CitiStreet Assures Customers PPA is Beneficial and Manageable
QUINCY, MA, November 28, 2006 -- At first glance, the 900-page Pension Protection Act (PPA) of 2006 is a daunting and complex law, but overall it provides benefit plan sponsors with the confidence, protection and tools to enhance their plans on many fronts.
That was a main theme in a recent series of customer forums that CitiStreet held in major cities, where CitiStreet's comprehensive study of the law dovetailed with keen customer interest.
"There was significant interest in all the topics at the forums, but PPA was clearly foremost on the minds of the plan sponsors. They seemed to especially appreciate the ability to have face-to-face communications on the Act," said Sandy McCarthy, CitiStreet president of retirement services. "By reaching out to our customers, we were able to communicate that PPA, while very complex and with parts still to be clarified by the Department of Labor, offers significant enhancements to plan sponsors."
Key among the defined contribution plan changes, she said, is the ability to allow automatic enrollment with safe harbor provisions that ease the fiduciary concerns for sponsors and will greatly increase employee participation; broader offerings of investment advice; making permanent the tax break for small businesses starting retirement plans that was to sunset in 2010; and also making permanent the Roth 401k, which also was scheduled to sunset at the end of 2010.
As for enhancements for defined benefit plans, Tina Campbell, CitiStreet associate general counsel, said PPA provides significant changes on retirement plan funding and bolsters cash balance pension plans as a defined benefit option. Among health and welfare enhancements, PPA expands the plan sponsor's ability to transfer excess defined benefit plan assets to a separate account to fund retiree medical expenses.
"The PPA reflects a new mindset in government regarding participation in retirement plans. There is a broad desire to bring more people into play in retirement savings, and PPA removes some of the road blocks for plan sponsors to bring their employees into their retirement plan," said Campbell, one of the CitiStreet attorneys who addressed the forums.
The customer forums were held in October and November in Dallas, New York, Washington, D.C., Boston and Chicago. In addition to the PPA sessions, forum topics covered participant and communication strategies, investment advice and managed accounts as well as planned Web enhancements for plan sponsors and for participants. Those sessions also offered tie-ins to PPA, such as its impact on advice.
Meanwhile, successful communications and education strategies and campaigns were shared with customers and sparked interest and dialogue.
"The forums give us another way of staying connected to our customers, building on our partnerships with them and our commitment to providing Direction-for-Life for their participants," said McCarthy. "And the customers told us in this case that they especially appreciated that we were at the leading edge in our efforts to work with them on PPA."
In order to keep its associates and sponsors current on the provision of PPA, CitiStreet has developed a PPA Intranet section; key timelines on the law; special communications such as a recent one that provided extensive grids positing past regulations with the new provisions in the laws; updates and articles on its Legislative E-lert and Sponsor Forum sites on the Web. Work is also in progress on a PPA Webinar.
CitiStreet has focused its efforts by establishing on-going teams of subject matter experts to break down the PPA into more manageable form. Those groups include committees on Advice; Auto Enrollment; Company Stock; Defined Benefit Plans; DB/K Plans, Distributions; EGTRRA Permanency; Fiduciary Relief - Blackouts, Defaults, Investment Options, etc.; Miscellaneous/Administrative; Vesting.
About CitiStreet
CitiStreet, one of the largest global benefits delivery firms in the United States, is headquartered in Quincy, Mass. CitiStreet, with 3,000 employees, has offices in Somerset, N.J., Jacksonville, Fla., Lewiston, Maine, Boston and field offices around the nation. It also has a division, CitiStreet Australia, with offices in Sydney, Brisbane and Melbourne. CitiStreet serves more than 11 million participants and administers $200 billion in assets in the United States for defined contribution, defined benefit and health and welfare plans of corporate, government, health care, Taft-Hartley and not-for-profit organizations. It also serves more than 1 million participants and administers about $15 billion in assets outside the United States. CitiStreet is a 50/50 joint venture between State Street Corp. (NYSE:STT) and Citigroup (NYSE:C). For more CitiStreet information, visit the Web site at www.citistreetonline.com.
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