPARK websites Discounted registration fees for SPARK’s two annual conferences Electronic semi-annual updates to the program materials A subscription to the quarterly SPARK Journal

For more information about the SPARK Designation Programs, go to the SPARK Education Center at http://sparkeducationcenter.netdimensions.com or contact: Rachael RyanEducation DirectorPhone: 860-658-5027 Email: [email protected]

www.sparkusa.org 29

New SPARK Accreditations

SPARK CERTIFICATIONS

Congratulations to the following individuals who recently earned a SPARK industry designation. Since they were introduced in 2004, the SPARK Accredited Retirement Plan Consultant (ARPC) sales and marketing designation and/or the SPARK Accredited Retirement Plan Specialist (ARPS) recordkeeping and administrative designation have been awarded to over 1,800 industry professionals. These programs are developed by The SPARK Institute, Inc. in partnership with the SPARK Education Committee and the SPARK Certification Committee. For more information about the SPARK training and designation programs, visit the SPARK Education Center (www.sparkeducationcenter.com) or contact Rachael Ryan at [email protected].

We applaud the following individuals on their professional accomplishments:

For a list of those individuals who have earned a SPARK designation and have elected to have their accomplishments posted online, go to sparkeducationcenter.netdimensions.com or sparkusa.org/accreditation.php.

November 8-9, 2016 Advisory Board Meeting The Breakers, Palm Beach, FL

February 27 - March 1, 2017 Executive Summit Belmond Charleston Place, Charleston, SC

May 30-31, 2017 Advisory Board Meeting Gaylord National, Washington, DC

THE SPARK INSTITUTE

FUTURE SPARK CONFERENCES

Brent Bradshaw, ARPC BB&T

Carissa Fischer, ARPC Paychex

James Baker, ARPC First National Bank

Loretta Besson, ARPC Associated Pension

Richard Michalko, ARPC Empower Retirement

Stephen Scott, ARPC Ascensus

Daniel Sharkey, ARPS Voya

2017 SPARK National ConferenceJune 1-2, 2017Gaylord National Resort & Convention Center,Washington, DC

2017 SPARK ForumNovember 5-7, 2017The Breakers, Palm Beach, Florida

2016 SPARK Forum

November 6-8, 2016, Palm Beach, FL


TAKE PART iN SPARK CONFERENCESThe retirement services industry’s leading events for the nation’s top marketing, sales, administration and recordkeeping professionals. Attendees include representatives from national banks, insurance companies, mutual fund complexes, investment firms, third party administrators, benefit consulting organizations and financial advisory firms. We are now taking reservations for sponsorships, exhibits and speakers.

Who Should Sponsor/Exhibit?The SPARK Conferences are the perfect venue for any company that provides products and services to the retirement services market. Among the organizations that choose the conferences to support their marketing efforts through sponsorships or exhibits are:

Mutual funds & other investment management organizations

Recordkeeping service providers Communications and printing firms Systems and technology companies Consulting firms Education and training companies Trust companies Outsourcing organizations Rollover service providers

Benefits of ParticipationThe SPARK Conferences will provide opportunities for you to:

Increase your industry profile Enhance your brand and product awareness Promote your products and services to new prospects Introduce new products and services Network with industry leaders Meet with key industry media representatives Increase your professional knowledge

Attendee ProfileBy taking an active, visible role as a sponsor or exhibitor at the SPARK Conferences, you’ll have access to the top retirement industry executives, managers and other professionals who attend the conferences, including:

Retirement business presidents Investment advisors and managers TPA owners and managers Fund company managers 403(b) service providers Recordkeeping administrators Sales and marketing executives and managers Product development executives Government affairs representatives Legal, risk management and compliance professionals

Call Now for Details!Please call Marlene Jung at

860-658-5058 for information about sponsorships,exhibits and speaking opportunities.

nOveMber 6-8THE BREAKERS

PALM BEACH, FL

RETiREMEnT induSTRY COnFEREnCE

2016 SPARK FORuM

2016 SPARK FORuM

RETIREMENT INDUSTRY CONFERENCE

2 0 1 7 S PA R KNATIONAL CONFERENCEJ U N E 1 - 2 W A S H I N G T O N , D CG AY L O R D N AT I O N A L R E S O R T

Documents

2016 SPARK Journal_4th Quarter