Overseeing Plans Just Got a Lot Harder
Pensions & Investments (01/12/04) Vol. 32, No. 1 p.3; Williams, Fred

The mutual-fund scandal currently plaguing the industry will likely lead to significant regulatory changes for defined contribution plans. Regulators are expected to impose a strict 4 p.m. cutoff time for pricing mutual fund shares--a move that will inevitably eliminate the importance of daily valuation in 401(k) plans. Industry experts say the fallout from the mutual-fund scandal will likely lead to increased fees and reduced service by defined contribution vendors, in addition to changes in record-keeping and servicing of 401(k) plans. On the positive side, the scandal will force plan sponsors to pay more attention to their fiduciary duties and on monitoring their service providers. Other changes include the simplification of 401(k) plans through automated enrollment and portfolio diversification. Experts predict that, in the wake of mutual-fund changes, managed accounts will be the next major trend for defined contribution plans. NewRiver Inc. predicts that assets in defined contribution managed accounts will reach $50 billion by the end of 2005 and $600 billion by 2010.


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