March 4, 2015
For many organizations, defined contribution (DC) retirement plans represent 8 percent or more of compensation - significantly more than is spent on annual payroll increases. Given the magnitude of that investment in their employees, it is surprising how few organizations have paid attention to the overall objectives for their DC plans. And, they have not identified objective, measureable criteria for assessing the success of these programs. In many instances, the design of plans set up years ago has never been subject to a strategic review that can help ensure an adequate return on the organization's investment.
This Spotlight presents an overview of common measures of DC plan success and other, less well-known contributing factors before describing a systematic approach to measuring a DC plan's effectiveness and determining what actions to take to make ongoing improvements. More importantly, it puts forth a process under which the plan can achieve success.