An Early View into Defined Contribution Plan Sponsor
Responses to the Coronavirus
By: Kevin Vandolder, CFA, Regional Director, Senior Consultant 
The Coronavirus Aid, Relief and Economic Security Act (CARES) was enacted into law on March 27, 2020. This article shares an update on how peers are responding to the pandemic and the CARES Act with two hot off the press surveys by the Defined Contribution Institutional Investment Association (DCIIA) and Plan Sponsor Council of America (PSCA).  

“Managing Through the Crisis Webinar” Survey Results
On Monday, April 13, DCIIA held a webinar on defined contribution investment lineups relative to the pandemic with both the recordkeeper and Plan Sponsor community. A central point of focus was on what “trail blazing” defined contribution Plan Sponsors are interested in pursuing once the economy and the investment markets get to the “other side” of this crisis. Five possible innovative ideas were considered with more than one or two best answers. More specifically, every possible answer is a logical one but most critically it was meant to tease out priorities. The results are noted in Exhibit A below.

What Shuold Trail Blazing DC Plan Sponsors Consider
Plan Sponsor Survey on Early Reaction to the CARES Act 
PSCA (Plan Sponsor Council of America) also just released survey results from 152 Plan Sponsor respondents with an impressive degree of industry and size representation. The main headline from this survey was that almost half of respondents (47 percent) articulated that they are still evaluating the provisions of the CARES Act before they take any action with larger plans earlier in their process than smaller ones. Among DiMeo Schneider’s defined contribution plans, we believe more than nearly 80 percent have adopted all the CARES Act options with others deciding not to alter their loan provision or to postpone making any decision.  

Exhibit B below illustrates how organizations are anticipating they will make changes to their employer contribution policies within their retirement plans. The data continues to highlight that most plans are not anticipating any changes with only a fraction planning to suspend contributions (17 percent). In addition, only a very small number indicated they were considering a termination of the plan at this time and most of those respondents were from plans with less than 1,000 participants.

Finally, Exhibit C below illustrates that more than half of PSCA’s survey respondents said their recordkeepers were waiting for them to direct changes to the plan while roughly a third indicated they believe that their recordkeeper will incorporate all provisions of the CARES Act unless they stated otherwise. We continue to encourage Plan Sponsors to stay in close communication with their service providers about planning for next steps.  

The CARES Act and the investment market volatility due to the Coronavirus pandemic have been with us for only a couple of weeks. Details and strategies on best practices are just beginning to emerge. We look forward to continuing to work with you closely in mapping out next steps to maximize retirement readiness and outcomes for defined contribution plan participants through these challenging times.  

For additional resources, please contact any of the professionals at DiMeo Schneider.

This report is intended for the exclusive use of clients or prospective clients of DiMeo Schneider & Associates, L.L.C. Content is privileged and confidential. Any dissemination or distribution is strictly prohibited. Information has been obtained from a variety of sources which are believed though not guaranteed to be accurate. Information has been obtained from a variety of sources believed to be reliable though not independently verified. Past performance does not indicate future performance. This paper does not represent a specific investment recommendation. Please consult with your advisor, attorney and accountant, as appropriate, regarding specific advice.

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