ST. LOUIS -- Monsanto Co. is outsourcing the administration and record keeping for its $2.7 billion 401(k) plan, $1.7 billion cash balance and traditional defined benefit plans and health and welfare plans to Fidelity Investments.
But Monsanto is reviewing the investment options in its 401(k) plan to determine whether it will be making any changes, said Tom Schaefer, director of pension asset planning. Monsanto has not made any changes to the 401(k) investment menu for about two years.
In either case, the company intends to transfer the record-keeping and administration of the plan to Fidelity by mid-2000, said Chuck Belloli, director of benefits and compensation, administration and accounting.
But Monsanto has not decided which investments will end up in the 401(k) and cash balance plans, he said. The 401(k) plan has 10 options, including four pre-mixed funds, Mr. Belloli said. The participation rate is 85%.
A number of money managers run investments in both the 401(k) and cash balance plans, he said.
"The move to Fidelity was not prefaced on switching investment options or the use of Fidelity funds," Mr. Belloli noted.
While Monsanto does not have to use Fidelity funds as a result of the outsourcing, the company would get a more favorable fee structure if it did.
"The broader the relationship, the more flexibility you have in pricing, the more leverage for the companies," said Peter Smail, president of Fidelity Institutional Retirement Services.
Still, Mr. Smail added, "We're in the administration business, particularly the total administration. So for us, this makes sense."
Fidelity, Boston, has seen a surge in large companies that want a single provider to handle all retirement, health and welfare and even payroll services, Mr. Smail said.
So far, over 30 large companies have hired Fidelity to do just that, and "the vast majority" of them use Fidelity funds, he said.
"But its not a requirement," he said. "We price the (administration-only) business accordingly."
Monsanto executives decided five years ago to hire one firm to do the record keeping for all three plans, and Hewitt Associates LLC, Lincolnshire, Ill., had done that job, Mr. Belloli said.
But when the Hewitt contract was about to expire, Monsanto executives "felt it made good business sense to revisit the marketplace," Mr. Belloli explained.
"Although Hewitt has helped us tremendously to get us to full outsourcing, we felt Fidelity offered the best service delivery and cost to the participants," Mr. Belloli said.
Hewitt declined to comment, according to a spokeswoman.
