Benefits April 27, 2000

Chamber of Commerce Chooses SunAmerica/ADP

April 27, 2000 - (PLANSPONSOR.com) The U.S. Chamber of Commerce has endorsed a new SunAmerica/ADP alliance as the preferred pension provider for its nearly 3 million small business members, replacing Fidelity Investments.
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SunAmerica and ADP Retirement Services have developed The CHAMBERplan for Retirement as part of a five-year contract with the U.S. Chamber of Commerce, according to Jane Kotlarski Sanders, Vice President Business Information and Development for the Chamber of Commerce.

Chamber Members Benefit

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Daniel Demko, executive vice president of group retirement markets for SunAmerica, hoped their collaboration with the U.S. Chamber of Commerce will increase these numbers: “There?s a great demand among small businesses for turnkey retirement systems that will help attract and retain their best workers,” he explained. “Through the Chamber, member companies will receive fifty percent off our retail price. The administrative fees will, in many cases, be less than they were with Fidelity.”

98% of American businesses fall into the small or emerging category, reveal statistics compiled by the nonpartisan Employee Benefit Research Institute (EBRI); but just 15% of employees at these firms currently participate in a pension plan.

Different Direction for Fidelity

SunAmerica/ADP were selected from a field of eleven bidders; Fidelity chose not to bid. “Fidelity indicated to us that this was not their strategic direction,” Sanders noted, when the Chamber sent out competitive bids last fall prior to their 1997 contract?s expiration. SunAmerica was chosen based on their “their national marketing reach and distribution channels, their alliance with ADP, and their educational commitment,” according to Sanders.

Chamber members who wish to remain with Fidelity will not be required to switch providers.

Debra McConnell, spokesperson for Fidelity Institutional Retirement Services Company, commented, “We decided to market directly to small plans. We’ve had a lot of success with our all-Internet 401(k) plan targeted to this market.”

The CHAMBERplan for Retirement will offer nine investment options managed by SunAmerica Asset Management, Alliance Capital Management, Davis Selected Advisers, First American, Putnam Investments, and Wellington Management. Investment choices range from conservative to aggressive.

SunAmerica will provide group variable annuity benefits as well as the investment options outlined. ADP Retirement Services handles enrollment, employee education and communications, recordkeeping, regulatory compliance testing, and reporting services.

Benefits April 25, 2000

NCR Retirees Sue Over Slashed Healthcare Benefits

April 25, 2000 (PLANSPONSOR.com) - A class action suit starts in Minneapolis Thursday over whether NCR had the right to reduce health subsidies and eliminate Medicare supplementation to 3,370 former workers and spouses who accepted early retirement in 1993.
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To help restore benefits, the  Minnesota Senior Federation, an activist group, referred the case to Minneapolis law firm Siegel, Brill, Greupner, Duffy & Foster.

The suit highlights the difficulties a plan sponsor might run into when changing benefits if employees took action based on a reasonable expectation that those benefits would be continued.

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Restoration Sought

Benefits were reduced January 1, 1999. The suit seeks “complete restoration of benefits and reimbursement for all out-of-pocket insurance expenses incurred by class members since then,” stated Jordan Lewis, the attorney handling the plaintiffs’ case.

The suit charges:

  • NCR created an enforceable contract to provide benefits when it asked early retirees to waive various legal rights
  • No early retirement documents gave NCR the right to later change the benefit terms
  • If the main NCR ERISA plan document is found to be the controlling document, that plan expressly prohibits retroactive benefit changes.

No Comment

Lewis noted the healthcare plan’s history became complicated when it was acquired and then spun off by AT&T. “This case feels quite different from others because the documents don’t do what NCR says they intended to do,” says Lewis. “I think it just got too complicated. The unique language and plan history in this case favors the plaintiffs.”

NCR spokesman John Hurrigan said, “We do not comment on pending litigation.” NCR has 32,800 active employees worldwide. It was unable to provide information on retiree demographics by press time.

In the past, courts have held that when an employer encourages employees to take early retirement based on a reliance on promised benefits, applicable state laws may override the right of employers to change the plan.

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