2. Retirement Plan Clients 960+
Retirement Plan Assets $35+ Billion
Lockton Clients 15,000+
U.S. Client Retention 96% (Industry Average 85%)
Associates 6,000+ Associates
Premium Placed $21+ Billion
Revenue $1.241+ Billion
Locations
North America, Europe, Latin America,
Asia Pacific, Middle East
Offices 75
Headquarters Kansas City, Missouri, U.S.A.
Ownership Private
Chairman David Lockton
Year Founded 1966
Lockton Motto WE LIVE SERVICE!®
L O C K T O N F A C T S
Scan QR code to view our
2014 Annual Report video
LOCKTON US OFFICES
Minneapolis
Kansas City
Chicago
St. Louis
Atlanta
Dallas
Denver
Las Vegas
Phoenix
San Francisco
San Jose
Los Angeles
Irvine
San Diego
San Antonio Houston
South Florida
Washington, DC
New York
Hartford
CharlotteMemphis
Philadelphia
Omaha
Encino
Fairfax
Boston
Milwaukee
Fort Worth
Nashville
Lockton US Offices
Lockton Retirement Services Offices
3. 3
Investment Selection and Monitoring
Serve as fiduciary investment advisor as defined by ERISA 3(21) or
3(38), as appropriate
Perform initial due diligence for selection of investment funds and
menu design
Provide qualitative and quantitative monitoring of investment
menu advising on watch list and de-selection of funds
Deliver quarterly investment monitoring reports using customized
LockSMART®
scorecard designed to align with investment policy
statement
Keep committee abreast of investment trends and legislation
affecting retirement plan investment options
Provide committee with timely economic updates
Deliver in-depth research in key areas such as target date funds,
stable value, and alternative investments
Plan Optimization Services
Provide plan design benchmarking through Lockton PRISMsm
tool
Assess employee retirement readiness status, design strategies to
improve projected outcomes
Develop multi-faceted employee education strategy to be
implemented through vendor resources
Meet with vendor relationship manager, as needed, to review
service offerings and measure effectiveness
Access to in-house employee communications practice for
custom needs
Plan Governance Structure
Perform compliance and fiduciary assessment using Lockton
MATRIX®
tool
Assist in formalizing committee structure through drafting of
charter, by-laws, and other formative documents
Review and/or develop investment policy statement
Draft committee meeting documents including agendas and
minutes
Build and maintain Lockton Partner Portal; a web-based,
password-protected central repository for key plan and fiduciary
information
Perform fee benchmarking study every three years to help satisfy
ERISA 408(b)(2) requirements
HR Team Support
Prepare customized Compliance Calendar to include required
notices, filings, and audit deadlines
Review plan amendments, plan documents, required notices,
contracts, etc.
Access to Lockton’s ERISA counsel for guidance related to plan
operations and compliance
Keep team apprised of regulatory and legislative changes through
quarterly Ledger publication and Beacon Alerts, as needed
Available, as needed, for general plan related questions or service
issues
TYPICAL SCOPE OF SERVICES
4. 4
Plan Success Measures
Just 18% of Americans are very confident that they will have enough money to live comfortably in retirement.
– EBRI March 2014
Employee Education & Communication
34% of the middle class expect to work until at least the age of 80 because they will not have saved enough for retirement.
– Wells Fargo Financial Health Savings 2014
Investment Menu
The average 401(k) plan sponsor offers 18.2 investment options, yet the average plan participant is only invested in 3.1.
– Vanguard 2014
Participation percentage
Average deferral rates
Plan-level asset allocation
Revenue-sharing awareness
TYPICAL APPROACH
Fill in all the “style boxes”
Primarily actively managed funds
Diversification focused in domestic equity
Off-the-shelf target date funds
TYPICAL APPROACH
Enrollment meetings during new hire
orientation
Auto-enrollment at less than optimal
deferral rate, no auto-escalation
Focus on participation rather than
employee engagement
Heavy reliance on non-custom vendor
website
TYPICAL APPROACH
Participant retirement readiness; outcomes-based analysis
Deferral rates needed to achieve retirement goal
Asset allocation analysis based on age and salary
demographics
Fund revenue leveling, improve plan expense efficiency
THE LOCKTON ADVANTAGE
Tailor target date solution to meet participant demographics
Full suite of passively managed index funds
Diversification in fixed income and international equity
Consideration of downside risk protection, not just returns
maximization
THE LOCKTON ADVANTAGE
Focus on retirement age outcomes; percentage on-track to
reach income goal
Targeted education campaigns to drive needed behavior
changes
Use of print, mobile, web, and face-to-face communication
methods
Tailored strategy aligned with plan sponsor’s goals and
measured frequently
THE LOCKTON ADVANTAGE
THE LOCKTON ADVANTAGE
5. 5
LOCKTON’S PROPRIETARY TOOLS
RISK ASSESSMENT
Fiduciary risk management is paramount to Lockton’s daily plan
sponsor services. In assessing where our clients are on the spectrum
of fiduciary compliance and their administrative processes, we utilize
the Lockton MATRIX®
, a comprehensive fiduciary checklist designed
to mitigate risk and profile a plan’s overall compliance risk. Lockton MATRIX®
evaluates annual notices, plan
documents, fiduciary audit file, annual committee oversight, investments and 404(c) compliance. It produces a
scorecard illustrating to clients where they fall on the compliance spectrum, what risks their current practices
expose them to and recommendations on how to alleviate these risks. Lockton MATRIXSM
is revolutionary in its
evaluation of fiduciary compliance and assists firms in their evaluation of their retirement plan management.
PLAN DESIGN AND
BENCHMARKING
The Lockton PRISM®
is the newest addition to the Retirement
Services toolbox. The PRISM®
comparatively analyzes client plans with same-size competitors and with other
competitors within the industry. We evaluate the same-size peer groups both by head count and by assets. This
tool allows our Associates to benchmark plans in the areas of eligibility and vesting, investments and expenses,
plan participation, plan contributions and plan features. The research for these reports is provided through our
partnership with Fiduciary Benchmarks, Inc. With this data, we perform an analysis and advise on areas for
improvement. We benchmark and expose plan provisions, expenses, participation and various other measures of
success.
INVESTMENT TECHNOLOGY
LockSMART®
is a strategically designed monitoring tool that helps plan, document and implement a sound
fiduciary process. It closely regulates our clients’ portfolios to ensure their activity matches the standards and
criteria set by Lockton. As part of the overall client-specific LockSMART®
investment review, the LockSMART®
Fund Scorecard helps manage key fiduciary responsibilities, under ERISA, of prudently selecting and monitoring a
plan’s investment options.
®
6. 6
QUARTERLY FINANCIAL CHECKLIST
This checklist sets an agenda for quarterly retirement committee meetings and helps document plan topics that should be
addressed at least annually. Each quarter’s focus subject is intended to be a primary topic discussion for the committee, though
other matters will also be discussed. The checklist may be edited to meet the needs of individual clients.
FIRST QUARTER | PLAN GOVERNANCE
Document Analyze Resources
Committee Charter � Are the actions of the committee consistent with the committee governance
provisions?
� Are the committee membership and process descriptions current?
� Are the scope and range of the committee role descriptions current?
Sample Fiduciary Training
Brain Shark
Sample Fiduciary Acceptance
and Acknowledgement Form
Sample Charter
Sample Board Resolution
Sample Fidelity Bond
Checklist
Sample Fiduciary Insurance
Evaluation
Committee Meeting Minutes � Are the meeting minutes of the committee approved and retained?
� Has fiduciary training been conducted?
Plan Document
Board Resolutions
� Do plan document provisions and board resolutions address authority?
Third-party Service Agreements � Do third-party agreements include language surrounding discretionary vs. non-
discretionary authority/responsibility?
Fidelity Bond � Are all those who handle plan assets bonded?
� Does Fidelity bond meet requirements (i.e., 10% of plan assets, not to exceed
$500,000)?
Fiduciary Insurance Policy
Indemnifications of Fiduciaries
� Is current fiduciary insurance policy in place?
� Is policy amount appropriate for plan changes?
� Does policy identify the correct plans and parties?
� Does the policy include appropriate fiduciary indemnifications?
� Who pays for fiduciary insurance?
SECOND QUARTER | FEES AND EXPENSES
Document Analyze Resources
Service Provider Agreements � Are lists of services in provider agreements current?
� Are service providers meeting expectations?
� Has committee reviewed appropriateness of service providers float retention policies?
� What were the dates of the last RFPs for each service provider?
� Are dates identified for future RFPs for each service provider?
Lockton RFP
Fiduciary Benchmarks
408(b)(2) Checklist
404(a)(5) Checklist Service Provider Fee Disclosures
Service Provider Fee Change
Notice
Participant Fee Disclosure
Participant Comparative Chart
� If any service provider changed fees, was a change notice received? (“Service
providers” receive at least $1,000 for services provided to a plan.)
� Does the plan have excess revenue sharing at year-end?
� Has an annual fee benchmarking exercise been conducted?
� Are plan-paid fees reasonable?
� If current fees do not pass benchmarking exercise, has committee addressed
receiving more services, or requesting a fee decrease and/or a share-class change?
Quarterly Benefit Statements � Do quarterly benefit statements include information required by 404(a)(5)?
Schedule C from Form 5500 � Were service providers reported on Schedule C?
7. 7
THIRD QUARTER | INVESTMENTS
Document Analyze Resources
Investment Policy Statement (IPS)
Plan Document
Summary Plan Description
� Is date of IPS more than three year ago? If so, revisit.
� Are the investment criteria and objectives current and appropriate?
� Are the investments, benchmarks and investment types current and appropriate?
� Is the menu (number of investments, asset classes and style [active vs. passive])
appropriate for participant population?
� Is investment performance meeting criteria outlined in the IPS?
� Are the retention and removal policies in the IPS current and appropriate?
� Does the QDIA still meet the requirements of DOL Reg. §2550.404c-5?
� Is the investment option(s) for forfeitures and unallocated accounts current and
appropriate?
Target Date Selection Tool
Stable Value Selection Tool
Model Investment Policy
Statement
FOURTH QUARTER | PLAN ADMINISTRATION
Document Analyze Resources
Form 5500 Auditor’s Opinion � Were contributions and deposits to participant accounts made timely?
� Has statement of activity in trust/custodial account been reviewed?
� Was the annual Form 5500 and audit filed timely?
Plan Limits
Fiduciary Risk Matrix—DB
Fiduciary Risk Matrix—DC
Missing Participant Checklist
Compliance Calendar
QDRO Resource Package
Document Retention Guide
Plan Document
Recordkeeper’s Service Agreement
� Does plan have a calendar tracking timely delivery of the following disclosures (if
applicable):
� QDIA Notice
� Safe Harbor Notice
� Automatic Enrollment Notice
� Participant Fee Disclosure
� Vendor Website Updates
� Summary Plan Description
� Summary of Material Modification
� Summary Annual Report
� Distribution Notice (402(f))
� Quarterly Participant Statements
� Were applicable fund and fee change notices sent to participants?
� Are plan procedures up-to-date for the following:
� Loans
� QDROs
� Hardships
� Document Retention
� Timely Contributions and Deposits
� Rollover Acceptance
� Eligibility
� Cash outs
� Are ERISA Section 404(c) compliance procedures and responsibilities in place?
� Are annual contribution and compensation limit controls effective?
� Did annual testing (if applicable) pass for the following:
� ADP
� ACP
� Top Heavy
� Coverage
� General Nondiscrimination
� Compensation
� Are any plan amendments required?
� Are plan design changes suggested?
8. 8
WHAT CAN THE LOCKSMART®
FUND SCORECARD DO?
Can the LockSMART®
Fund Scorecard match the monitoring criteria in our Investment Policy Statement? YES
Is it flexible enough to do more than analyze performance returns? YES
Can the scoring of funds be customized based on our committee’s expectations? YES
INVESTMENTS
Core funds are listed with applicable peer
group and benchmark.
WEIGHTED PERCENTAGES
Percentages are allocated to each
measurement criteria at your investment
committee’s discretion. This customization
creates a unique scoring measure based on
importance.
DOCUMENTATION
Comments are used to document
committee decisions, advisor analysis, and
recommendations.
ALTERNATIVE FUNDS
Replacement funds are listed and reviewed
against the same measurement criteria
to ensure it meet the Investment Policy
Statement standards.
FUND SCORECARD
MEASUREMENT CRITERIA
Up to 10 of the 38 available measurement
criteria may be selected to monitor
investments and mirror the Investment Policy
Statement.
9. 9
Does this help reflect a prudent investment process? YES
Can this be used as documentation of a fiduciary decision-making process? YES
Does it include supporting commentary? YES
WATCH LIST DATE
A date may be documented to designate when
funds are placed on the watch list.
SYSTEM/USER ACTION
System and User notations are used when
action is taken to replace or maintain a fund.
OVERALL RATING
A pass (green) or fail (red) rating is given,
based on a fund’s total score versus your
prescribed overall rating percentage. The
overall rating percentage is determined by
you and may be raised or lowered. Weighted
percentages considered as part of the
rating equation for a fund exceeding the
measurement criteria thresholds selected.
®
10. 10
THE LOCKTON DIFFERENCE
INVESTMENT MANAGER
S E L E C T I O N M E T H O D O L O G Y
PROCESS OBJECTIVE
Identify managers who consistently deliver positive excess returns
Rolling standard period returns vs. current standard period returns
40 quarters of rolling period excess returns used to calculate Long-Term Batting Average
Reasonable range of expectations for each investment is determined and Modern Portfolio Theory statistics are
evaluated
Identify managers with consistent above-median performance and minimal bottom quartile history
Qualitative overlay to include style consistency, tactical allocation capability, and organizational/team strength
“Best-in-Class” identification by asset class continuously maintained
PROCESS SUMMARY
Fund menu comprised of options which consistently display above-average performance over full market cycles
Minimize return inconsistency which can lead to plan participant uncertainty and less than ideal individual
investment decisions
DESIRED RESULT
Selection advice delivered to committee as ERISA 3(21) fiduciary
Selections and changes implemented directly on behalf of plan sponsor as ERISA 3(38) fiduciary (full menu or
custom model portfolio)
IMPLEMENTATION OPTIONS
11. 11
SECURE DOCUMENT SHARING AND ONLINE COLLABORATION
A single dashboard organizing a client’s specific benefits information, documents, and tools.
Client-specific information is stored on its own secure, online portal accessible anytime and anywhere via the Internet.
Lockton’s compliance resources, regulatory updates, and quarterly newsletters are all accessible through the Partner Portal.
The most updated versions of the client’s documents are available through the portal, ensuring accurate information on its
secure site.
Collaboration between the Lockton account team and the client is simple and streamlined with project tracking and shared
document features.
PORTALS CAN INCLUDE:
LOCKTON
INFORMATION
Contact Information
Compliance News
Home Page
BENEFITS
PROGRAM
Plan Documents
Summary Plan Descriptions
Participant Notices
Enrollment Materials
Vendor Contacts
COMMITTEE
RESOURCES
Investment Policy Statement
Committee Charter
Meeting Minutes
Due Diligence Documents
OTHER
FEATURES
Open Items List
Announcements
Event Calendar
LOCKTON’S PARTNER PORTALS
12. 12
The Ledger
Fourth Quarter 2014
Summary of Legislative, Judicial, and Regulatory
Retirement News
Issued by Lockton®
Retirement Services
DEFINED CONTRIBUTION
COMPLIANCE CALENDARS
Pages 10-11
INSIDE THIS ISSUE
LEGISLATIVE UPDATE,
REGULATORY UPDATE, AND
COURTS UPDATE
Pages 1-7
JESSICA SKINNER, J.D.
Compliance Attorney
Lockton Retirement Services
816.960.9295 | jskinner@lockton.com
SAM HENSON, J.D.
Senior ERISA Counsel
Lockton Retirement Services
816.751.2245 | shenson@lockton.com
AUTHORS
L O C K T O N R E T I R E M E N T S E R V I C E S
FIDUCIARY TRAINING MODULE
Pages 12-15
LEGISLATIVE UPDATE
House and Senate Weigh in on Tax Reform for 2015
On December 11th, the Outgoing House Ways and Means Committee
Chairman Dave Camp (R-MI) introduced the Tax Reform Act of 2014
that would significantly change the tax treatment of qualified plans.
Among the many proposed retirement provisions:
™ Tax deferred employee contributions to defined contribution (DC)
plans would be limited to one-half the maximum annual elective
deferral amount, and anything above would be required to be Roth.
™ For Individual Retirement Accounts (IRAs), income limits for
Roth contributions would be eliminated, and new contributions to
traditional IRAs would be prohibited.
™ Suspend the inflation adjustment for annual plan limits, freezing
them for a period of time, and tying future increases to the
consumer price index.
™ Repeal the early withdrawal penalty exception for distributions
taken for first home purchases and educational expenses, and apply
the early distribution penalty to governmental 457 plans.
™ Allow employees to continue contributing to a plan after taking a
hardship distribution.
™ Extend the period allowed for employees to pay back outstanding
loans, upon plan termination or separation of employment, to the
filing due date for the individual’s tax return.
13. 13
OVERVIEW OF LOCKTON EXECUTIVE
BENEFITS PRACTICE
Lockton’s Executive Benefits Practice provides corporate clients,
shareholders, owners, and executives with solutions in succession,
retention, reward, and supplemental benefit programs.
Our corporate clients and their executive suite turn to us for the
design, financing, administration, communication, and reporting of:
Non-qualified Retirement Plans
Supplemental Executive Retirement Plans
Corporate-Owned Life Insurance (COLI)
Bank-Owned Life Insurance (BOLI)
Supplemental or Carve-Out Life and Disability Insurances
Estate and Business Succession Planning
Individual Life Insurance
Individual Disability Income Protection
EXECUTIVE BENEFITS PRACTICE • LOCKTON FINANCIAL ADVISORS
3
NONQUALIFED DEFERRED COMPENSATION
When to use deferred compensation plans and why
implement them?
Offering a competitive benet program for your company gives you
an advantage to recruit, reward, and retain your top executive talent.
Alternative accumulation vehicle for employees who cannot
take full advantage of a company’s qualied retirement plan.
Allows certain employees the opportunity to invest pre-
tax dollars above the IRS qualied plan limits.
Allows the corporation the ability to create additional
supplemental contributions pre-tax to select employees.
Additional retention reward mechanism to enhance long-
term employment and stability of key executive talent.
Supplemental tax-deferral mechanism in conjunction with
other corporate compensation and stock plans.
Advantages of NQDC plans
Positions company to effectively recruit, reward, and retain key talent.
Allows highly compensated employees to maximize tax-
deferred accumulation and retirement income.
Participants may defer a portion of salary, bonus, or any other
forms of compensation as outlined in the nal plan document.
Discretionary employer contribution/match may be
facilitated in excess of qualied plan limits.
Plan may be established to provide participants with
elective investment direction options (fund menu).
14. 14
444 W 47th Street, Suite 900 Kansas City, MO 64112 816.960.9000 www.lockton.com
Lockton Retirement Services
SAMUEL A. HENSON
JD, CEBS, RPA, GBA
Vice President
Director, Legislative & Regulatory
Affairs
shenson@lockton.com
Professional Profile
Sam serves as Director, Legislative & Regulatory Affairs
for Lockton Retirement Services. He acts as a subject
matter expert on ERISA compliance, DOL/IRS activities,
and the legislative landscape. In addition, Sam supervises
compliance services for more than 1,000 Lockton
retirement clients and 100 retirement Associates.
Prior to joining Lockton, Sam spent almost 10 years
with the U.S. Department of Labor’s Employee Benefits
Security Administration. While with the DOL, Sam was
a Senior Investigator, conducting more than 100 civil and
criminal investigations of employee benefits plans, service
providers, and fiduciaries. Sam supervised enforcement
efforts for benefit plans funded by prevailing wage laws
under the Service Contract Act and Davis-Bacon Act.
In his current role, Sam is able to leverage his past
experiences to assist employers with reducing their
fiduciary risks.
Sam earned his J.D. at the University of Missouri-Kansas
City School of Law, and received his B.S. in Political
Science from Northwest Missouri State University.
Current and Previous Positions
™ Lockton Retirement Services
h Vice President, Director, Legislative & Regulatory
Affairs
h Vice President, Director, Compliance Services
h Senior ERISA Counsel
™ United States Department of Labor—Employee
Benefits Security Administration
h Senior Investigator
Education
™ J.D.; University of Missouri-Kansas City
™ B.S. in political science; Northwest Missouri State
University
Professional Designations
™ Certified Employee Benefit Specialist (CEBS),
Retirement Plans Associate (RPA), and Group
Benefits Associate (GBA); Wharton School,
University of Pennsylvania
™ Fellow: International Society of Employee Benefits
Specialists
™ APM: American Society of Pension Professionals &
Actuaries
Bar Admissions
™ Missouri
™ U.S. District Court Western District of Missouri
Associations
™ American Benefits Council
™ American Society of Pension Professionals &
Actuaries
™ Defined Contribution Institutional Investment
Association
™ International Society of Certified Employee Benefits
Specialists
Securities offered through Lockton Financial Advisors, LLC, a registered broker-dealer and member
FINRA, SIPC. Investment advisory services offered through Lockton Investment Advisors, LLC, an
SEC-registered investment advisor. For California, Lockton Financial Advisors, LLC, d.b.a. Lockton
Insurance Services, LLC, license number 0G13569.
15. 15
1801 K Street NW, Suite 200 Washington, DC 20006 202.414.2400 www.lockton.com
Lockton Retirement Services
HOYT CONNELL
Vice President
Principal
hconnell@lockton.com
Professional Profile
Hoyt is a Principal with Lockton’s Washington, DC/
Tysons Corner, VA offices. With more than 10 years
with Lockton, Hoyt’s primary areas of expertise are
retirement plan fiduciary consulting, employee benefits,
and international employee benefits. Hoyt began his
career in investment advisory and insurance more than
25 years ago, and he has developed industry vertical
expertise in technology, government contracting,
multinationals, not-for-profits and rapid-growth
emerging companies.
Hoyt serves as an Investment Advisor Representative
and carries FINRA licenses as a Principal in Series 26
and also holds both Series 6 and Series 63.
Hoyt has served on numerous advisory and
philanthropic boards.
Linked-in profile
https://www.linkedin.com/in/hoytconnell
Education
™ B.S. in political science; University of Washington,
Seattle
™ Securities Industry Association Management Series:
Wharton School
™ Phillips Academy, Andover
Professional Affiliations
™ Board of Directors, Small and Emerging
Contractors Advisory Forum
™ Society of Human Resource Management
Mid-Atlantic Chapters Member
™ International Foundation, Employee Benefits
Specialists Member
