When it switches providers in December, Playtex Inc. will save $500,000 over the course of the contract in fees that had been paid by its 401(k) participants.
Julie Roe, director of benefits at Westport, Conn.-based Playtex, said, "Our current vendor was making a lot of money off us on fees for investment management." Playtex has three qualified defined contribution plans in the United States and one in Puerto Rico, which total about $110 million.
At the $500 million City of San Diego Deferred Compensation Plan, its current provider, AIG VALIC, Houston, is doing a report on the administrative costs of running the plan, relative to the revenue it generates, according to Valerie Van Deweghe, benefits manager.
Ms. Van Deweghe said the plan expects the VALIC report by November. If there is a substantial difference between the costs paid and the revenue generated, she said, trustees will negotiate for lower the fees. San Diego's contract with VALIC ends next year. Ms. Van Deweghe said the plan might decide to issue an RFP for a new provider if negotiations with VALIC over fees are unsuccessful.
Playtex worked with The Glading Group, Montclair, N.J., to assess revenue-sharing fees its participants were paying to its current provider, Boston-based Putnam Investments Inc., and negotiate lower fees with the new provider, New York Life Investment Management Inc., for its two-year contract.
Currently the Playtex 401(k) plans are paying 51 basis points in fees to Putnam. When it switches to NYLIM in December, the total fee will be 37 basis points.