CENTER. The employer who sponsors the Plan is the “center” on the pension court. Everything in our world of pension administration revolves around what the Plan sponsor needs for their plan. Ultimately the responsibility of the Plan lies with the sponsor: Enrollment of eligible employees, providing information to eligible employees, making contributions to the plan, authorization of benefit payments, confirmation of compliance, and submitting annual filings.
POINT GUARD. The Plan’s investment advisor calls the plays and directs the offense of the Plan. Sponsors are looking to “draft” an advisor with experience specific to retirement plans. A responsible advisor will: Prepare an Investment Policy Statement, help select the investments available within the plan, monitor the investments regularly, meet with the Plan investment committee at least once per year, provide information and education to employees about the Plan and investment strategies.
SMALL FORWARD. This position requires a well-balanced player with strengths in a variety of areas. Investment Custodians that hold the money for a Plan are such a player in the world of pension administration. Custodians perform a variety of functions for a Plan including: posting investment trades, allocating dividends and fees, providing record-keeping services, maintaining a website for Plan participants to get information about the Plan, and they prepare statements for the Plan.
POWER FORWARD. Defense is very important in basketball. It is also very important in Plan administration, so the Third Party Administrator (TPA) is the power forward on our court. The TPA defends the Plan sponsor by making sure that rules and regulations are followed including: preparation and maintenance of the Plan documents, performing testing of the plan to confirm that all compliance rules are met each year, preparing mandatory filings and reports for the sponsor to file, and to provide general consulting services throughout the year as the Plan sponsor may have questions.
SHOOTING GUARD. Plans with more than 100 eligible Participants must be audited by a CPA each year. The CPA looks at the plan from the outside, just as a shooting guard makes outside shots. Auditors have very specific guidelines, and they provide a valuable service to Plan sponsors to confirm that their plan is being administered according to the terms of the Plan document, that the correct data is being provided to the TPA for testing purposes, that the investments are being reported accurately on the financial statements and reports being provided to the government.
REFEREES. The refs on the court of pension administration are the auditors from IRS and investigators from the DOL. They have the ultimate authority! Employers who surround themselves with good help – a strong advisor, a versatile custodian, a talented TPA, and a thorough auditor will not have much to fear from the referees representing the government.
We all like to play or watch games, and to root for our favorite teams. One of the most important games to win in life is the retirement game. Having the right players on the court will give you the winning edge.
