Defined Benefit: Plan Services
Overview
A Defined Benefit (DB) plan provides a solid foundation for retirement, rounding out a total retirement program. It can be used with 401(k), 403(b), profit sharing, money purchase and nonqualified plans, or on its own.
Balancing all your responsibilities
Managing your retirement program is only one of your many tasks. It is important that the solution you choose lets you focus on the needs of your employees while making the most of your time.
Delivering a broad range of services
As a leading provider of Defined Benefit plans[1], we take a consultative approach that helps integrate your retirement program with services that help to reduce the amount of administrative work you have to do. Services include:
Plan Sponsor Services
Working with your financial professional, we offer the team, tools and services to provide an end-to-end solution for your retirement program, which can help manage costs, improve efficiency and increase accuracy so you can focus on your other priorities.
Services include:
- Consulting services
- Recordkeeping and other administrative services
- Actuarial services
- Investment services
- Investment advisory and asset allocation services[2]
- Fiduciary support
- Plan compliance support
- Employee education and communication
- Benefit determination and payment
- Retiree payout services
Secure access to plan information online
You should have quick and convenient access to plan information. Our comprehensive, award-winning Web site,[3] the Principal Sponsor Service CenterSM, enables you to easily manage your retirement program and participant information through one secure interface. Once logged in, you can:
- Conduct administrative tasks online
- Track eligibility and key enrollment dates
- Access a wide range of retirement plan information
- Review reports
- Integrate with payroll
- Track/Manage Retirement program
- View news and economic updates
Understanding your fiduciary responsibilities
Almost all qualified plans are subject to the rules of the Employee Retirement Income Security Act of 1974 (ERISA). You need a service provider who can help you understand these rules. We can help you manage a number of your fiduciary responsibilities with testing services and ongoing support through:
- Compliance and nondiscrimination testing service (410 (b), top-heavy, 415 and compensation limits)
- Government filings, including Form 5500 Annual Report, SAS 70, Summary Annual Report, Form 5300 filing, form 1099-R
- Audit support line
- Pension Benefit Guaranty Corporation (PBGC) premium forms
- Legislative updates through compliance newsletter
See a summary of all services for a Defined Benefit plan (PDF: 675 KB)
Participant Services
Defined Benefit plans can be one of the most valuable benefits you offer. However, many participants may not fully understand or appreciate the benefit.
Teaming with your financial professional, we provide an education program, which includes everything from statements to targeted campaigns, to help increase awareness and appreciation of your Defined Benefit program. This results in increased employee satisfaction and retention.
We make it easy for you to communicate with your employees about retirement. With the help of our award-winning materials and innovative services, your employees will better understand your retirement plan.
Develop a solid employee communications strategy
We make it easy for your participants to understand the value of your Defined Benefit program by offering award-winning resources. These tools include:
- Award-winning Defined Benefit statement[4] - These statements, which are also available online, feature earned monthly benefits, vesting percentage and estimated monthly benefits, as well as information about the retirement plan and its assumptions. Retirement worksheets included with statements are designed to help your employees determine how much to save for retirement (and also reinforce the value of your retirement plan).
- Award-winning participant Web site - Participants can access personalized information as well as historical data such as compensation history, hours history, service data and more. This Web site contains educational tools and resources, including our unique Estimated Benefit Calculator.[5] Unique in the industry, this tool uses participants' personal data, rather than industry averages, to model retirement plan benefits under a variety of scenarios.
- Client Contact Center - We provide world class customer service through the Client Contact Center. Participants can call and speak directly to multilingual retirement specialists who can answer their detailed questions about the retirement plan.
Consulting Services
We understand that each organization has a unique set of needs. We provide experienced actuaries and consultants who can help make certain your Defined Benefit plan meets your needs. This includes:
- Actuarial valuation
- Consulting services
- Asset/liability modeling
- Forecasting of pension funding and expense
- Benefit stream report
- Participant communication and education
- Customized participant benefit illustrations
- Benchmarking/statistics for in-depth plan comparison
- Income replacement ratios and needs analysis
- Legislative review, analysis and communication
- Review of operational and technical concerns Benefit illustration concepts and general consultation
- Internal Revenue Service and Department of Labor audit support
- Compliance testing
- Plan design consultation and testing
- Retirement program review and analysis
If your third-party administrator already provides these services, we can customize your retirement plan to meet the needs you do have.
Asset liability modeling
Our review process helps you strategically find the link between assets and liabilities to identify the optimal investment strategy to meet your plan requirements. Our actuaries that have extensive expertise in forecasting plan liabilities.
If you work with an outside investment advisor, we can work with them to help meet your needs.
Investment Services
Our investment strategy is backed by over a century of financial expertise, allowing us to help you find what you need to create a professionally-managed, diversified portfolio for your Defined Benefit retirement plan.
Investment options choice and flexibility
You have extensive choice and flexibility to select the appropriate investment options, from both sub-advised investment options and a mutual fund network, for your plan's investment program.
Sub-advised investment options[6]
Our sub-advised investment options are retirement-focused. They are designed to be appropriate investment options for retirement savings under employer-sponsored plans.
Spanning a wide range of asset classes, they are sub-advised by some of the industry's leading investment managers.
The benefits of our institutional approach to sub-advised investment options include:
- Our company scale delivers access to some investment managers not broadly available
- Control of process through investment mandates
- Extensive scrutiny through onsite manager visits
- Seamless manager transitions
An extensive mutual fund network
You can select from a virtually endless menu of investment choices through our extensive mutual fund network. This network can provide you with enhanced diversification through a universe of established fund families, including thousands of mutual funds from outside fund companies to individual stocks and investment-grade bonds.
Helping you manage your fiduciary obligations
Principal Life Insurance Company is a fiduciary with respect to the:
- Initial selection
- Ongoing monitoring of iInvestment options among our Sub-Advised Funds as appropriate investment options for a retirement plan and
- Portfolio managers for our Separate Accounts.
Our fiduciary status and obligations are set out in our written agreements. We will indemnify the plan fiduciary as stated in those agreements.
The Principal Due Diligence ProgramSM
The Principal Due Diligence ProgramSM is the rigorous and disciplined framework we follow to identify, hire and retain premier investment managers within each asset class and investment style for our sub-advised investment options. Learn more about the Principal Due Diligence ProgramSM (PDF: 308 KB)
Selecting premier investment managers
Each manager search is unique, depending upon:
- Asset class and investment style targeted.
- Whether we are replacing a manager, starting a new investment option or adding an additional manager to an existing investment option.
We review investment strategies, composites and managers, not just performance. After determining the type of manager needed, we narrow focus, eliminating managers who don't meet specific qualitative and quantitative criteria.
Monitoring and taking action
Our skilled investment professionals continue to monitor managers on an ongoing basis, and don't hesitate to take action if a situation warrants. Ongoing monitoring helps us make logical and timely manager retention and termination decisions. If any adverse changes are identified through the monitoring process, we may:
- Recommend placement of the manager on a watch list,
- Conduct a comprehensive, in-depth review of the manager
- Recommend immediate termination of the manager
- Take no additional action and continue monitoring
Communication to you and your financial professional varies by situation and type of action being taken.
Understanding your investment program
Understanding your investment program You will have access to the following resources to help you meet your plan's investment needs:
- Sample Investment Policy statement
- Investment bulletins and notices
- Comprehensive investment reporting and benchmarking
- Investment option fact sheets and profiles with data provided by Morningstar
- Secure plan sponsor Web site on www.principal.com
- Fiduciary support tools
Investment advisory services
You will also have access to investment advisory services though Principal Financial Advisors, Inc., a registered investment advisor and member company of the Principal Financial Group. Principal Financial Advisors:
- Provides experienced investment personnel, robust analytical tools, comprehensive reporting and ongoing support
- Can assist you in designing and implementing customized asset allocation solutions
- Can share fiduciary responsibility for asset allocation decisions[7]
- [1]
- As of 09/30/2008
- [2]
- Provided by Principal Financial Advisors, Inc., a registered investment adviser and member of the Principal Financial Group.
- [3]
- Awarded DALBAR Communications Seal for the Principal Sponsor Service Center (awarded to outstanding web sites that effectively and efficiently meet the needs of plan sponsors). Years won: 2004, 2005, 2006 and 2007.
- [4]
- 2007 DALBAR Seal of Excellence
- [5]
- This service is not offered on all plans. A review of plan provisions and characteristics is necessary to ensure that your plan qualifies.
- [6]
- Foundation Options include Separate Accounts and Principal Funds, Inc. mutual funds (Funds) of the Principal Fund series.
- [7]
- The plan sponsor remains the "named fiduciary" of the plan, but you select Principal Financial Advisors, Inc as your plan's investment advisor.
Before investing in mutual funds, investors should carefully consider the investment objectives, risks, charges and expenses of the funds. This and other information is contained in the free prospectus, which can be obtained from your local representative or by contacting us at 1.800.547.7754. Please read the prospectus carefully before investing.
The value of the investment options will fluctuate so that when redeemed, shares or units may be worth more or less than the original cost.
No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values.
