Education Policy Statement (EPS)

Transcription

1 Education Policy Statement (EPS) The following EPS is intended to give an overview of a typical education plan, and help assist plan sponsors define and document a process that can provide ongoing and comprehensive education to plan committee members and plan participants.

2 Employee Education Plan Summary Name of Plan: Plan Type: Current Assets: Total Eligible Participants: Service Providers: Plan Administration and Recordkeeping Financial Advisor/Consultant Purpose of the Education Policy Statement (EPS) This Education Policy Statement ( EPS ) has been adopted by the Benefits Committee ( Committee ) of the ABC Corporation 401(k) Savings Plan to support the company s overall strategic goal to retain employees by providing an ongoing and coordinated employee education program. This EPS will be reviewed by the Committee on a regular basis, but no less frequently than annually or as needed in light of prevailing market conditions affecting the overall performance of the plan. Plan Objectives/Goals The primary objective of the EPS is to assist the Committee in effectively designing, monitoring and evaluating an employee education plan. It is designed to provide a measurable, objective-based communication program to raise the level of retirement readiness for all employees participating in the plan by: 1. Establishing formal criteria to monitor, evaluate and compare the results achieved by the plan s service providers including, but not limited to, investment advisor, Fiduciary Advisor, plan administrator, recordkeeper and employee education specialist. 2. Helping maximize plan enrollment, employee deferral amounts and use of employer matching contribution, if offered. 3. Assessing adequacy of benefits at retirement for each participant. 4. Utilizing all of the tools and services offered by service providers. 5. Assisting participants with the process of setting, managing and monitoring their retirement goals. 6. Refrain from providing individual investment advice as defined in Section 3(21)(a) of ERISA. Duties and Responsibilities The Committee is responsible for: 1. Preparing a written document defining the goals and objectives of the plan. 2. Establishing criteria to be used to measure the effectiveness of the education plan. 3. Selecting the plan service providers and coordinating the scope and frequency of employee education activities and, when necessary, use qualified independent, third party experts to implement plan. 4. Prudently monitoring the activities and fees of hired individuals and organizations. 5. Establishing a budget and assessing how the fees for education services and materials of the program will be paid for while evaluating the reasonableness of such fees and services. Investment Advisor The Committee will retain an investment advisor or other education specialist to assist the Committee in developing a comprehensive education process that will provide guidance to plan participants. The investment advisor will be responsible for disclosing, in writing, if they are acting in a fiduciary or non-fiduciary capacity when providing investment education services to plan participants. Use of a Fiduciary Advisor (Optional section) The Committee will prudently select a qualified Fiduciary Advisor through a documented, objective process that assesses the Advisor s qualifications, services, and reasonableness of fees. The Fiduciary Advisor must acknowledge fiduciary status in writing, disclose conflicts of interests, and all forms of compensation.

3 The Committee will prudently monitor the Fiduciary Advisor and arrange to have the Fiduciary Advisor audited annually by an independent third-party to ensure the Advisor s continued compliance with the 2006 Pension Protection Act and ERISA. Plan Recordkeeper The role of the recordkeeper is to provide on a quarterly basis detail reporting on account activities to track: 1. Participation rate 2. Salary deferral rates 3. Asset allocation 4. Demographic summary of participant activities 5. Plan loans and hardship withdrawals Education Performance Standards The Plan Committee has selected the following performance objectives to be evaluated in achieving the plan results: 1. Number and quality of group participant seminars. 2. Provide plan participants with access to personalized advice or guidance through one-on-one meetings. (Optional: Only if Offering Advice) The education program will offer participants investment counseling and advice provided by: - Financial advisor - Certified computer modeling - Web-based advice - Third-party provider: [name of provider] [method of provision of advice] 3. Enhance participant experience by conducting meetings on how to use participant website, interactive voice response and participant service center representatives to manage and monitor their account. 4. Work with service providers to develop targeted and personalize communications to effect positive behavioral changes using print, digital and audio media. 5. Review meaningful plan statistics to measure improvements in plan participation, contributions and asset allocation. 6. Provide retirement income planning and transition services for employees nearing retirement age by implementing a series of education seminars to educate and inform plan participants. The program will include group and individual employee meetings on a quarterly basis on a variety of topics including but not limited to: - Strategies for preserving purchasing power - Generating income from stocks and bonds - Converting savings into spending - Retirement income planning - Required minimum distributions - IRA rollover strategies 7. Keep plan participants informed of new plan features, services and legislative developments that could impact retirement planning. 8. Make fund prospectuses and other participant educational material available upon request to help participants make informed decisions. A list of participant education materials and presentations are described in Exhibit A. Monitoring Results On a timely basis, but not less than quarterly, (semi-annually or annually) the Committee will meet with service providers to review whether each of the items listed in the previous section are being satisfied, specifically the plan metrics described below. The Committee will assign a rating of Meets Goal (M), Exceeds Goal (E), or Needs Improvement (N). 1. Measure improvement of average participation rate of entire plan compared to previous period.

4 2. Measure improvement in average employee contribution/deferral rate of entire plan compared to previous period. 3. Improvement in participant rate with auto enrollment. 4. Review plan demographic summary to identify areas of improvement: a. number of eligible participants by age group (20-29, ). b. average participation rate by age group. c. average contribution/deferral rate by age group. d. average account balances for plan by age group e. number and /or percentage of participants with outstanding loans. f. number and/or percentage of hardship withdrawals. g. participants who have taken more than one loan or hardship withdrawal. h. participants not saving enough to receive the full matching contribution. 5. Number of participants who have enrolled in personalized investment advice services offered by the Plan. EPS Review The Committee will review this EPS at least annually to determine whether stated participant education objectives are still relevant, and whether realistically they can be achieved. It is not expected that the EPS will change frequently. In particular, short-term changes in the financial markets should not require adjustments to the EPS. Approved: Committee Member Signature(s) Date

5 Exhibit A Participant Investment Education Materials The education program will use a variety of communication media to educate and motivate participants, including, but not limited to: - Group meetings/seminars - Individual meetings - Computer-based materials (PowerPoints, webcasts, etc.) - Print materials - Questionnaires/assessments (such as risk tolerance, gap analysis) - Display materials (posters/bulletin boards) - Expert speakers - Company intranet - - Mailings - Interactive Web tools (such as calculators) - Voice messaging - [Other] Participant education will cover a broad range of retirement planning topics to encourage employees to take an active role in planning for their retirement. The following is a representative list of presentations topics: - Enrollment documents and process - The importance of participating - Need to start saving early - Retirement Income Planning and Education - Maximizing contributions - Risk/return concepts - Compounding - Asset allocation - Diversification - Mutual funds and their fees - Employer stock (if offered) - Dollar cost averaging - Effect of inflation - 401(k) loans - Market volatility - Pre-tax investing and Tax Deferral - Beneficiary information - Rollovers - Roth 401(k) IRAs (If offered) Thornburg Investment Management is providing this useful tool to help assist your plan with its fiduciary responsibilities. In no way does Thornburg Investment Management assure, that by using it, your plan is in compliance with ERISA regulations Thornburg Investment Management 2300 North Ridgetop Road, Santa Fe, New Mexico /21/2011 TH2271