An annual report on fees in defined contribution plans by investmentconsulting firm NEPC, which consults on $184 billion in planassets, shows total retirement plan costs have hit another all-timelow.

And for the first time in the study's 11-year history, themajority of retirement plan sponsor respondents report having afixed, per-participant recordkeeping fee structure in place.

Since 2013, 81 percent of the 117 plan sponsor respondentsreport having renegotiated their recordkeeping fees; 51 percent ofthe plans in the survey, which had an average size of $1.1 billionin assets, now apply a per-participant fee for recordkeeping.

Total investment management fees averaged 42 basis points,down from 57 basis points in 2006 and 46 basis points in 2014.

Average recordkeeping costs were $57 per participant last year,down from $92 in 2011.

Ross Bremen, a partner at Boston-based NEPC, expected fees toshow some leveling in this year's report.

“While lower fees reflect the good work sponsors have done toreduce fees on participant's behalf, at some point service levelscould suffer,” said Bremen in a statement accompanying the report.“A race to the bottom, at the risk of sacrificing service andinnovation, is not in the participants' best interests.”

In an interview, Bremen noted another recent NEPC survey ofsponsor clients, which showed plan fees were a top concern.

“Fees are a front burner issue right now,” he said. “A lot ofthat has to due with the litigation we've seen in the corporatedefined contribution space. Sponsors see the headlines.”

Overall lower costs for participants are a welcome trend, saidBremen.

But the trend to a strict per-participant fee structure forrecordkeeping services is removing flexibility from plan design asa growing consensus of retirement experts, policymakers andparticipant advocates say savers need more personalized savings anddecumulation strategies.

“The idea that recordkeeping is a commodity is just not thecase,” said Bremen, who noted that 21 percent of surveyed plans donot use any revenue-sharing agreements to help shoulder the cost ofplan services.

“There is a lot of talk about getting participants betterservices, and even personalized cradle-to-grave planning throughfinancial wellness programs. And more participants are going toneed personalized advice when it comes to spending their savings inretirement. The idea that recordkeeping is a bare-boned servicedoesn't completely square with the services so many people sayparticipants need,” said Bremen.

No 'Perfect Plan'

To date, industry has yet to create the algorithm thatquantifies the perfect mix of services to get participants safelyto, and through retirement, noted Bremen.

Nor is there a smoking gun proving participants are beingstarved from the services they need, or that the race to lower planfees is resulting in poorer savings outcomes.

But data does suggest sponsors see fixed per-participantrecordkeeping fees as inherently cheaper than plans with feeschedules based on plan assets, and “that is just not the case,”says Bremen.

“No one is out there saying 'more education is bad,'” saidBremen. “But all of those tools and services cost money. At thesame time, they are hearing that plan fees are too high, or thatfees have to be level between participants, or that not having thelowest-cost mutual funds somehow makes them guilty of horriblebehaviors.”

More and more, sponsors are footing the cost for a la carte planservices as they trend away from a reliance on variablerecordkeeping fees and revenue-sharing agreements, explainedBremen.

For employers willing to do that, the out-of-pocket cost ofsponsoring a plan is going up. And that introduces the risk thatsome sponsors will be reluctant to increase matching contributions.“How is that good for getting people prepared for retirement?”

Also notable in this year's Defined Contribution Plan and FeeSurvey was sponsors' willingness to adopt in-plan annuities.

In 2012, annuities were virtually non-existent in plan menus.Now 5 percent of surveyed sponsors have included a lifetime incomeoption.

NEPC has been supportive of annuity adoption, says Bremen. As aco-fiduciary, the firm is not paid on recommending any investmentproduct. But even as more sponsors in the NEPC universe show awillingness to break the mold, broad-scale annuity adoption willlikely require increased investment in participant education,another cost that will have to be paid for.

“There's no perfect annuity, no perfect fund, and no perfectplan—that's true of all products,” said Bremen. “What is importantgoing forward is that plan fiduciaries have the flexibility tocustomize plans the way they think will be most beneficial toparticipants.”