April 8, 2014 – Valley Forge, PA – Vanguard today announced that it will no longer provide one of its four defined benefit (DB) retirement plan services. The firm will continue to provide DB plan sponsors with its low-cost investments, trustee and payment services, and investment advisory services, but will cease offering administration for DB plans. This decision will enable the firm to further expand its services for 401(k), 403(b), and other defined contribution (DC) retirement plans.
“A key part of Vanguard’s mission is to help plan participants achieve the best possible retirement outcomes. We believe we can maximize our impact on the retirement security of U.S. investors if we focus on recordkeeping, investments and associated services for DC plans—the dominant type of workplace retirement program in this country today—as well as investments and other services for DB plans,” said Chris McIsaac, Managing Director of Vanguard’s Institutional Investor Group.
Vanguard currently provides administration services for the DB plans of a small group of its DC clients. The company will work with these sponsors to help them transition to a new DB administration provider. The decision to discontinue offering DB administration occurs in the context of a challenging economic, market and demographic environment that has led to a significant contraction in the DB marketplace and limited the company’s ability to reach the economies of scale necessary for continued investment in such a capital-intensive offering.
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