Products October 8, 2009

Ford Outsources Benefits Administration to ACS

October 8, 2009 (PLANSPONSOR.com) - Ford Motor Company has selected Affiliated Computer Services, Inc. to provide total benefits administration services to employee and retiree participants.
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Under the new contract with Ford (which, according to a press release, was reflected in ACS’ fourth quarter fiscal year 2009 results), ACS will provide the administration of health and welfare, pension, and savings plans. These services are deployed through ACS’ call center operations and Web portal. The self-service Website provides participants information that integrates Ford’s benefit information, vendor partners, and benefit program information in “an engaging and participant-focused tool,” according to the announcement.

ACS said that the Web portal “builds upon the convergence of health and wealth benefits in the marketplace and the desire to control costs.”, and that as a result, “Ford’s partnership with ACS will enable it to transform the delivery of benefit administration services to its employees and retirees by providing information to participants to help them better manage their health and wealth decisions”.

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Customer Care Center

Additionally, ACS said it will be “investing in the southeastern Michigan community” by establishing a customer care center in Allen Park, Michigan to support its benefit administration offerings.

“This new partnership represents our commitment to providing Ford innovation in technology, tools and processes and delivering total benefits services,” said Ann Vezina, executive vice president and group president of ACS Enterprise Solutions & Services. “As a proven market leader with significant expertise in the benefits space, ACS will enable Ford to build further value for its employees and retirees.”

ACS Human Capital Management Solutions services are provided to more than 4 million employees and retirees in more than 80 countries worldwide in 20 languages. ACS’ HR business process offerings includes HR services, total benefits services, and learning management services. ACS, which is the parent company of Buck Consultants, last month agreed to be acquired by Xerox Inc. in a $6.4-billion deal designed to help more strongly diversify the Xerox revenue stream away from products into services (see  Xerox to Wed ACS in $6.4-billion Acquisition ).

Compliance October 7, 2009

Flight from Equities in Cash Balance Plan no ERISA Miscue

October 7, 2009 (PLANSPONSOR.com) - An employer's move to reduce its equity holdings and increase fixed income investments in its cash balance pension plan did not represent an illegal benefits reduction, a federal judge has ruled.
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U.S. DistrictJudge J.P. Stadtmeuller of the U.S. District Court for the Eastern District of Wisconsin asserted that the decision by S.C. Johnson & Sons did not violate the anti-cutback rule in the Employee Retirement Income Security Act (ERISA). Stadtmeuller said the employer’s pension plan changes did not result in a “reduction of accrued benefits” that would trigger the ERISA provision prohibiting sponsors from changing their plan in a way that generates lesser benefits for participants.

The court pointed out that the law could not tie sponsors to a specific investment strategy to avoid an anti-cutback rule violation because that would keep them from being able to respond to changes in the economy and the markets.

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“These managers would be unable to exercise their fiduciary duties and respond to changing market conditions; conditions which may, at times, call for a more conservative approach to the allocation of assets in order to preserve the financial integrity of the plan,” the court contended.

The court said the plans’ investment strategy change was to reduce their investment in equities and invest more in fixed income funds. “A particular percentage of assets invested in equities versus fixed income is not a protected benefit and a change to these investment percentages does not support a §204(g) [anti-cutback rule] claim,” Stadtmeuller wrote.

In addition, the court pointed out that Treasury Regulation Section 1.411(d)-4 specifically states that the right to a particular form of investment is not subject to the protections of the anti-cutback rule.

The participants’ suit alleged the more conservative investment approach resulted in lower rates of return, which, in turn, lowered “interest credits” deposited in their notional accounts. The court said the claim was related to the performance of the plans’ trust investments, given that the plans stated that participants’ accounts would be credited at a rate of either 4% or 75% “of the rate of return” generated by the plans’ trust.

The case is Thompson v. Retirement Plan for Employees of S.C. Johnson & Sons Inc.,E.D. Wis., No. 07-CV-1047.

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