Benefits June 11, 2004

RIA Offers Solution To Boost Lifecycle Fund Utilization

June 11, 2004 (PLANSPONSOR.com) - Plan sponsors are constantly confronted with the problems of increasing participation rates in 401(k) plans and making sure participants make the right investment decisions once there, problems that Manning & Napier Advisors, Inc have a solution for.
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Speaking to a plan sponsor’s heart, Manning & Napier Advisors, Inc identifies the simple problem with the complex answer. “If you are the sponsor of a 401(k) or other type of participant-directed plan, you know the problem. Many participants are confused about investments.” Yet, the firm’s white paper, A Solution to Participant Confusion:Help DC Plan Participants Make Better Investment Choices Using Tiered Communication and Life Cycle Funds, says the solution does not necessarily have to be complex and is as easy as offering lifestyle fund options in 401(k)s.

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“Participants cannot save their way out of inadequate investment returns,”said Patrick Cunningham, Managing Director of Client Relations and a memberof the firm’s Executive Group. “Helping your employees earn a higherinvestment return, even by a percentage point or two, can have a majorpositive impact on their preparedness for retirement.”

Plan sponsors may approach the easy answer with trepidation, given that traditionally the utilization rate of these funds remains in the single digits. However, Manning & Napier said utilizing a strategy outlined in the white paper, they were able to increase participation rates among lifestyle funds to better than 50% of a plan’s participants.

The Rochester, New York-based registered investment advisor offers three case studies of companies that dramatically increased the use of lifestyle funds among plan participants through Manning & Napier’s two-tiered communication strategy, the lynch pin of which is to offer participants a clear, concise decision,“ Would you like to make the asset allocation decisions yourself or delegate them?”

Manning & Napier found with this clear message, “most participants who chose to invest in life cycle funds used them appropriately.” Quantifying their results, the firm said an average of 57% of participants in the case studies invested all of their accounts in a single, diversified life cycle fund, while an additional 10% invested all of their accounts in two adjacent life cycle options on the risk spectrum. Further 14% invested across both sides of the two-tier menu in a consistent manner.

To further drive home the message to participants, Manning & Napier found the communication strategy to be most effective in on-site group meetings. Speaking to the three case studies detailed in the white paper, the firm said, “These plans had the ability to hold group meetings and, as a result, participants used the professionally managed life cycle funds broadly, with over 50% of plan assets directed to these offerings.” Without the onsite meetings, Manning & Napier said utilization of lifecycle funds will not be nearly as high, “Many companies, including many large plan sponsors, cannot offer on-site group meetings. With the message in hardcopy and Internet form only, there will likely not be 50%+ utilization. “

Further, the white paper examines details of an approach that integrates everything from menu design, fund selection, and communications in an effort to reach out to the participants most in need of professionally-managed allocations.A copy of the 24-page report,A Solution to Participant Confusion, is available at http://www.manningnapieradvisors.com/www/news_detail.asp?ID=60 .

Administration June 10, 2004

UAL Employees Selling Airline Stock

October 30, 2002 (PLANSPONSOR.com) - Amid the threat of potential bankruptcy filing that would make their shares of United Airlines parent UAL virtually worthless, many United employees are selling some of their company stock holdings before it's too late.
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By unloading part of their stake, UAL employee-shareholders who together own 55% of UAL, hope to diversify their holdings and help protect their nest egg, according to a Dow Jones news report.

Facing $945 million in debt repayment and other obligations before year-end, UAL, parent of the world’s second-largest carrier, has warned it may be forced to file for Chapter 11 later this year if it can’t reduce costs, win $1.8 billion in federal loan guarantees and raise $2 billion in fresh capital, Dow Jones said.

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State Street Corp.’s State Street Bank and Trust, hired in August by a committee representing the UAL employee-owners to manage their investments, registered to sell 11 million of the 59 million UAL shares held for the workers, according to Dow Jones. UAL said in a regulatory filing Friday that State Street has begun selling the shares on the open market. (See  State Street Selling UAL Stock ).

State Street determined that being solely invested in UAL stock was ” inconsistent” with federal pension laws governing employee stock ownership plans, the International Association of Machinists union said in a note to members, Dow Jones said.

However, State Street is constantly reviewing the decision and can decide to halt the sales or buy back the stock, said the union representing about 35,000 United workers.

The UAL stock sold on behalf of the employees is sold on a proportionate basis from all participants’ accounts, and proceeds and any earnings related to the sales are also credited to their accounts proportionately, the machinists union said. State Street, the union said, is investing the proceeds in a short- term investment fund, according to the report.

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