DEARBORN, Mich. - Ford Motor Co. will revamp its $5.3 billion defined contribution plan for salaried workers in response to employee demand for daily account valuation and more investment choices.
Ford will move to a daily valued system for the Savings and Stock Investment Plan in the fourth quarter. Record keeping, trust and administrative services will be provided by Fidelity Institutional Retirement Services Co., Boston. Comerica Bank, Detroit, has provided monthly plan administration services as well as most investment management.
Ford's defined contribution plan for hourly, unionized workers will not be affected.
Under the new plan, Ford's 52,000 active and retired salaried plan participants may invest in six Fidelity mutual funds - Magellan, Contra, Overseas and the three Asset Manager balanced funds. Employees also will have access to at least 50 more mutual funds from other fund families through Fidelity's BrokerageLink program.
Ford staff is still deciding how many funds will be available to employees through BrokerageLink, said John Ferguson, director of Ford's national employee services center. "There are some details about the new plan design that are still being finalized."
Three investment options from the current plan will be carried over. Fidelity will assume administration of a Ford company stock fund from Comerica. Comerica will continue to actively manage a pooled common stock fund, and Wells Fargo Nikko Investment Advisors, San Francisco, will actively manage a core bond fund.
A GIC and a money market fund, now managed by Comerica, will be replaced by a single Fidelity-managed fund that will invest in securities with a guaranteed rate of return.
Ford salaried employees were surveyed about the defined contribution plan and other company benefits last year. They rated the savings plan as one of the most valuable options. The company provides a 60% employer match to 10% of an employee's salary; Ford also pays all plan expenses. Mr. Ferguson said employees were adamant on the flexibility of daily valuation and more fund choices.
"This move has everything to do with meeting customer demand. In this case, we listened to the voice of the customer, our employee, who demanded more control of retirement investment through daily transaction capabilities. Employees also wanted more fund choices and name-brand fund choices, which was part of the reason we selected Fidelity," said Mr. Ferguson.
The current plan uses an internally managed automated voice-response system for most functions. But because of the daily valuation, Ford will use Fidelity's system, said Mr. Ferguson.
Unlike at some other companies, Ford's move to outsourcing is not connected to any downsizing or cost cutting. Instead, said Mr. Ferguson, "the move to outsource .*.*. is entirely in response to our employees' request for daily valuation."
Because Ford also is introducing a flexible benefits program for employees this year as well as further health care enhancements, Mr. Ferguson doesn't expect staff in the national employee services center to be reduced. He said could not comment on whether existing staff employed in providing defined contribution services would be redeployed to other benefit functions.
Ford and Fidelity together will provide employee communication and investment education.
"We'll use a mix of customized and generic material from Fidelity. Certainly, the communications materials relating to our specific plan and its new options will be targeted and customized for Ford employees," said Mr. Ferguson.
Still under consideration are whether to offer employee education seminars and make new enrollment efforts.
General financial planning services also are being introduced to help employees with all aspects of managing their money and savings, said Mr. Ferguson. Retirement planning - provided by Price Waterhouse, New York - will be part of the program.
Ford announced the changes Jan. 9.
Employees can use e-mail to inquire about the new options, and Ford also set up a special toll-free number to give employees answers about the new program.
"It's still pretty early. I think our salaried employees are still absorbing the information, but so far the reaction to the new program has been good. We've tried to give employees just what they asked for," said Mr. Ferguson.