New Web Site Rates Defined Contribution Plans Versus Peers

BrightScope.com is a potentially very useful Web site that ranks defined contribution plans in most companies filing Department of Labor Form 5500 reports, although some smaller plans are not yet included. The site went online in 2009. You can type in a company name and get results for an ESOP, 401(k) plan, profit sharing plan, or other defined contribution plan. A chart then shows the average account balance as of the last filing and the number of participants. There is also a rating for the company relative to a selected group of peers (listed in a sidebar) based on the size of the company contribution, plan fees, employee deferral rates, average account balances, and investment menu choices. The ratings are free, and by registering (also free) you can get suggestions on how to improve the plan.

The ratings system should be viewed with caution. It does not work well for companies with more than one retirement plan because it rates each plan as if there were not any other plans. Ratings also include factors that can downgrade a plan that may actually be advantages (such as zero employee deferrals into an ESOP). But the data on account balances and company contributions can be a good way for companies to see how they compare with peers and may be a very useful communication tool for employees if used appropriately.