Vanguard of Valley Forge has announced that it will no longer provide administration for defined benefit (DB) plans.
However, Vanguard will continue to provide defined benefit plan sponsors with low-cost investments, trustee and payment services, and investment advisory services. Vanguard says dropping administrative services in the challenging economy will allow it 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,” said Chris McIsaac, managing director of Vanguard’s Institutional Investor Group.
“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,” he said.
Vanguard said it is helping clients transition to a new administration provider. The firm has substantial scale in the DC marketplace as it serves more than 5,100 defined contribution plans. Vanguard provides full-service recordkeeping services, investments and other services to nearly 4,000 of these plans and their 3.6 million participants.
The company is investing considerable resources in technology to serve defined contribution plan sponsors. Vanguard is also enhancing its education and communication capabilities to help improve the retirement outcomes of participants. Traditionally a major provider in the large- and mid-sized DC market, Vanguard has expanded rapidly in the small business market. In 2012, the company launched its 401(k) service for small businesses, Vanguard Retirement Plan Access™, for sponsors of 401(k) and profit-sharing plans with assets of up to $20 million, as well as to advisors who sell fee-based 401(k) plans and to third-party administrators.
Vanguard is one of the world’s largest investment management companies. At the end of this year’s fourth quarter Vanguard reported it manages more than $2.55 trillion in U.S. mutual fund assets.
