Compliance June 24, 2022

State Bill Would Require Multiple 403(b) Providers

For certain 403(b) plan participants at New Jersey school districts, more choices could facilitate additional retirement strategy personalization, one bill supporter says.   

 

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A bill in the New Jersey Legislature would require that certain boards of education have multiple providers for 403(b) plans. 

The legislation provides that certain school districts—those with at least 1,000 students that offer a 403(b) retirement plan to school district employees—select at minimum three providers or vendors for the plan.

The bill is intended to “to make sure that they are receiving what I would call competitive quotes from their service providers,” says Israel Tannenbaum, partner at Withum, a tax advisory and public accounting firm with headquarters in New Jersey. “A big part of that is to make sure that the fees are being reviewed and being looked at and that the plan is getting administered properly.”

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He explains that for industries where 403(b) plans are prevalent, retirement plan sponsors have not always considered the widest range of providers, which has been to the detriment of plans and participants.

“Different industries are more common in terms of going out for a bid or looking at proposals or comparing quotes, whereas in others it may not be as common,” Tannenbaum says. “This bill does force the plans to make sure that they have multiple providers, are actually comparing these rates and making sure that the plan itself is getting the best deal and the most value for the fees it’s paying.”

The bill would require a financial institution or pension management organization that provides services for a board of education to enter into an agreement with the board; this agreement would require the institution or organization to provide, in an electronic format, all data necessary for the administration of the 403(b) plan as determined by the board of education. The bill would also require the institution or organization to provide all data required by the board of education to facilitate disclosure of all fees, charges, expenses, commissions, compensation and payments to third parties related to investments offered under the 403(b) plan.

The bill before the General Assembly was introduced in January and was referred to the Assembly Education Committee. A Senate version, introduced on May 9, was referred to the Senate Education Committee and approved unanimously.

The legislation is sponsored by Assemblymen Raj Mukherji and Roy Freiman, both Democrats.

Tannenbaum says that, if passed, the bill might help to improve retirement preparedness for school district employees and allow for greater personalization or strategies tailored to workers’ individual circumstances.

“By providing numerous management organizations, this allows [plan participants] … to choose among different vendors—maybe one vendor represents their retirement strategy better,” he explains. “Maybe [a participant] want[s] to be a little more aggressive, to have a little more growth, so they can choose the provider that most properly reflects that. Especially [for workers] earlier in their career, and they have their whole career ahead of them to save, they may want [their investments] to be a little more aggressive up front.”

Tannenbaum adds that the bill would enhance “the plan opportunities and retirement opportunities for members … by requiring multiple financial institutions. That really does enable the plan to efficiently use economies of scale to make sure that they’re getting the most value and that the participants ultimately are not overpaying.”

Other states may follow New Jersey with similar legislation to bolster participants’ retirement savings and options, Tannenbaum speculates.

“Other states will follow suit. This is definitely a big focus, specifically [for] 403(b) plans where they are only available to either governmental or 501(c)(3) public charities such as schools,” he says. “This will provide them all with multiple options in terms of their vendors, and by requiring it they’ll be able to have these choices and ultimately be able to enhance the retirement savings through these economies of scale.”  

Deals and People June 24, 2022

Retirement Industry People Moves

Morgan Stanley at Work to acquire American Financial Systems; The Standard hires stable value sales director; Lincoln Financial Group unites investments, risk and sustainability teams; and more.

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Morgan Stanley at Work to Acquire American Financial Systems

Morgan Stanley at Work has announced the acquisition of American Financial Systems, a provider of nonqualified executive benefit plan solutions and services to employers of all sizes. 

The business’s full-service deferred compensation plan offerings include plan design consulting; plan implementation and online enrollment; funding analysis and optimization; and client management and plan recordkeeping.

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Terms of the transaction, which is expected to close in autumn, were not disclosed.

The Standard Hires Stable Value Sales Director

The Standard has announced the hiring of Mike Shamon as stable value sales director. He is responsible for growth through new investment-only stable value sales in the eastern region and is based in the greater Boston area.

Shamon has almost 30 years of experience in the retirement plans and benefits industry. He previously held roles as relationship manager at J.P. Morgan Asset Management and national 401(k) sales desk manager at Putnam Investments and Empower Retirement.

Shamon holds a master’s degree in business administration and management from Nichols College. He also earned a bachelor’s degree in political science from Massachusetts College of Liberal Arts. Shamon holds FINRA Series 6, 7 and 63 licenses.

Lincoln Financial Group Unites Investments, Risk and Sustainability Teams

Lincoln Financial Group has announced it has appointed Amber Williams, senior vice president and head of client investment strategies, to lead corporate sustainability as the firm’s chief sustainability officer.

Williams’ elevated responsibilities come as the investments and risk organization welcomes sustainability within its purview—a move that aligns Lincoln’s structure with its long-term strategic business plan being driven by newly appointed CEO Ellen Cooper.

Since joining Lincoln in 2019, Williams has grown the client investment strategies team, expanding its reach across Lincoln’s distribution channels and among client-facing professionals in support of Lincoln’s business lines. She and her team are responsible for establishing a differentiated thought leadership program that maximizes the value of Lincoln’s multi-manager platform.

Prior to Lincoln, Williams spent much of her career at Nationwide Investment Management Group in a variety of investment product management and investment consulting roles of increasing responsibility. Most recently, she served as head of product management, where she was responsible for building and leading a team dedicated to strengthening the quality of investment support to internal partners and financial advisers across Nationwide’s investment products.

Williams holds a bachelor’s degree in accounting from the University of Phoenix and is a member of the CFA Society of Philadelphia. She holds Series 6, 7 and 24 securities licenses.

PGIM Fixed Income Hires Former Deputy National Security Adviser as Chief Global Economist

PGIM Fixed Income has named Daleep Singh as chief global economist and head of global macroeconomic research, effective June 21.

Singh joins PGIM Fixed Income from the White House, where he was U.S. deputy national security adviser for international economics and deputy director of the National Economic Council. In this capacity, he served as President Joe Biden’s top international economics adviser, driving policy formulation at the intersection of economics and national security. His work has included the development of fiscal and tax policy; shaping the U.S. economic strategy with China; leading efforts to promote supply chain resilience; promoting the development of a digital asset strategy; and building an economic governance toolkit that includes tariffs, sanctions, export controls, energy security, debt relief, bilateral assistance and infrastructure finance.

Singh also served as the U.S. representative to the G7, G20 and APEC. Prior to joining the Biden administration, Singh was executive vice president and head of the markets group at the New York Federal Reserve, where he led a team of nearly 600 employees overseeing the group’s full portfolio during the most intense phase of the pandemic.

From 2011 to 2017, Singh worked at the U.S. Department of the Treasury as acting assistant secretary for financial markets and deputy assistant secretary for Europe and Eurasia. Preceding his tenure at the Treasury Department, Singh worked for Goldman Sachs, with a focus on U.S. interest rates and currency markets.

Singh will report to Gregory Peters, co-CIO for PGIM Fixed Income, and will be responsible for oversight of PGIM Fixed Income’s global macroeconomic research team, which includes senior economists with extensive experience in the public and private sectors.

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