Study: TPAs Improve Retirement Plan Design

New research from the Profit Sharing/401k Council of America (PSCA) reveals that 403(b) retirement plan sponsors benefit from the use of third-party administrators (TPAs).

PSCA’s 2011 403(b) Plan Survey, which was sponsored by the Principal Financial Group, showed an increase in the percent of 403(b) plan sponsors who use TPAs, from 24.6% in 2010 to 28.7% in 2011. The survey also showed that TPA-serviced 403(b) plans offer, on average, 42 different investment options, while the average number of investment options for all plans is just 28. Moreover, the numbers revealed that a higher percentage of TPA-serviced plans (53.9%) have investment policy statements than all plans (46.2%) in the survey.

“Responses to the survey also demonstrate the value TPAs bring to 403(b) plans,” says David Wray, president, PSCA. “For example, 403(b) plan sponsors who use TPAs reported higher default deferral percentages.” More TPA-serviced plans offer a four percent default deferral rate than all plans (21.9% vs. 16.4%), and fewer offer a three percent default deferral rate than all plans (40.6% vs. 49.3%).

 

 

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