457 plans (government only) - live mutual · source: plansponsor defined contribution survey, 2012...

Source: PLANSPONSOR Defined Contribution Survey, 2012 0

457 Plans (government only)

sponsored by MassMutual Retirement Services.


Summary of Findings


About this report

The PLANSPONSOR 2012 Defined Contribution (DC) Survey results incorporate the responses of 6,184

plan sponsors from a broad variety of U.S. industries. Of these 6,184 respondents, 2,189 (35.4%) are

“Micro” plans (under $5 million in DC assets), 2,195 (35.5%) are “Small” plans ($5-$49 million), 800

(12.9%) are “Mid” plans ($50-$199 million), 627 (10.1%) are “Large” plans ($200 million-$1 billion), and

373 (6.0%) are “Mega” plans (over $1 billion).

Within the survey, 112 respondents are from Government 457 Plans. Of these 457 Plan respondents,

12 (10.7%) are “Micro” plans (under $5 million in DC assets), 28 (25%) are “Small” plans ($5-$49

million), 21 (18.8%) are “Mid” plans ($50-$199 million), 27 (24.1%) are “Large” plans ($200 million-$1

billion), and 24 (21.4%) are “Mega” plans (over $1 billion).

This report compares the survey responses of plan sponsors from Government 457 Plans with those of

respondents from All Industries, which includes Government 457 Plans.


Plan Types and Design Features


How many active qualified and/or nonqualified defined contribution plans does your organization sponsor?*

All Industries Government 457 Plans

Overall Micro Small Mid Large Mega Overall Micro Small Mid Large Mega

Average 2.63 2.21 2.41 3.15 4.23 2.96 4.55 6.09 2.07 7.76 6.19 2.04

Median 1.00 1.00 1.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

(*Active plans are defined as plans still receiving participant and/or sponsor contributions.)


Does your organization offer any of these additional workplace retirement/savings plans?



Defined Benefit

Plan (Traditional) 44.1% 34.0% 33.6% 45.9% 60.1% 64.9% 79.8% 90.0% 55.0% 80.0% 84.6% 94.4%

Defined Benefit

Plan (Hybrid/

Cash Balance)

10.6% 2.0% 3.2% 10.2% 23.6% 41.9% 10.1% 0.0% 15.0% 0.0% 7.7% 22.2%

Health Savings

Account (HSA) 56.9% 60.2% 58.4% 49.3% 40.8% 53.2% 19.1% 30.0% 30.0% 33.3% 11.5% 0.0%

College Savings

Plan (529) 15.1% 7.0% 16.3% 20.0% 17.9% 12.6% 15.7% 10.0% 10.0% 20.0% 19.2% 16.7%

Other 7.1% 8.1% 6.6% 5.2% 7.1% 5.9% 12.4% 0.0% 30.0% 20.0% 7.7% 0.0%


If you have a defined benefit (DB) plan, what is the status of the plan?



Active - Open to eligible

employees 61.5% 83.8% 64.0% 47.3% 50.7% 60.9% 91.3% 83.3% 90.9% 83.3% 95.5% 94.4%

Soft Freeze - No new

participants but benefit

accruals continue for plan

participants

19.6% 6.7% 16.2% 26.8% 28.5% 21.3% 5.8% 16.7% 0.0% 8.3% 4.5% 5.6%

Hard Freeze - No new

participants and benefits

accruals have stopped for

existing participants

18.8% 9.6% 19.8% 25.9% 20.8% 17.8% 2.9% 0.0% 9.1% 8.3% 0.0% 0.0%


Who administers/recordkeeps your defined benefit plan?



Same firm as DC

recordkeeper 39.3% 63.0% 43.7% 30.0% 25.6% 30.8% 14.7% 33.3% 36.4% 33.3% 0.0% 0.0%

Internally managed 22.5% 16.0% 16.3% 25.8% 28.2% 30.8% 66.2% 50.0% 18.2% 50.0% 85.7% 88.9%

Other firm different from

DC recordkeeper 38.2% 21.0% 40.1% 44.1% 46.2% 38.5% 19.1% 16.7% 45.5% 16.7% 14.3% 11.1%


Do you provide a Roth contribution option?



Yes 48.0% 47.5% 48.5% 44.9% 47.7% 56.8% 47.7% 9.1% 42.9% 52.4% 44.4% 70.8%

No 52.0% 52.5% 51.5% 55.1% 52.3% 43.2% 52.3% 90.9% 57.1% 47.6% 55.6% 29.2%


Does the plan include a loan and/or hardship withdrawal provision?



A loan provision is

included 82.5% 77.7% 81.9% 87.5% 91.6% 91.4% 64.9% 45.5% 75.0% 71.4% 55.6% 66.7%

A hardship withdrawal

provision is included 90.7% 90.2% 89.2% 93.3% 93.5% 94.2% 89.1% 80.0% 92.9% 85.7% 81.5% 100.0%


If loans are offered, what % of plan participants have outstanding loans?



Average 14.2% 11.1% 14.5% 17.0% 17.0% 19.7% 12.1% 5.5% 11.7% 15.0% 10.1% 13.3%

Median 11.0% 7.0% 12.0% 16.0% 16.0% 20.0% 10.0% 3.0% 5.5% 17.0% 7.5% 13.0%


Average Loan Balance



Average $7,853 $6,947 $8,116 $8,505 $8,769 $8,656 $7,997 $3,900 $8,150 $10,905 $8,278 $5,759

Median $6,500 $5,000 $6,779 $7,300 $7,970 $7,721 $6,591 $5,000 $7,330 $7,217 $8,051 $5,450


If hardship withdrawals are offered, what % of plan participants have made hardship withdrawals in the past year?



Average 2.0% 1.9% 1.7% 1.9% 2.8% 3.5% 1.4% 0.6% 0.8% 2.8% 1.3% 1.6%

Median 1.0% 0.0% 1.0% 1.0% 1.0% 2.0% 1.0% 0.0% 0.0% 1.0% 1.0% 1.0%


Does the plan allow for catch-up contributions for

participants age 50 and over?



Yes 97.1% 97.7% 96.8% 96.3% 97.4% 96.4% 90.9% 80.0% 89.3% 85.7% 92.6% 100.0%

No 2.9% 2.3% 3.2% 3.7% 2.6% 3.6% 9.1% 20.0% 10.7% 14.3% 7.4% 0.0%


Plan Investments


Do you currently offer any of the following types of investment options in your plan?



Target-Date/

Lifecycle Funds 76.3% 64.7% 72.1% 77.1% 83.4% 81.0% 88.2% 71.4% 90.5% 100.0% 89.5% 81.3%

Risk-Based Lifestyle Funds 29.8% 33.0% 31.0% 24.4% 15.6% 15.7% 39.5% 28.6% 57.1% 30.8% 36.8% 31.3%

Index Fund(s) 77.4% 63.7% 72.0% 81.1% 87.8% 87.1% 90.8% 57.1% 85.7% 100.0% 100.0% 93.8%

Money Market Fund 74.7% 78.2% 71.6% 66.1% 62.2% 51.4% 69.7% 85.7% 90.5% 76.9% 63.2% 37.5%

Employer Stock 8.8% 0.6% 3.4% 12.1% 23.0% 47.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Stable Value Fund 69.1% 48.6% 70.3% 74.1% 77.6% 77.6% 80.3% 71.4% 81.0% 61.5% 84.2% 93.8%

“In-Plan” Guaranteed Income

Option 9.5% 8.4% 9.3% 10.1% 10.2% 5.2% 22.4% 42.9% 23.8% 23.1% 26.3% 6.3%

Out- of-Plan Guaranteed

Income Option 1.0% 0.6% 1.1% 1.5% 0.5% 1.9% 5.3% 0.0% 9.5% 0.0% 5.3% 6.3%

Self Directed Brokerage 19.8% 8.6% 14.9% 29.5% 35.7% 41.0% 42.1% 28.6% 28.6% 23.1% 63.2% 56.3%

Mutual Fund Window 8.8% 9.9% 6.7% 7.2% 7.4% 15.2% 13.2% 0.0% 4.8% 7.7% 21.1% 25.0%

Real Estate/REITs 22.6% 20.0% 21.1% 25.0% 21.7% 21.4% 31.6% 42.9% 28.6% 38.5% 47.4% 6.3%

Alternative Investments 2.8% 2.9% 2.5% 2.4% 1.8% 4.8% 6.6% 0.0% 9.5% 0.0% 10.5% 6.3%

ETFs 0.9% 1.4% 0.7% 0.7% 0.3% 0.5% 1.3% 0.0% 4.8% 0.0% 0.0% 0.0%


How many investment options are offered in your defined contribution plan?



Average 17.6 17.8 18.0 17.2 16.2 17.1 22.9 24.2 32.6 22.4 19.7 15.8

Median 16.0 16.0 17.0 16.0 15.0 14.0 19.0 30.0 25.0 20.0 18.0 16.5


What is the average number of investment options held by your DC plan participants?



Average 4.7 5.0 4.9 4.6 4.2 4.1 3.9 3.8 4.8 3.4 3.7 3.6

Median 4.0 4.0 4.0 4.0 4.0 4.0 4.0 5.0 4.5 3.0 3.5 3.0


Which investment vehicles are you currently using for your DC plan?



Mutual Funds 96.7% 88.0% 93.1% 95.5% 97.4% 84.2% 93.5% 100.0% 95.2% 100.0% 94.7% 81.3%

Separate

Accounts 24.0% 20.0% 22.4% 20.1% 21.1% 50.7% 39.0% 12.5% 28.6% 23.1% 42.1% 75.0%

Managed

Accounts 32.9% 34.3% 30.7% 27.1% 26.5% 34.4% 45.5% 37.5% 42.9% 69.2% 47.4% 31.3%

Commingled

Pool 7.7% 4.3% 4.4% 6.3% 13.4% 37.3% 16.9% 12.5% 0.0% 0.0% 21.1% 43.8%

Collective Trust 13.2% 4.0% 8.4% 20.5% 29.0% 42.1% 11.7% 12.5% 0.0% 0.0% 15.8% 25.0%


How often do you formally review the investment options?



Quarterly 39.0% 15.7% 38.1% 60.9% 73.6% 73.2% 48.7% 12.5% 19.0% 53.8% 65.0% 81.3%

Twice a year 19.1% 15.4% 24.8% 21.4% 11.7% 9.8% 15.0% 10.0% 34.8% 0.0% 9.1% 5.6%

Annually 29.1% 44.2% 28.5% 14.4% 10.4% 8.8% 20.0% 20.0% 26.1% 26.7% 18.2% 0.0%

Every 1-2 years 3.2% 5.7% 2.6% 0.6% 1.2% 1.4% 3.8% 10.0% 0.0% 0.0% 4.5% 5.6%

Every 2-3 years 1.9% 4.1% 1.0% 0.2% 0.7% 0.9% 1.3% 0.0% 0.0% 0.0% 0.0% 5.6%

Every 3+ years 1.8% 3.5% 1.3% 0.4% 0.7% 0.9% 2.5% 10.0% 4.3% 0.0% 0.0% 0.0%

Never 4.0% 8.8% 2.2% 0.6% 0.5% 1.4% 6.3% 20.0% 4.3% 13.3% 0.0% 0.0%

Other 1.8% 2.4% 1.4% 1.5% 1.0% 3.3% 1.3% 0.0% 4.3% 0.0% 0.0% 0.0%


If offered, what types of target-date funds are in your plan?



Target-date funds

comprised of funds from

one firm (single-manager

funds)

39.8% 30.5% 39.2% 49.1% 51.0% 52.9% 53.3% 25.0% 55.6% 66.7% 50.0% 60.0%

Target-date funds

composed of funds from

multiple firms (multi-

manager funds)

11.8% 13.6% 11.3% 8.0% 14.8% 7.1% 10.0% 25.0% 11.1% 0.0% 16.7% 0.0%

Target-date funds

composed of funds from

your plan's current fund

lineup (customized

funds)

9.0% 7.4% 9.6% 13.1% 5.8% 11.4% 10.0% 0.0% 11.1% 16.7% 16.7% 0.0%

Two or more of the above 8.2% 6.2% 8.6% 9.1% 9.7% 11.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Not sure 26.9% 38.6% 28.0% 16.6% 11.0% 8.6% 16.7% 50.0% 22.2% 0.0% 0.0% 20.0%

Other 4.3% 3.7% 3.3% 4.0% 7.7% 8.6% 10.0% 0.0% 0.0% 16.7% 16.7% 20.0%


Have you considered building a customized target-date series for your plan utilizing your plan’s current fund lineup?



Yes--

considering 12.4% 7.5% 10.4% 14.5% 23.3% 30.2% 20.3% 12.5% 10.0% 7.7% 27.8% 40.0%

No--have not

considered 75.3% 83.6% 75.9% 70.1% 64.8% 53.6% 63.5% 87.5% 90.0% 76.9% 44.4% 26.7%

Already in

place 12.3% 8.9% 13.7% 15.5% 11.9% 16.1% 16.2% 0.0% 0.0% 15.4% 27.8% 33.3%


Participation and Eligibility


What is the participation rate in your DC plan among eligible employees?



Average 72.6% 67.9% 75.0% 75.0% 75.1% 77.4% 61.8% 66.2% 68.0% 64.9% 66.6% 44.5%

Median 80.0% 75.0% 80.0% 81.0% 82.0% 85.0% 60.0% 72.5% 77.0% 62.0% 65.0% 40.0%


Average Participant Account Balance:



Average $63,199 $51,396 $63,128 $73,092 $72,712 $88,199 $49,686 $29,210 $53,111 $64,184 $42,829 $46,805

Median $50,000 $38,000 $50,000 $55,800 $60,000 $80,000 $43,961 $32,130 $48,000 $50,324 $43,921 $45,388


Average Contribution/Deferral Rate Among Active Participants:



Average 6.1% 5.7% 5.9% 6.3% 6.8% 7.1% 8.3% 5.0% 7.8% 6.2% 14.7% 6.0%

Median 6.0% 5.0% 6.0% 6.0% 6.7% 7.0% 6.0% 5.0% 6.0% 4.6% 6.5% 5.4%


When are employees eligible to participate in the plan?



Immediately upon hire 35.9% 18.6% 32.3% 54.5% 69.2% 77.3% 81.1% 45.5% 75.0% 81.0% 92.6% 91.7%

Within 3 months 26.5% 23.1% 32.0% 27.4% 22.8% 15.8% 7.2% 18.2% 10.7% 4.8% 3.7% 4.2%

After 4 to 6 months 8.1% 10.0% 9.2% 5.9% 2.4% 2.2% 2.7% 0.0% 7.1% 4.8% 0.0% 0.0%

After more than 6

months 29.6% 48.3% 26.5% 12.3% 5.7% 4.7% 9.0% 36.4% 7.1% 9.5% 3.7% 4.2%


Plan Oversight and Administration


How often do you formally review actual administrative costs/fees?



Annually 71.8% 65.6% 73.5% 80.2% 73.3% 75.0% 65.8% 50.0% 60.0% 84.6% 63.2% 68.8%

Every 1-2 years 9.5% 11.1% 9.4% 7.9% 7.2% 8.2% 9.2% 25.0% 0.0% 0.0% 15.8% 12.5%

Every 2-3 years 7.1% 7.7% 7.0% 4.9% 8.5% 7.2% 5.3% 0.0% 15.0% 0.0% 5.3% 0.0%

Every 3-5 years 4.3% 3.3% 3.9% 3.2% 8.5% 7.7% 10.5% 0.0% 10.0% 7.7% 10.5% 18.8%

Every 5+ years 2.0% 2.4% 2.4% 1.5% 0.5% 1.0% 3.9% 12.5% 5.0% 0.0% 5.3% 0.0%

Never 5.3% 9.9% 3.8% 2.3% 2.1% 1.0% 5.3% 12.5% 10.0% 7.7% 0.0% 0.0%


Who pays for the plan’s administrative/ recordkeeping costs?



Participants - fees not paid

exclusively by revenue sharing

are allocated directly to

participant accounts

20.5% 14.7% 22.3% 20.9% 27.8% 30.7% 53.4% 25.0% 36.4% 45.5% 64.7% 86.7%

Participants - fees not paid

exclusively by revenue sharing

are covered by an additional

"wrap"• fee on participant

accounts

3.7% 2.1% 3.2% 4.0% 6.7% 11.4% 5.5% 0.0% 18.2% 0.0% 0.0% 0.0%

Shared Responsibility - some

fees are paid by

participants while the

organization covers other

expenses directly

21.6% 19.2% 20.8% 24.5% 27.2% 24.3% 6.8% 25.0% 0.0% 18.2% 5.9% 0.0%

Our Organization - fees paid

exclusively by the plan

sponsoring organization

41.7% 50.8% 40.9% 38.4% 28.0% 22.8% 15.1% 25.0% 18.2% 27.3% 5.9% 6.7%

Other 3.1% 1.9% 2.5% 4.0% 5.9% 7.9% 8.2% 0.0% 9.1% 9.1% 11.8% 6.7%

Don't know 9.4% 11.2% 10.3% 8.2% 4.3% 3.0% 11.0% 25.0% 18.2% 0.0% 11.8% 0.0%


Approximately how much of your plan's administrative/recordkeeping costs are paid for by related investment revenue?



All administrative and

recordkeeping fees (i.e.,

plan is "free"•)

33.5% 25.1% 36.8% 42.7% 43.0% 21.1% 54.5% 37.5% 71.4% 61.5% 63.2% 25.0%

Most (>50%)

administrative and

recordkeeping fees

19.2% 12.1% 21.5% 26.8% 25.6% 15.6% 10.4% 25.0% 4.8% 15.4% 10.5% 6.3%

Some (<50%)

administrative and

recordkeeping fees

15.6% 12.9% 14.6% 15.9% 21.4% 27.1% 13.0% 0.0% 4.8% 15.4% 21.1% 18.8%

None (i.e., we do not

receive any revenue

sharing payments)

31.8% 49.8% 27.1% 14.7% 10.0% 36.2% 22.1% 37.5% 19.0% 7.7% 5.3% 50.0%


Does your organization have an investment committee for the DC plan?



Yes - committee

includes only internal

employees

52.6% 31.3% 59.1% 66.4% 70.5% 74.3% 41.8% 0.0% 50.0% 30.8% 55.0% 43.8%

Yes - committee

includes only people

external to our

company

1.4% 1.8% 1.4% 1.1% 1.0% 1.4% 5.1% 0.0% 4.5% 7.7% 5.0% 6.3%

Yes - committee

includes a mix of

internal and external

people

21.3% 15.6% 24.5% 27.8% 22.3% 17.3% 25.3% 25.0% 13.6% 30.8% 20.0% 43.8%

Yes - but unsure of

composition of

investment committee

0.8% 0.6% 0.9% 0.4% 1.0% 1.9% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

No - we do not have

an investment

committee

22.3% 48.2% 13.0% 3.3% 4.5% 4.7% 26.6% 75.0% 31.8% 30.8% 15.0% 6.3%

Don't know 1.5% 2.6% 1.1% 1.1% 0.8% 0.5% 1.3% 0.0% 0.0% 0.0% 5.0% 0.0%


Do you have a written investment policy statement (IPS) for the DC plan?



Yes 65.5% 40.1% 72.1% 87.2% 85.6% 88.3% 68.4% 25.0% 59.1% 61.5% 75.0% 100.0%

No 22.9% 40.7% 18.1% 8.6% 8.3% 8.0% 25.3% 62.5% 31.8% 38.5% 15.0% 0.0%

Don’t know 11.6% 19.2% 9.8% 4.2% 6.0% 3.8% 6.3% 12.5% 9.1% 0.0% 10.0% 0.0%


Defined Contribution Providers


How often do you formally evaluate your DC provider?



Annually 29.6% 37.9% 28.1% 20.1% 18.8% 23.0% 31.5% 33.3% 32.1% 25.0% 25.9% 41.7%

Every 1 to <2

years 12.1% 15.3% 12.6% 8.5% 6.6% 4.3% 4.5% 16.7% 3.6% 5.0% 3.7% 0.0%

Every 2 to <3

years 16.0% 15.1% 17.3% 15.9% 15.4% 12.9% 4.5% 8.3% 3.6% 5.0% 0.0% 8.3%

Every 3 to <5

years 21.1% 11.0% 22.2% 30.1% 35.8% 36.7% 30.6% 0.0% 21.4% 35.0% 48.1% 33.3%

Every 5+ years 12.2% 6.5% 12.9% 19.9% 18.3% 17.6% 18.9% 8.3% 21.4% 25.0% 18.5% 16.7%

Never 9.1% 14.2% 6.8% 5.5% 5.0% 5.4% 9.9% 33.3% 17.9% 5.0% 3.7% 0.0%


Does your plan use the services of a financial adviser?



Yes 66.4% 66.6% 67.5% 66.8% 66.8% 54.8% 58.0% 75.0% 53.6% 52.4% 70.4% 45.8%

No 33.6% 33.4% 32.5% 33.2% 33.2% 45.2% 42.0% 25.0% 46.4% 47.6% 29.6% 54.2%


Is financial/investment advice offered to participants in your DC plan?



Yes, through our

DC provider 29.2% 24.1% 31.2% 37.8% 33.3% 21.5% 52.7% 63.6% 50.0% 66.7% 53.8% 37.5%

Yes, through a 3rd party

(i.e., Financial Engines,

Morningstar, etc.)

9.6% 7.0% 6.8% 9.5% 18.0% 34.8% 11.8% 0.0% 7.1% 9.5% 30.8% 4.2%

Yes, through a financial

planner/adviser outside

of the plan

32.5% 41.4% 37.4% 19.5% 11.0% 6.1% 9.1% 27.3% 17.9% 4.8% 3.8% 0.0%

Yes, through another

source 3.5% 4.0% 3.4% 2.7% 4.4% 1.4% 0.9% 0.0% 3.6% 0.0% 0.0% 0.0%

Total "Yes" 74.9% 76.4% 78.8% 69.5% 66.9% 63.8% 74.5% 90.9% 78.6% 81.0% 88.5% 41.7%

No 25.1% 23.6% 21.2% 30.5% 33.1% 36.2% 25.5% 9.1% 21.4% 19.0% 11.5% 58.3%


Questions


For more information,

please contact your

retirement plan services representative

or call MassMutual at

1-866-444-2601


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457 plans (government only) - live mutual · source: plansponsor defined contribution survey, 2012...

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