The Massachusetts Securities Division targeted many of the wrong firms in questioning 401(k) record keepers about employers moving to an annual match instead of contributing each pay period.
Among those queried that are not record keepers are BlackRock Inc. and Barclays Global Investors, bought by BlackRock more than four years ago and no longer a separate company. Others include State Street Global Advisors, Invesco Ltd., Ameriprise Financial Inc., Legg Mason Inc., Galliard Capital Management Inc. and GE Asset Management Inc.
Many of the largest defined contribution record keepers were not among the 25 firms contacted. They include TIAA-CREF, Aon Hewitt, Great-West Retirement Services, Wells Fargo & Co. and Xerox Corp. Ltd.
“Galliard did receive a request on this (and) communicated with Massachusetts that Galliard is not a record keeper,” said company spokeswoman Jane Marie Petty in an e-mailed response to questions. “Since we don't provide record-keeping services, we told Massachusetts that we would not be responding to their inquiry.”
On Feb. 24, William F. Galvin, Massachusetts secretary of the commonwealth and chief securities regulator, wrote to 25 “companies that administer 401(k) employer-provided retirement accounts,” according to a statement from the agency.
Mr. Galvin, in his letter, said he wants to know the number of employers whose plans they administer that have shifted to year-end lump-sum matches, the number of affected employees and the date of the change. He also requested the disclosure information provided to plan participants as to the potential risks connected to lump-sum matches.
“We're trying to determine what information is being provided to participants of any changes in their matches,” Mr. Galvin said in a telephone interview. “This is a matter of critical importance to most employees. So the real issue here is to determine if this is indeed a trend.”
Mr. Galvin, who announced in October that he plans to run for re-election to a sixth term, also said in the interview that since the information that the agency is looking for is “of a general nature,” he expects the firms to cooperate.
When told that a good number of the firms Mr. Galvin's office queried aren't record keepers, Brian McNiff, a spokesman for Mr. Galvin said, “If that's what they say, that's what they say. We sought them out as providers of 401(k) administration services and we'll have to see how they respond.”
A news release from Mr. Galvin's office announcing the action mentioned three companies — Deutsche Bank AG, Frankfort; IBM Corp., Armonk, N.Y.; and Charles Schwab Corp., San Francisco — that contribute annually. Deutsche switched to annual from by the paycheck this year; IBM did so late in 2012; and Charles Schwab has always contributed annually.
