The opportunity to save in an employer-sponsored retirement plan is certainly an important benefit. Over the years plan sponsors have sometimes encountered issues with employees who begin to participate but who make no affirmative election about investments. The Pension Protection Act of 2006 (PPA) addressed this by providing employers a fiduciary “safe harbor” by offering a Qualified Default Investment Alternative ("QDIA").  QDIA rules cover investments made on behalf of participants in a plan's default investment option such as life cycle or target date funds, balanced funds, or managed accounts.  

While the Department of Labor has delayed the implementation of new fee disclosure rules about fees charged to plans and participants, it may be useful to refer to the recent report "The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2009" published by the Investment Company Institute (ICI), a national industry group representing companies offering mutual funds, ETFs, and unit investment trusts (UITs). Members of ICI manage assets of $12.74 trillion and serve over 90 million shareholders. As the title suggests, this report offers research insights into the costs associated with 401(k) plans. You may find the information also relevant to similar plan arrangements.

A study by the Employee Benefit Research Institute (EBRI) reports that as a result of the financial market and real estate crisis of 2008 and 2009, the percentage of households that have ended up at risk of falling short of retirement income needs ranges from a low of 3.8% to a high of 14.3%.   At-risk households were defined as those that would not have enough income to pay for "basic" expenses in retirement as well as uninsured health care costs.