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Business and Policy Areas
Business and Policy Areas

New Year, New Retirement Plan Resolutions

February 7, 2017

By Karla Hignite

In their NACUBO 2016 Annual Meeting presentation “Higher Education Retirement Plans: Changes, Challenges, and Charting Your Course,” co-presenters Beryl Ball, senior vice president, CAPTRUST Financial Advisors, and David Levine, principal, Groom Law Group, stressed that fiduciary oversight is more important now than ever. Gone are the days of simple reporting and limited oversight activity. In an era of increased litigation risk, increased compliance testing and audits, and evolving regulatory requirements, plan fiduciaries must place greater focus on vendor selection, investment selection and monitoring, fee benchmarking, and aligning retirement benefits and institution goals, among other concerns, noted Ball and Levine. As a matter of course going forward, they urged institutional leaders to acknowledge and accept litigation risk and proactively manage it. They also suggested that they educate plan fiduciaries on their roles and responsibilities, partner with experienced professionals, and follow institution plan documents.

Among the trends that Ball and Levine said campus business leaders must understand and embrace as fiduciaries within this more hands-on environment is a concerted focus on plan participants themselves. This includes:

  • Improved plan design with features such as automatic enrollment and escalation and better communication about plan features.
  • Greater emphasis on financial wellness and retirement readiness with lifetime income solutions and more targeted investment options.
  • Increased attention to best practices for structuring employer contribution formulas and funding.
  • A better grasp of employee generational and other demographic differences that may impact participation.


Thomas Phizacklea attests to the need to clearly focus on institution retirement plan fiduciary responsibilities. He is vice president for administration and finance at McDaniel College in Westminster, Maryland, a private, four-year liberal arts institution with approximately 1,500 full-time undergraduate students and about the same number of graduate students. According to Phizacklea, assets of the college’s 403(b) plan total approximately $100 million for the institution’s 825 current, former, and retired employees.

Soon after Phizacklea came to McDaniel in June 2014 from another independent liberal arts institution, he hired CAPTRUST as the fiduciary adviser for the college’s 403(b) and 457(b) plans. “Especially at smaller institutions where you may not have the expertise inhouse to keep on top of regulatory and compliance standards, an independent adviser can be extremely beneficial,” notes Phizacklea. He points to trends in recent years toward increased liability and risk not only for institutions as a whole, but also for business officers and other individual committee members providing oversight of institution retirement plans. “Having an adviser that is a co-fiduciary to your plan ensures that they will have skin in the game,” adds Phizacklea.

In short order, the college formed a plan fiduciary committee and a faculty and staff advisory committee, adopted a charter and investment policy, and secured training for committee members. In addition to transitioning to a group contract to allow the plan committee oversight of investments, a focused review of recordkeeping expenses opened the door to negotiate lower costs. The college worked with TIAA to establish a revenue credit account with the generated savings to use to pay for plan-related expenses. Allowable expenses include auditing expenses, compliance monitoring service fees, and fees to third-party consultants providing services in support of the plan administration and maintenance.

“In our case, negotiating a reduction in recordkeeping fees helped us generate approximately $50,000 off of our $100 million in plan assets that we can now use to pay for plan expenses,” says Phizacklea. “This has proven to be a very good solution for us because we can pay for these services with little additional money required from our operating budget.”

Another big change that McDaniel’s retirement plan committee tackled during Phizacklea’s first year was a substantive restructuring of the plan’s fund lineup, expanding available investment options for employees. “Ten years ago. McDaniel’s plan had about a half dozen fund choices; today we average about 18 options and have upgraded the plan design to add a Roth 403(b) feature to the program,” says Phizacklea.

In addition to improving the variety of fund selections for employees, the plan committee pays special attention to fund performance and fees as part of its ongoing review of plan investments. The program also includes an automatic default into a menu of life-cycle funds. “While many employees have voiced their desire for greater choice, we also know that others can easily be overwhelmed by the fund selection process, so we want to make this as easy as possible for all employees to participate,” says Phizacklea.


Now that crucial changes have been implemented to strengthen McDaniel’s retirement program, the college’s plan fiduciary committee meets on a quarterly basis to monitor fund performance and expenses, assess each fund’s fit within the overall plan lineup, track retirement plan trends, and ensure that investment policy standards are maintained. “While we have definitely settled into an efficient rhythm with our monitoring process and are much more comfortable and confident with our fiduciary responsibilities as a committee, we know this requires ongoing attention,” says Phizacklea.

Now that McDaniel is coming up on three years since instituting some big changes to its retirement program, Phizacklea reports that the committee is going to focus on employee education. “Providing a comprehensive retirement plan with a good investment structure for employees will not yield a strong retirement unless employees are prompted to change their behaviors toward a higher saving strategy.” McDaniel, along with its partners, is committed to providing one-on-one advice as well as educational seminars on planning for retirement. These sessions provide a full analysis of an employee’s financial health as well as planning for an employee to reach his or her desired retirement goals, explains Phizacklea. The committee will continue to monitor feedback from employees as this program matures.

“If your institution has not formed a retirement plan committee, I strongly suggest you do so as soon as possible,” says Phizacklea. He recommends the following steps once a committee is formed:

  • Ensure all of the plan fiduciaries understand their responsibilities and risks.
  • Document a financial investment policy including decision criteria on when to modify funds.
  • Use a committee structure that meets regularly to monitor fund performance.
  • Create minutes of every committee meeting and document all actions taken and decisions made.
  • Provide education to employees on general financial health.
  • Perform an expense review with the current vendor(s), and document the process.
  • Consider hiring an independent financial adviser to provide expertise and guidance.

Karla Hignite, editorial consultant to NACUBO, is editor of NACUBO's HR Horizons; e-mail: