Archive for October, 2012

Plan fiduciaries and their fee related responsibilities…

Christine Gurney Discusses US Pensions

A Plan Fiduciary has many different responsibilities.   Those responsibilities include being prudent, maintaining investment diversification and having reasonable fees.   Smart plan fiduciaries maintain records regarding all of their duties.  Although I hope no fiduciary ends up in the situation, a plan fiduciary may need to demonstrate that they performed due diligence in their duties.  For instance, the fiduciary may need to prove that the fees that were charged to the plan were competitive and reasonable. With the upcoming fee disclosures, there is always a chance that this could come up. One way to demonstrate due diligence might be checking fee schedules against competitors for the plan’s service providers every few years. Then, documenting that the fees are competitive for corporate records would be one way to illustrate that the plan fiduciary is complying with this requirement.

Thanks for reading and have a wonderful day!   Please be sure to…

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October 31, 2012 at 10:42 pm Leave a comment

Excessive Fees in Retirement Plans

The Chicago Tribune had an article entitled, “U.S. Top Court will Not Review John Hancock Retirement Plans ” , by Jonathan Stempel.  Located at http://www.chicagotribune.com/sns-rt-usa-courtmanulife-retirementl1e8lt9g2-20121029,0,6902038.story, the article indicates that John Hancock made an appeal to have overturned a decision regarding excessive fees in a retirement plan.  What I felt was noteworthy was their argument that being held responsible for excessive fees would somehow discourage employers to have retirement plans.  I would hope that it would have a different effect, and plan sponsors would understand the importance of carefully evaluating service providers and their fees.

Thanks for reading and have a wonderful day!   Please sign up for my blog and follow me on twitter @ChristineGurney.  Please like my facebook author page at http://www.facebook.com/ChristineGurneyHsiung.  If you have not already done so, please check out purchasing my book at https://www.createspace.com/3964647.

October 30, 2012 at 7:35 pm 2 comments

Retirement Plan TPA Internal Controls Part II

Internal controls are important to me because they help reduce fraud and errors. Does your retirement plan third party administrator (TPA) have proper internal controls?  Your TPA will be handling confidential employee information and financial data.  One of the controls that should be in place are the establishment of responsibilities controls (Kimmel, P., Kieso, D., and Weygandt, J.  Financial Accounting: Tools for Business Decision Making, 6th ed.  (2011).  Danvers, MA:  John Wiley & Sons, Inc., pp. 344).  As a consumer, I feel it is imperative that you check these controls when choosing a TPA.

Does your TPA have a listing of who will be handling what for your plan?   For example, do you know who amends your document, performs distributions, processes loans, prepares government forms, or does testing?   If all the TPA hands you is a vague organization chart with only names and titles, that may be a warning sign.   A TPA should be able to tell you who will do what for your plan.   TPA’s that do not have established responsibilities may miss an essential government filing or some other function.  It is essential that you also know who is doing what aspect of the job in order to confirm their qualifications and quality.

I discuss more on determining TPA qualifications in my book, A Short Guide to Finding a High Value, Low Fee Third Party Administrator (TPA) for Your Retirement Plan, available at amazon.com and https://www.createspace.com/3964647. My goal is to help plan sponsors make the best decision they can when selecting a  TPA.  I understand how difficult a decision this can be when you do not know what skills and credentials to look for.  I have created this book to ease the process and enable plan sponsors to make good choices through my insights from working in the industry.

Thanks for reading and have a wonderful day!   Please be sure to sign up for my blog and follow me on twitter.

I am not selling my own or any one else’s TPA services through this blog or my book.

October 29, 2012 at 4:17 pm Leave a comment

Retirement Plan TPA Internal Controls Part I

Internal controls are important to me because they help reduce fraud and errors. Does your retirement plan TPA have proper internal controls?  Your TPA will be handling confidential employee information and financial data.  One of the controls that should be in place are human resource controls (Kimmel, P., Kieso, D., and Weygandt, J.  Financial Accounting: Tools for Business Decision Making, 6th ed.  (2011).  Danvers, MA:  John Wiley & Sons, Inc., pp. 344).  As a consumer, I feel it is imperative that you check these controls when choosing a TPA.

Does the TPA perform background checks to make sure employees do not have a history of theft?   With increased societal concern over identity theft, could you imagine the potential of an individual to take advantage of the employee census data you would be required to provide each year?  Social security numbers, names, and salaries could be transmitted to unauthorized parties.

Are employees hired and promoted on qualifications and merit?  Or does an employee receive a managerial position based on being married to a referer of business without any meaningful skills or qualifications?  Such an individual might encourage employees to have alcohol during the work day and other malfeasant behavior.  Or worse yet, an unqualified manager would likely reinforce the behavior of unqualified employees rather than working on improving their skills because she does not understand even the most basic pension concepts.  Would you want those people working on your plan?   It is important to confirm that department managers and administrators are Enrolled Retirement Plan Agents (ERPA) or Enrolled Actuaries (EA) and have applicable credentials.  For example, a QKA is not qualified to work on plans that are not 401(k)’s (ASPPA.  (2009). Qualified 401(k) Administrator QKA Credential Overview.  Retrieved from   http://www.asppa.org/Main-Menu/edpubs/CertandCred/Credential%20Programs/QKA.aspx).

I recommend doing your research and ensuring you have found the best.  You cannot assume that a TPA that skimps on the knowledge workers that will work on your plan will not skimp on human resources and other supporting positions.  You need to confirm that the appropriate controls are in place.  My experience is those who have no interest in qualifications will give you every song and dance to explain why you do not need solid controls.  They are also the ones who eventually will cost you thousands of dollars in fines and corrections later down the road.

I discuss more on determining TPA qualifications in my book, A Short Guide to Finding a High Value, Low Fee Third Party Administrator (TPA) for Your Retirement Plan, available at amazon.com and https://www.createspace.com/3964647. My goal is to help plan sponsors make the best decision they can when selecting a  TPA.  I understand how difficult a decision this can be when you do not know what skills and credentials to look for.  I have created this book to ease the process and enable plan sponsors to make good choices through my insights from working in the industry.

Thanks for reading and have a wonderful day!   Please be sure to sign up for my blog and follow me on twitter.

I am not selling my own or any one else’s TPA services through this blog or my book.

October 25, 2012 at 4:21 pm Leave a comment

A Retirement Plan TPA Warning Sign

What are the warning signs of a problem TPA?  Recently, a transcript was forwarded to me from a webinar that illustrated such a warning sign.  The webinar, the firm employing the administrator, and the individual will not be mentioned in this article since the information is not needed to illustrate my point and is readily available in the transcript which is available online without restriction by the industry organization that gave the webinar earlier this year.  This unenrolled administrator suggested illegally back-dating a plan document.  Although there are certain rare circumstances under which a corrective amendment could possibly be applied retroactively, if your administrator routinely recommends a retroactive amendment or asks you to backdate amendments to the plan document, that is a major warning sign of an unethical administrator.  If  you desire to do so, such administrators can be reported to the IRS for their actions.  I would question why a firm would retain such an employee and would not be concerned about her actions reflecting badly on the firm’s image and the potential liability issues with her actions.  As a consumer, I would conclude they likely approve of her actions.

For additional tips, I recommend my book, A Short Guide to Finding a High Value, Low Fee Third Party Administrator (TPA) for Your Retirement Plan, available at amazon.com and https://www.createspace.com/3964647.  My goal is to help plan sponsors make the best decision they can when selecting a  TPA.  I understand how difficult a decision this can be when you do not know what skills and credentials to look for.  I have created this book to ease the process and enable plan sponsors to make good choices through my insights from working in the industry.

Thanks for reading and have a wonderful day!   Please be sure to sign up for my blog and follow me on twitter.

I am not selling my own or any one else’s TPA services through this blog or my book.

October 25, 2012 at 12:33 am Leave a comment

Also now available on Amazon!

Christine Gurney Discusses US Pensions

As a plan sponsor, there are many responsibilities that must be performed regarding your retirement plan.  Among the most important duties is selecting service providers.  How do you select a third party administrator (TPA)?  What items should a plan sponsor be looking at?   How can you gauge the credentials and skills of a potential TPA?

I am proud to announce that my book, A Short Guide to Finding a High Value, Low Fee Third Party Administrator (TPA) for Your Retirement Plan, is now available at https://www.createspace.com/3964647.  My goal is to help plan sponsors make the best decision they can when selecting a  TPA.  I understand how difficult a decision this can be when you do not know what skills and credentials to look for.  I have created this book to ease the process and enable plan sponsors to make good choices through my insights from working in the industry.

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October 24, 2012 at 7:32 am Leave a comment

Internal Controls for Retirement Plans

Recently, I have had a lot of personal discussions about internal controls.  An interesting question has been posed.  Do you think internal controls are strong enough for retirement plans?  Often times procedures are created, but not always with an understanding of the importance of internal controls and how they can reduce fraud and errors.  I wanted to extend this question to the readers of my blog. Do you feel that your retirement plan is safe and internal controls are adequate?

Thanks for reading and have a wonderful day!   Please be sure to subscribe to my blog and follow me on twitter @ChristineGurney.

October 22, 2012 at 10:13 pm Leave a comment

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Christine Gurney

A pension professional who shares her thoughts and ideas about the pension world for industry members and anyone else interested.

@ChristineGurney

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