Client Service January 10, 2017

DC Participants Place Different Values on Mobile and Web Abilities

More participants are placing a higher importance on income projections, Corporate Insight found.
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In establishing criteria for its annual Monitor Awards, given for best practices in online and mobile innovation for 2016 by defined contribution (DC) plan recordkeepers, Corporate Insight surveyed close to 1,500 participants and found the top-15 features most commonly identified by participants as “very important” or “extremely important” saw a considerable amount of change since the 2013 survey.

In total, six of the top-15 features in 2013 no longer appear within the top 15 in the 2016 study. Most notably, five of the new site features that appear within the top 15 are related to account information: ability to view recent account activity, YTD rate of return, plan fees, general holdings-level performance and the ability to view performance of individual holdings across multiple timeframes. These website features replace transaction confirmations, quarterly statements, two account history-related features and customer service response time.

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While the 2013 version of the study asked participants which transactions they completed within the previous six months, the 2016 version also asked how important they deem each transaction type. The data shows that participants place the highest value on rollovers, contribution rate changes and future investment election management capabilities, followed by fund exchanges and withdrawals, significantly more than the abilities to take loans or conduct rebalances.

Among individuals who indicated that they accessed their plans via mobile devices over the previous six months, phone app usage rose from 82% to 93%, while tablet app usage remained at 29% and mobile site usage rose from 9% to 15%.

NEXT: Focus on income projections and financial wellness

Corporate Insight noted that retirement income projections have emerged as the clear preferred method among recordkeepers for communicating retirement readiness information to DC plan participants. The increased popularity of income projections is among the most prominent trends in the digital retirement arena, as nine different Retirement Plan Monitor (RPM) firms either added an income projection directly to the participant site homepage or enhanced an existing homepage projection resource.

Participants are also beginning to recognize the importance of income projections as 57% of survey respondents stated that it is either “very important” or “extremely important” to have access to one directly on the homepage, representing a 24% increase from the 2013 survey results.

Throughout 2016, there has been a growing, industry-wide focus on helping participants develop retirement plans that fit within the greater context of their overall financial lives. Creating holistic retirement plan websites that allow participants to account for outside financial accounts, goals and obligations can drive better financial outcomes, Corporate Insight says.

Many recordkeepers in the RPM coverage group have recognized the importance of holistic retirement planning, and have greatly enhanced the overall financial wellness resources available on the participant websites. This year, seven firms added new financial wellness tools and six added significant new financial wellness-focused content.

More information about the Monitor Awards is here.

Compliance January 10, 2017

JC Penney Agrees to $4.5 Million Stock Suit Settlement

In the settlement agreement, the company denied any wrongdoing in its handling of the company stock fund in its retirement plan.
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A federal court judge has preliminarily approved a settlement in a class action against J.C. Penney Corp. over its handling of the company stock fund in its retirement plan.

Under the terms of the settlement, J.C. Penney will pay $4.5 million to resolve allegations that it breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by failing to prudently and loyally manage the plan’s assets and to adequately monitor the independent fiduciary and provide the independent fiduciary with accurate information. The lawsuit alleged that plan fiduciaries allegedly knew or should have known that the J. C. Penney Common Stock Fund was an imprudent investment under ERISA.

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According to the settlement agreement, defendants deny any and all liability to plaintiffs and the plan, and deny any and all allegations of wrongdoing made in the action. Defendants deny that some or all of them were fiduciaries under ERISA, or were acting as ERISA fiduciaries at the time of the events complained of, or to the extent that any of them were acting as fiduciaries, that any breach of fiduciary duty occurred in connection with the investment, acquisition, or retention of the J. C. Penney Common Stock Fund in the plan. Defendants further contend that they acted prudently and loyally at all times and in all respects with regard to the plan.

The Settlement Class includes all individuals, excluding defendants, who participated in the plan, and whose individual accounts held units of the J. C. Penney Common Stock Fund between November 1, 2011, and May 31, 2016.

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