PLANSPONSOR.com April 2011 43 42 PLANSPONSOR.com April 2011

In December 2010, PLANSPONSOR published its first annual Defined Benefit (DB) Administration Survey. The survey showcased the experience and capabilities of leading providers of DB administration, with a focus on size and scope of busi-ness, types of clients and plans served, and product/service offerings. All data for that survey were as of June 30, 2010. Since then, most of the original 28 respondents to the survey have published year-end 2010 data, which are summarized on the pages that follow. While many of the trends observed in the original analysis still hold true, a few additional findings became evident in this update.

Growth Spurt. The fastest-growing segment of outsourcing business was administration of government pensions, which grew by more than 25%, as these entities seek help in managing their future obligations.

“Unemployed” Participants. Although plan growth overall was neutral, providers have added approximately 2 million total participants to their platforms since June 30, 2009, but

71% of these new additions represented employees that were either separated or retired. Additionally, the number of sepa-rated participants increased by almost 10%—to 7.5 million—since June 2010, while both active and retired participants declined slightly during the period (down <1%).

One-Stop Shops. In an effort to strengthen ties with DB plan sponsors, providers continue to offer a wide range of services, frequently leveraging in-house resources. The most common services provided without the assistance of a third party are Data Remediation (96%) and Form 5500 Completion (93%), while the least common are Plan Accounting/Master Trust (56%) and Trustee and Custody (37%).

Incomplete Package? On average, these DB providers report that 50% of all DB plans they service are bundled with other non-DB services, including Defined Contribution (DC), Stock/Employee Stock Ownership Plans, Health & Welfare, and Payroll. This number is somewhat higher than recent find-ings from the PLANSPONSOR 2010 DC survey, which runs

2011 Defined Benefit Administration SurveyDB providers face headwinds, but are showing signs of growth

Sponsors / clients by Plan Size 6/09* 6/10 12/10

Less than 100 participants 3,000 3,007 2,868

100-999 participants 1,386 1,420 1,333

1000-4999 participants 733 762 773

5000-9999 participants 261 275 297

10,000-25,000 participants 268 288 260

25,000-50,000 participants 123 124 135

50,000+ participants 130 138 140

Total Plans by Status 6/09* 6/10 12/10

Active / Open Plans 4,996 5,273 5,209

Closed Plans 1,290 1,262 1,359

Frozen Plans 1,593 1,662 1,756

Terminated Plans 95 79 91

Total Plans by Type 6/09* 6/10 12/10

Corporate Pension Plans 8,028 8,074 7,903

Public (nongovernmental) Pension Plans 96 93 90

Government Pension Plans 249 247 306

Multiemployer/Taft-Hartley Plans 129 127 142

Church Plans 146 129 124

Hospital Plans 384 384 384

DB(k) Plans 3 5 8

Other 61 57 60

Total Participants by Type 6/09* 6/10 12/10

Active participants 13.36mm 14.05mm 13.95mm

Separated participants 7.17mm 6.89mm 7.51mm

Retired participants 8.37mm 9.45mm 9.44mm

Top 5 Overall Db Plan Administrators (# of Participants)

1 Aon Hewitt (as of 6/30/2010) 9,027,189

2 Affiliated Computer Services, Inc. 5,258,628

3 Fidelity Investments 4,165,691

4 Towers Watson 2,965,351

5 Morneau Shepell 2,120,803

Top 5 corporate Db Plan Administrators (# of plans)

1 Aon Hewitt (as of 6/30/2010) 1,513

2 Principal Financial Group 1,071

3 Mercer Outsourcing 952

4 CUNA Mutual Group 810

5 Prudential Retirement 761

Top 5 Public/Government Plan Administrators (# of plans)

1 McCready and Keene, Inc. 101

2 Principal Financial Group 100

3 Prudential Retirement 52

4 USI Consulting Group (as of 10/31/2010) 46

5 MassMutual 41

Top 5 cash balance / Hybrid Plan Administrators (# of plans)

1 John Hancock Retirement Plan Services 399

2 Mercer Outsourcing 331

3 Aon Hewitt (as of 6/30/2010) 253

4 Fidelity Investments 71

5 Affiliated Computer Services, Inc. 65

Top 5 nonqualifed Db Plan Administrators (# of plans)

1 Aon Hewitt (as of 6/30/2010) 295

2 Fidelity Investments 182

3 Mercer Outsourcing 88

4 Vanguard 40

5 Milliman 35

most Defined benefit clients Added (6/09–12/10)

1 Morneau Shepell 147

2 Mercer Outsourcing 40

3 The Newport Group 24

4 Towers Watson 20

4 Aon Hewitt (as of 6/30/2010) 20

most clients bundling Db Admin with Other benefits

1 Retirement Strategies, Inc. 100.0%

2 Bank of America Merrill Lynch 97.0%

3 Fidelity Investments 95.0%

4 Vanguard 90.0%

5 CUNA Mutual Group 89.0%

across a larger group of providers (some that do not provide DB services) and draws from the perspective of plan sponsors; it found that 37% of employers having both DB and DC plans are bundled with the same provider. Smaller plans, however, are much more likely to bundle than larger plans, and spon-sors with bundled arrangements are somewhat more likely to recommend their provider. —Brian O’Keefe

meTHODOlOGy: Updates to PLANSPONSOR’s first annual Defined Benefit Administration Survey were received in February 2011 from 25 of the 28 providers of defined benefit plan record-keeping services listed in the December 2010 issue. Where updates were not available, the previously collected data were used. The origi-nal survey, which asked for approximately 100 different data points related to a provider’s experience and capabilities, was available for providers to complete in October 2010. A summary of the survey’s results is found on the pages that follow. The complete data set is available for purchase from PLANSPONSOR’s Research & Surveys group. For the complete analysis of the DB/DC bundled market, please contact Brian O’Keefe at bokeefe@assetinternational.com.

* June 2009 data includes some projections to address limitations in the availability of historical data.

Illustration by Aya Kakeda

44 PLANSPONSOR.com April 2011 PLANSPONSOR.com April 2011 45

PROVIDER PROFILE SERVICE CAPABILITIES EXPERIENCE DB PLANS BY SIZE DB PLANS BY TYPE DB BUNDLING/INTEGRATION

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Affiliated Computer Services1 10-20 10 Proprietary Yes Yes Yes Yes Yes Direct Direct 101 349 5,258,628 40% 37% 23% 83% 2% 9% 19% 72% DC NQ DB Affiliated Computer Services1

Aon Hewitt2 30+ 10+ Proprietary Yes Yes Yes Yes Yes Direct Direct 360 1,638 9,027,189 NA NA NA 92% 0% 0% 75% 11% DC NQ DB Aon Hewitt2

Bank of America Merrill Lynch 10-20 10 Hybrid Yes Yes No No Yes Partnership Both 36 75 613,476 20% 53% 27% 100% 0% 0% 0% 97% DC NQ DB Bank of America Merrill Lynch

Charles Schwab 20-30 4.3 Proprietary No No No No No Direct Direct 77 119 61,200 82% 18% 0% 96% 1% 1% 66% 78% DC NQ DB Charles Schwab

Correll Co. 30+ 11 Proprietary No No No No Yes Direct Partnership 50 58 8,003 95% 5% 0% 93% 3% 0% 6% 22% No Correll Co.

CUNA Mutual Group 30+ 31.1 Proprietary No No No No Yes Direct Direct 810 810 34,933 100% 0% 0% 100% 0% 0% 11% 89% DC DB CUNA Mutual Group

Diversified Investment Advisors2 30+ 10 Proprietary No Yes Yes Yes Yes Direct Direct 212 212 358,000 75% 23% 3% 65% 7% 0% 32% 84% DC NQ DB Diversified Investment Advisors2

Fidelity Investments 10-20 7 Proprietary No Yes Yes Yes Yes Direct Direct 112 674 4,165,691 59% 26% 15% 97% 0% 0% 41% 95% DC NQ DB Fidelity Investments

Great-West Life and Annuity Insurance Co. 30+ 23 Winklevoss Yes No No No Yes Direct Direct 87 96 39,919 94% 6% 0% 79% 13% 1% 51% 11% DC NQ DB Great-West

ING U.S Retirement Services 10-20 6.5 Proprietary No Yes No No Yes Partnership Partnership 17 42 1,117,375 38% 36% 26% 98% 2% 0% 20% 80% DC NQ DB ING U.S Retirement Services

J.P. Morgan Retirement Plan Services 10-20 5 Proprietary No Yes Yes Yes Yes Not Offered Direct 17 60 151,423 53% 43% 3% 100% 0% 0% 50% 39% DC NQ DB J.P. Morgan

John Hancock Retirement Plan Services <5 NA Proprietary NA NA NA NA NA NA NA NA 399 NA NA NA NA NA NA NA NA NA NA John Hancock

Kidder Benefits Consultants, Inc. 10-20 9 Proprietary No No No No No Partnership Direct 123 123 1,530 100% 0% 0% 98% 0% 0% 100% 70% DC NQ DB Kidder Benefits Consultants

MassMutual 30+ 14.2 Proprietary No No No No Yes Direct Partnership 157 260 392,953 78% 18% 4% 77% 16% 0% 54% 46% DC NQ DB MassMutual

MBM Advisors, Inc. 30+ 9 Relius No Yes Yes Yes Yes Direct Direct 94 94 14,587 93% 7% 0% 99% 0% 0% 90% 0% DC DB MBM Advisors, Inc.

McCready and Keene, Inc.3 30+ 26 DB Val No No No No Yes Direct Partnership 198 221 64,000 95% 5% 1% 48% 46% 0% 99% 27% DC NQ DB McCready and Keene, Inc.3

Mercer Outsourcing 30+ 25 Proprietary Yes Yes Yes Yes Yes Direct Direct 251 994 2,012,637 56% 36% 8% 96% 0% 0% 70% 60% DC NQ DB Mercer Outsourcing

Milliman 30+ 11 Proprietary Yes Yes No No No Direct Partnership 109 209 799,440 46% 47% 7% 91% 2% 0% 40% 12% DC NQ DB Milliman

Morneau Shepell4 30+ 15 Proprietary Yes Yes Yes No No Partnership Partnership 329 760 2,120,803 82% 16% 2% NA NA NA 0% 67% DC NQ DB Morneau Shepell4

New York Life Retirement Plan Services 30+ 7 Proprietary No Yes Yes Yes No Direct Direct 87 170 185,360 71% 26% 3% 91% 6% 1% 40% 60% DC NQ DB New York Life Services

The Newport Group 20-30 16.5 Winklevoss No Yes No No Yes Direct Direct 72 86 18,171 93% 7% 0% 87% 7% 0% 100% 25% DC NQ DB The Newport Group

Principal Financial Group 30+ 28 Proprietary No No No No Yes Direct Direct 1,110 1,255 296,021 95% 5% 0% 85% 8% 1% 100% 35% DC NQ DB Principal Financial Group

Prudential Retirement 30+ 27.4 Proprietary No No No No No Direct Both 790 1,012 564,423 92% 8% 1% 75% 5% 9% 55% 25% DC NQ DB Prudential Retirement

Retirement Strategies, Inc. <5 4.4 Relius No No No No No Partnership Partnership 11 11 161 100% 0% 0% 100% 0% 0% 0% 100% No Retirement Strategies, Inc.

T. Rowe Price Retirement Plan Services 10-20 6.4 SBC Systems No Yes No No No Partnership Partnership 8 27 72,400 59% 37% 4% 100% 0% 0% 0% 87% DC NQ DB T. Rowe Price

Towers Watson 30+ 9 Proprietary Yes Yes No Yes Yes Direct Direct 202 600+ 2,965,351 NA NA NA NA NA NA 86% 11% DC NQ DB Towers Watson

USI Consulting Group5 30+ 11 Proprietary No Yes Yes Yes Yes Direct Direct 266 302 233,000 89% 11% 1% 65% 16% 0% 15% 8% DC NQ DB USI Consulting Group5

Vanguard 10-20 7 Proprietary No Yes No No Yes Partnership Direct 120 233 554,927 79% 15% 6% 100% 0% 0% 0% 90% DC NQ DB Vanguard

1 Affiliated Computer Services, Inc., is a Xerox® Company2 Aon Hewitt and Diversified Investment Advisors data/information as of 6/30/20103 McCready and Keene, Inc., is a OneAmerica® Company4 Morneau Shepell figures include U.S. and Canadian pension plans5 USI Consulting Group data/information as of 10/31/2010

2011 Defined Benefit Administration Survey

For the complete analysis of the Db/Dc bundled market, please contact brian O’Keefe at bokeefe@assetinternational.com.