NEW ORLEANS - The theme of the annual meeting of the Profit Sharing/401(k) Council of America was taking control - by plan sponsors, by plan participants and by the PSCA itself - of legislative and regulatory issues.
Plan sponsors as diverse as Chevron Corp., Eastman Kodak Co., and Apple Computer Inc. showed examples of how legal and regulatory reform, plan design, communications and investment education, and high-tech access to account information have helped both sponsors and participants take better control of their retirement plans.
The PSCA's primary focus in the past year has been on two fronts: increasing public awareness of the value of profit-sharing and defined contribution plans through a national advertising campaign, and legislative success on bills affecting defined contribution plans winding their way through Washington.
The PSCA's ad campaign has been enormously successful, President David L. Wray, told conference attendees. He said he is interviewed five or six times a day on profit-sharing issues and the PSCA was quoted in hundreds of national, regional and local papers and in broadcast media on the subject of retirement plans.
The PSCA's aggressive Washington lobbying efforts resulted in success for 22 of the 24 legislative issues the organization targeted in 1995. Successes included passage of the Small Business Job Protection Act of 1996, source tax prohibitions on the state level and 401(k) and 401(m) safe harbor designations. The group also worked to block a bill by Sen. Barbara Boxer, D-Calif., to restrict company stock investments by defined contribution plan sponsors. The bill was never voted on.
Mr. Wray told conferees he fears government has yet to realize the success of defined contribution plans.
As evidence of that success, Mr. Wray estimated 650,000 defined contribution plans now provide coverage for 50 million eligible workers; 401(k) plans account for 220,000 of those plans and 30 million eligible employees. Defined contribution plans total nearly $1.5 trillion, with 401(k) plans holding $850 billion of that total. The average account balance for participants swelled to $65,294 in 1995, up from $31,246 in 1990.
Mr. Wray also said he expects that as many as 10 million new participants will be counted as many non-profit organizations convert their 403(b) plans to 401(k) plans under the provisions of the Small Business Job Protection Act.
The PSCA's mission, said Mr. Wray, is to work on improving membership of the association and thereby, improve retirement provisions for the estimated 40,000 million Americans not now covered by a retirement plan.
Plan design innovations
One of the highlights of the conference was the story told by Sally Brewster, benefits manager for Apple Computer, Cupertino, Calif., of the company's gradual move to providing plan information entirely online.
Apple's plan, Ms. Brewster said, was to make its 9,000 U.S. employees more self-sufficient and to improve service while reducing company costs and reducing the number of benefits staffers. Apple is working to make the computer the first point of contact, rather than benefit staff or a telephone voice-response system.
"We reversed the human resources model by using technology to do the work and hiring aggressively for outsourcing of many of these functions," Ms. Brewster said.
Apple is working with Fidelity Institutional Retirement Services Co., Boston, to run a retirement Web site for the company. General information about the 401(k) plan is included on the Web site, as well as legal and tax issues and investment education modules. Employees can enroll in the plan online, they can access account information and will have direct transactional capabilities so they can make real-time asset allocation and contribution changes starting in 1997.
Other plan sponsors, such as Illinois Tool Works Inc., Glenview, Ill., shared their experiences in merging multiple defined contribution plans and outsourcing virtually every plan function in partnership with a strong outside vendor. Motorola Inc., Schaumburg, Ill., described the development of its investment policy statement and the continual due diligence it performs on the managers managing its $5.5 billion defined contribution plan.
The Signature Awards
The PSCA sponsored its first Signature Awards, which recognized plans providing clear, creative, appropriate and effective plan communications with the objective of awarding excellence among its members, promoting the sharing of good ideas and providing outside recognition of the good work of a retirement plan administrator.
Of the 77 entries received, 28 were awarded prizes. The Best in Show was a video produced for Woolworth Corp., New York, which featured possibly the very first song ever written about 401(k) plans.
Other notable winners included Harrah's Entertainment for best promotional item; U S WEST Inc. for plan-specific periodicals for companies with more than 1,000 employees; Compaq Computer Corp. for best interactive media; Dana Corp. for best graphic design/illustration/art direction; and Food Lion Inc. and the State of Illinois for best complete campaigns.
The political environment
Speaking at the conference, political commentator Stuart Rothenberg predicted a win for President Clinton in the November election, but gave Democrats only a slight chance of regaining control of the House and Senate.