CHICAGO - The Profit Sharing Council of America outlined its primary legislative focus for 1995 and 1996 at its Midwest Regional Conference near Chicago last month.
David Wray, the PSCA's president, noted in a conference speech that while the House of Representatives is demonstrating the "power of a plan" in its rapid movement of legislation supporting the Republican Contract for America, he expects only about half of the proposals to survive a slower-moving Senate, much less a presidential veto. Presidential politics is likely to slow up the Senate even further, noted Mr. Wray, because so many senators have expressed their intention to run for the GOP presidential nomination in 1996.
The PSCA is drafting three policy papers this year to guide pension legislation. While pension simplification is the topic of hot political debate, Mr. Wray said it is unlikely such legislation will pass unless the GOP gains control of both houses of Congress and the White House.
The PSCA is formulating a series of suggestions that aims mostly for the elimination of complex regulations, rather than simplification of existing regulations, including:
A move to a universal 3% contribution by all employers for all participants in exchange for and elimination of actual deferral percentage testing;
Legislation restricting states to taxing any retirement income only in the state where the distribution is made;
A package of basic retirement regulations designed to make it easier for small employers, those with fewer than 100 employees, to establish a flexible qualified defined contribution plan.
WASHINGTON - Not surprisingly, Fidelity Institutional Retirement Services Co., Boston, is by far the most popular 401(k) record keeper, according to a survey by Judy Diamond Associates Inc.
Fidelity is used by 584 of the plans surveyed by Diamond Associates that named their record keeper. The No. 2 firm was The Vanguard Group, Valley Forge, Pa.; it provided record keeping for 263 plans.
Employee benefit consultants dominated the next tier: Hewitt Associates, Lincolnshire, Ill., used by 226 plans, was followed closely by the Wyatt Co., Washington, with 224. William M. Mercer Inc., New York, was fifth with 173 plan clients. Cigna Retirement & Investment Services, Hartford, Conn., and the Principal Financial Group, Des Moines, Iowa, took No. 6 and No. 7 in the rankings.
Fidelity also dominated the rankings of investment managers, with 930 clients, more than double the 459 clients of second-place Vanguard. Cigna followed with 181 investment clients, with Wells Fargo Defined Contribution Trust, San Francisco, taking fourth place with 171, nearly tied by New York-based Bankers Trust Co.'s 170. Not all plans in the survey confirmed or provided information about their investment managers.
Despite trends toward outsourcing, survey data demonstrated a substantial number of plans still adminster and manage their 401(k) plans internally. Of the plans surveyed, 804 perform in-house record keeping and 1,078 manage plan options internally.
The survey is included in the Standard Directory of 401(k) Plans, published by Judy Diamond Associates.
The universe consisted of 6,172 401(k) plans with assets exceeding $5 million.
In addition to the survey results, the 401(k) directory provides profile data about each plan, as well as vendor service information. Plan data were collected between September and December 1994.
MINNEAPOLIS - American Express Financial Advisors established an institutional class of shares that eliminates 12b-1 record-keeping fees for 20 IDS mutual funds.
The new "Y" shares will be available only to defined contribution plan clients with a minimum of 500 participants or $10 million in plan assets.
Plan sponsors can save five to 15 basis points in mutual fund expenses by using the Y shares, depending on fund selection, said Ward Armstrong, an American Express spokesman.
Also, two new mutual funds, the IDS Strategy Aggressive and the Strategy Value funds, will be available for the first time to institutional investors.
Fidelity Investments, Boston, will now offer the total benefits delivery system it has piloted with Mead Corp., Dayton, Ohio, over the past two years.
Fidelity is the first mutual fund company to offer an integrated benefit services package that combines information regarding an employee's defined contribution, defined benefit and health and welfare plans through a single voice response system.
The Fidelity Benefits Center, based in Boston, will allow active and retired employees to access information about all benefit plans; there also will be an option to talk to a customer service representative.
The defined benefit and defined contribution plan systems are running now; the health and welfare plan services will not be available until the fourth quarter.
WAYNE, Pa. - SEI Corp. launched a new bundled 401(k) plan service for distribution exclusively through financial intermediaries, such as financial planners, broker-dealers and bank trust departments.
The program offers a series of asset allocation or life cycle portfolios using SEI's manager-of-manager mutual funds as the underlying investments. SEI's mutual funds are also available as stand-alone investment options, together with a pooled GIC fund. Daily valued record-keeping services will be provided through SEI's alliance with regional third-party record keepers. Administration, trust services, plan design and documentation and compliance testing are part of the bundled package.
The SEI 401(k) Program also provides fully customized employee education materials, tailored for each company's selected investment options. Asset allocation rolls, including software programs, help participants determine risk tolerance. Quarterly newsletters and performance reports are also customized for each company.
EAST BRUNSWICK, N.J. - The Copeland Cos. entered an agreement with Management Compensation Group, Minneapolis, to provide expanded services for health care employers.
Copeland specializes in retirement plan services for more than 1,000 403(b) qualified plans. MCG provides expertise in executive deferred compensation programs for hospitals and physicians groups.
Mark Skinner, a spokesman for Copeland, said many not-for-profit hospitals have been acquiring physicians' practices in their business expansions and are trying to retain highly compensated doctors by offering attractive non-qualified supplemental plans, as well as competitive 403(b) qualified retirement plans.
"Copeland needed the expertise of MCG to be able to help hospital and health care clients design state-of-the-art supplemental savings plans," he said.
PITTSBURGH - Federated Investors introduced a comprehensive retirement program, Federated LifeTrack, primarily for distribution through banks.
The LifeTrack program provides bundled or unbundled defined contribution plan services, as well as non-qualified plan wrap accounts and SEP, SARPSEP and IRA options.
Bank pension customers can select from three levels of service - investment only, custom and fully bundled. The full LifeTrack program provides daily valued record keeping, an automated voice-response system, employee communications, personalized investment education and investment management.
Federated is negotiating now with five "big brand names" to offer access to funds from outside mutual fund families, said E. Thomas Johnson Jr., vice president and director of sales and marketing for Federated's retirement unit. Mr. Johnson said he could not identify the potential mutual fund partners yet.
Federated has made the LifeTrack program available as a private label product, and also is working with a number of plan sponsors to provide services without a bank intermediary.
NEW YORK - The Chase Manhattan Bank has hired two outside financial education firms to provide private-label programs for Chase's new small and midsized bundled defined contribution plan clients. Both hires are part of Chase's expansion and enhancement of the employee education programs.
Chase Manhattan has customized Cambridge, Mass.-based Acumen Financial Inc.'s personal financial planning programs to fit Chase's employee education programs, said Amy Lipton, vice president of marketing and employee education services for Chase's retirement and benefit service division. The Acumen report, called Your Personal Plan Savings Analysis, uses personal employee data from the employer's record-keeping system to provide customized savings analysis, as well as sample asset allocations.
Chase also has established a private label relationship with Discover Learning Co., Southfield, Mich., to develop interactive financial education workshops and curriculum for employees, said Ms. Lipton.
As part of its focus in the last year on the defined contribution plan market, Chase allied with Kwasha Lipton, Fort Lee, N.J., to gain third-party daily record-keeping services.
Investment management services for the small plan market include Chase's own Vista family of mutual funds. Within 90 days, Chase expects to complete agreements with three outside mutual fund families to augment the five Vista funds in the bundled product. Putnam Investments, Boston, could be tapped for balanced and life cycle funds; Templeton Investment Counsel Inc., Fort Lauderdale, Fla., for international equity funds; and Federated Investors, Pittsburgh, for fixed-income funds.
NEW YORK - The Bank of New York has introduced a bundled service for smaller defined contribution plan sponsors with up to $30 million in assets and 3,000 employees.
The small company program will provide daily valued record keeping, trust services, voice-response systems and employee education and communications.
Diversified investment options include mutual funds from outside money managers and the bank's own collective trust funds and Hamilton family of mutual funds. Company stock and self-directed brokerage accounts also can be added as plan options.
Previously, the services were only available to defined contribution plans with assets of more than $30 million.
The Bank of New York also announced it will offer specialized offshore fund management services through BNY Fund Management (Ireland) Ltd. in conjunction with Allied Irish Banks, Dublin.
The joint venture offers integrated custody/trust, fund accounting, fund administration and transfer agent services to collective investment schemes and mutual funds.
BOSTON - New England Retirement Services is seeking to expand its share of the large-plan defined contribution market, said Susan Bumstead, a spokeswoman for the firm's parent company, The New England.
As part of enlarging its marketing force, New England Retirement will add regional sales staff in New York, Georgia and Texas.
Also, Randal A. Brown has been named a regional sales vice president, based in San Francisco. Mr. Brown will concentrate sales efforts on larger companies on the West Coast.
Mr. Brown previously was a vice president for sales in the San Francisco office of State Street Bank & Trust Co.
Ms. Bumstead said the new marketing effort would expand the New England's presence in the 401(k) plan market, where it has concentrated efforts to date in the small plan market, using its insurance agency distribution system.
