CHICAGO - Sears Roebuck & Co. will outsource the administration of its $1.8 billion defined benefit plan and the investment management and administration of its $4.6 billion 401(k) plan.
State Street Global, Boston, will serve as bundled service provider for the Sears 401(k) plan, which now is managed internally.
Sears officials declined to give details, but a spokesman acknowledged the selection of SSgA and Wellspring effective sometime in 1998.
Jim Phalen, senior vice president and managing director of retirement and investment services at SSgA, declined to comment. He said through a spokeswoman that SSgA is working with Sears to begin providing record keeping, administration, trust services and investment management for the 401(k) plan starting next year.
A Sears source said the company is considering expanding the plan's investment options to eight from five, including an international equity one. One or more would be non-State Street funds, the source said. Existing fund options are money market, fixed-income, balanced, Standard & Poor's 500 and Sears stock, all internally managed.
Wellspring executives said Sears decided to outsource the administration of the pension plan to increase the level of service to employees "by giving them access to more information around the clock and instantaneously" and because Sears, like many businesses, "wants to concentrate on its core competencies."
Tony Herron, principal at Wellspring, said Sears officials will continue to oversee the defined benefit plan's investment management. Plan administration - including benefit calculations, compliance and reporting - will be phased into Wellspring over the next 18 months. No changes in investment management of the defined benefit plan are expected.
Mr. Herron said Sears will have nearly 1 million employees, retirees and former employees in the plan data base.
Employees and retirees will call a single toll-free telephone number at Wellspring to access benefit information, make changes or conduct transactions.
Sears will provide Wellspring regular payroll and employee information. The 401(k) data will be "stripped out" and forwarded to SSgA; pension information will remain with Wellspring, said Mr. Herron.
"We will run a consolidated data feed for State Street, and Sears employees will have a single point of contact for information about both plans," he said. If the matter is 401(k)-related it is forwarded to SSgA seamlessly, he said.
"The fact that we have a joint venture with SSgA helped Sears make its decision to go with Wellspring," said Mr. Herron. "It will be the closest thing to having a single vendor for them."
Wellspring already provides outsourced pension administration to such companies as Allegheny Teledyne Inc., Federal Express Corp., Lucent Technologies Inc. and U S WEST Inc.