Retirement Planning and
Employee Benefits

April 8 2002 - Planning retirement and servicing 401(k) plans remain key HR issues in the US. Fidelity(R) Investments found 2001 to be the the strongest year ever in its institutional retirement and human resources/benefits outsourcing businesses, adding more than 1,500 plans and over 1.0 million new participants in the corporate and tax-exempt marketplace. In total, by the end of 2001, Fidelity served more than 11,100 employee benefit programs and 11.2 million American workers through its defined contribution, defined benefit, health and welfare and HR/Payroll practices. 30% of its largest clients now use Fidelity to provide multiple outsourcing services.

"One of the fastest growing areas at Fidelity is our human resources and benefits outsourcing business," said Peter J. Smail, president, Fidelity Employer Services Company. "Fidelity's broad understanding of the workplace positions us well to assist employers in achieving their goals of integrated HR/benefits solutions that create excellent long-term value.

"Our clients are looking for broader multi-service solutions," Smail said. "In 2001, about 61 percent of requests for proposals from large companies asked for administration services in two or more areas, including HR administration and payroll services, health and welfare programs and defined benefit pension plans."

Fidelity found the outsourcing trend to be driven by companies focused on integrating their employee benefits with just one service provider to benefit from cost efficiencies and deliver new self-service tools to employees via the Internet.

"The Web has transformed the employee desktop and has moved us into the world of employee self-service," Smail said. "Today, in the 401(k) and benefits outsourcing business, we get more than 350,000 contacts per day and more than 65 percent are via the Web."

Fidelity provides its service through its NetBenefitsSM site, providing single-click access to a wide range of employee benefit programs - including 401(k) and pension plans, health, dental and other benefit programs, and payroll information.

"In one place, employees can gain direct access to relevant information, online planning and decision-support tools, and conduct a wide range of workplace service transactions with the convenience of the Internet," Smail said.

401(k) and a volatile economy

What happens to employee confidence when stock values are affected by economic downturns? Immediately following the events of September 11 CIGNA Retirement & Investment Services commissioned two separate surveys. They found that half of 1,000 Americans surveyed said they would pursue new investment strategies if their retirement-account balances were lower at the end of 2001 than they were in the previous January. And, in the other survey, 504 human resource executives involved in the administration of their companies' retirement plans said they were unprepared to provide the retirement-planning information employees need to make informed decisions.

The good news was that most Americans were keeping faith in their 401(k)s despite the recent volatility of stock portfolios in most retirement plans. They might be looking to make changes but their interest lay in reallocating portfolios or increasing contribution levels - made possible by recent pension reform.

But the more worrying news was that nearly half of HR executives (47%) said they were unprepared to provide retirement planning advice to employees. And the survey pinpointed the fact that fact HR executives found educating their workforce about retirement benefits was their biggest challenge, with employees giving them low marks - the equivalent of a "C" -- for their efforts.

Just one in five people (22%) relied on their employer as the primary source of retirement-planning information. Plan providers and financial advisers also each garnered 22%, followed by family and friends (12%) and the media (5%).

"These are difficult times, and employees clearly are looking for help in managing their 401(k) portfolios. Employers are struggling to meet this need," said Tom Jones, president of CIGNA Retirement & Investment Services. "Retirement planning is a critical workplace education and retention issue, and the gap between what employees need and what employers are providing is startling. They're not just on different pages, they're on different planets."

31% of consumers said that retirement plans were the most important employee benefit. But a mere 9% of HR executives cited employer-sponsored retirement plans as the most important tool for attracting and retaining employees.

"The 401(k) plan is America's best tool for building employee wealth and financial security. But like any tool, it's only as good as the instructions," said Jones. "Particularly in today's environment, employees are looking for retirement education. And it's up to employers, working with their retirement plan providers, to design educational programs that build awareness, encourage increased participation and recognize the individuality and specific needs of each employee."

Professional certification in 401(k) administration

This may be where increasing professionalization of the retirement plan industry has value, helping both consumers and HR specialists. In 2001, the American Society of Pension Actuaries (ASPA) introduced its newest training program, specifically designed for retirement plan professionals who administer 401(k) and related defined contribution plans. The new program from ASPA features five comprehensive courses that address issues such as events processing, daily valuation, laws and regulations. Upon successful completion of the program's five exams, participants receive a Qualified 401(k) Administrator (QKA) designation that increases their credibility within the retirement plan field.

"Completing the program and earning the QKA designation will enhance a person's role and prestige as a 401(k) professional, as well as contribute to the continued enrichment of the private pension system in this country," explained Sarah Simoneaux, CPC, ASPA Marketing chair. "We want to help ensure the highest level of training and professional knowledge for plan administrators, no matter where they work and no matter what their level of experience."

Qualified 401(k) administrators come from a variety of professional disciplines and assist employers and consultants with the recordkeeping, nondiscrimination testing, and administrative aspects of 401(k) and related defined contribution plans. ASPA's courses cater to the professional needs of these administrators.

The QKA designation requires successful completion of five examinations: PA-1 A and B (Pension Administration), Daily Valuation, C-1 (Administrative and Qualification Issues of Retirement Plans), and C-2(DC) (Administrative Issues of Defined Contribution Plans). Intended for the entry-level professional, the first three are take-home, self-study exams that can be ordered and taken at any time. The two exams for the final, more advanced courses are administered at a local Prometric Technology Center in the fall or spring. In addition, ASPA's program features special weekend classes to supplement individual preparation for the exams. Those seeking to earn the QKA credential must successfully complete the required exams, submit an ASPA Designated Membership Application with two letters of recommendation, and a dues payment of $315.

Participants in the QKA program need not be members of ASPA to qualify for this training, although ASPA membership will entitle them to discounted registration fees. Current ASPA members who have already paid dues for this year must submit a Membership Addition/Upgrade Application and two letters of recommendation after completing the required exams.

ASPA is a national organization of retirement plan professionals dedicated to the preservation and enhancement of the private pension system in the United States. ASPA offers education and professional credentials for actuaries (MSPA, FSPA), pension consultants (CPC), pension administrators (QPA), and other benefits professionals (APM). Its 4,300 members provide consulting and administrative support to over 30 percent of the private retirement plans in the country.

For more information about ASPA's new QKA training program, refer to the online information kit on ASPA's Web site at www.aspa.org/qka. You can also contact ASPA's exam department by calling 703- 516-9300 or faxing an inquiry to 703-516-9308.