ASPPA Conference Recap
Congratulations to ASPPA for hosting another great conference. As always, I found the workshops and sessions very informative. I enjoyed connecting with old friends and meeting new ones. And the “Ahead of the Curve” theme, which focused on innovation, seemed to strike a chord with everyone.
Speaking of innovation, it was good to see ASPPA leading the way with some changes to its educational format. In the past, industry professionals who wanted to earn their designation were required to sign up for a full series of classes. Now it appears ASPPA will allow people to sign up for individual courses instead of the whole series.
People can still earn their designations by completing all the required courses. But if they want to specialize in a few areas, ASPPA will allow them to do so without taking courses they don’t want or need. A small innovation perhaps, but one that will go a long way toward keeping our industry well educated and well trained.
Of all the issues raised during the convention, three caught my attention as potentially having the most impact on our industry.
IRS Audit of 403b Plans. After years of taking a mostly hands-off approach, the IRS has begun exercising more oversight over these complex plans. As a result, plan sponsors and TPAs who administer 403b plans will face increased scrutiny. Those found not to be in compliance could face significant financial penalties and perhaps even disqualification of some 403b plans. No business looks forward to an IRS audit. But the threat of one may benefit the industry and our clients by causing some record keepers and plan sponsors to tighten up their 403b administration.
PBCG and Default IRAs. As you know, the Pension Protection Act now gives PBGC the authority to offer default IRA services for defined contribution plans. Opinions at the conference were divided on this issue, with some favoring it and some opposed. For me, the main consideration is whether the PBCG plans to charge the same or higher fees than they now charge on the defined benefit side.
Also, I wonder whether the PBGC will be able to offer the same competitive level of service currently being offered by the private sector. For it certainly appears that the private sector that specializes in this area has done a remarkable job in developing systems, procedures and support services to effectively serve this market at very competitive rates. If not, it may cause plan sponsors and TPAs to re-evaluate using the PBCG for their default IRAs.
Skeptical Savers. Many of today’s younger workers – Gen X, Gen Y and Millennials – have lost faith in the system. Skeptical about the government and financial markets, many fear that even if they build a large retirement nest egg, they could lose it all due to corporate malfeasance, government inaction or over-reaction, or failure of the market to achieve its historical returns.
I believe our industry can do several things to help restore their confidence in our financial institutions. First, we need to do a better job of educating young workers on the need to save long-term. We also need to look at developing new products and services, such as a Master IRA account, that will make it safer and easier for them to save.
I believe we should encourage younger generations to actively lobby on their own behalf to protect what they save. I’m not sure what all this will look like, but I believe we run the risk of alienating multiple generations of retirement plan savers if we ignore this issue. Finally, if we as an industry want to take a significant leadership role, the only way to advance the notion that we need to be better savers is for the private sector to develop educational programs. These could be first introduced at the fifth- and sixth-grade class levels, and continued at the middle school and high school levels. Then, and only then, will we be a powerful influencer on today’s younger generations and their future financial wellbeing.
3/16 Plan Administration
This topic also received a lot of airtime during the convention, with attendees voicing strong opinions for and against offering this service to clients. PenChecks Trust addressed this issue earlier this year in a three-part blog series. You can read our thoughts on the subject by clicking here.
Our thanks to ASPPA for another well-run conference. We hope to see everyone there next year.
President & CEO