Resiliency Employers will focus on nuts-and-bolts issues in 2025 to keep their retirement plans healthy for the long term. Compliance and performing due diligence aren’t exciting Case Study topics, but adopting or maintaining best practices in both A private equity operation needed to areas will be key to avoid litigation, regulatory action and consolidate retirement programs for its cybercrime in 2025, helping ensure a retirement plan’s long-term future. different portfolio companies — otherwise, the PE firm would have to complete To start, there’s the trend of keeping former employees on expensive annual non-discrimination the retirement plan, even if they’re still working at another testing for each retirement plan. HUB was organization. It’s a small step to lower costs through able to untangle the thicket of regulatory economies of scale and stay resilient. However, there are risks such as administrative complexity and litigation requirements, merge the retirement programs that plan sponsors should carefully consider and manage and set the private equity firm up to leverage to ensure compliance and maintain the organization’s scale for the future. financial health. Another trend is the increase in the use of an “active/ passive mirror” approach to plan investments in which both active and passive investing options are represented investments, services and costs on a regular basis. in all asset classes. About 45% of defined contribution Pay ongoing attention to the plan’s IPS. Steer clear of plans reported a mirror approach in 2023, the highest ever. potential litigation risks related to high fees or inadvisable investment options and maintain standards for plan Critical fiduciary actions that most defined contribution participation levels as well as competitive investment plans are taking in 2024 include reviews of plan fees (74%) performance. and a review, update or implementation of the plan’s investment policy statement (IPS) (66%). Also noteworthy In addition, retirement plans — in concert with their plan is the increased use of open architecture for greater advisors — should review with their plan advisors any 11 service provider’s track record on cybersecurity, including transparency and flexibility. their standard practices and audit results and ensure they Cybersecurity presents another challenge to plan have risk management measures that will help keep the resiliency, which can affect individual accounts but attract plan sponsor safe. possible litigation or government action. The risk involved makes compliance essential. Any retirement plan needs to be run in accordance with the 11. Callan, “Focus on Plan Governance, and Continued Efforts to Rein in Fees,” April 24, 2024. plan document and to keep within the U.S. Department of Labor’s fiduciary governance standards. ERISA also requires that fiduciaries monitor, or review, their plan’s 5