Ask the Experts June 9, 2015

(b)lines Ask the Experts – What Is Gamification?

“A representative from the recordkeeper for our 403(b) plan referred to the concept of ‘gamification’ the other day.
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“I pretended to know what she was talking about, but, in reality, I did not have a clue! What is gamification and should I care?” 

Michael A. Webb, vice president, Cammack Retirement Group, answers:

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The Experts are not terribly surprised that you have not heard of the term, as it is a little-used, yet cutting-edge, concept in retirement plan communication. If you would guess that it has something to do with games, you would be correct.

Gamification is the use of game concepts/processes in non-game contexts to engage users. In retirement plans, the context is using games to attempt to influence participants to take appropriate actions, such as enrolling in the plan or increasing one’s savings to the plan. The thinking is that many individuals spend more time playing computer games than thinking about retirement, so merging the two may motivate participants who would otherwise not pay attention to their retirement plans at all. In short, it is an effort to make planning for retirement fun!

A handful of recordkeepers have rolled out such games in an effort to engage participants. Will gamiifcation work? Only time will tell, but it is promising to see that entities are thinking outside the box in an effort to address the longstanding problem of lack of retirement plan engagement among employees.

Thank you for your question!

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.
Compliance June 8, 2015

Settlement Reached in Fannie Mae Stock Drop Suit

Affected participants will receive $9 million, less attorneys’ fees and settlement expenses.
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U.S. District Judge Paul A. Crotty of the U.S. District Court for the Southern District of New York has preliminarily approved a settlement between the Federal National Mortgage Association (FNMA) and a group of retirement plan participants who claim the firm held onto company stock when it was imprudent to do so. 

The settlement agreement provides for $9,000,000 (less attorneys’ fees and settlement expenses) to be set aside in an account for all persons who were participants in or beneficiaries (including alternate payees) of the FNMA Employee Stock Ownership Plan at any time between April 17, 2007, and May 14, 2010, and whose plan accounts included investments in the Fannie Mae Stock Fund at any point during the class period. 

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In 2012, Crotty found that the plaintiffs plausibly alleged that defendants named in the lawsuit knew both the causes of the price drop of FNMA stock and the reasons it was imprudent to retain the plan’s investment in the stock. 

The benefit plan committee defendants argued that they cannot be found liable for a breach of their duty of prudence under the Employee Retirement Income Security Act (ERISA) because divesting the plan’s assets of FNMA’s stock would involve trading on insider information; alternatively, disclosure of non-public information before divesting would have caused the very decline in stock price that plaintiffs sought to avoid. Crotty rejected their arguments, saying defendants could have “taken a variety of steps that would not have been violations of the securities laws, including independently evaluating the prudence of the maintenance of the [company] stock fund as an investment option under the plans, ceasing new investments in the [company] stock fund, questioning the valuation of in-kind stock contributions to the plans, [or] considering whether public disclosure of material information would have been in the best interests of the plans’ participants … .” 

The settlement agreement is here.

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