Schwab to Expand Defined Benefit Plan Pension Services

Business Wire, Feb 4, 2003

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 4, 2003

Comprehensive Investment Management Tools and

Participant Services Are Designed to Help Improve Plan

Operations and Promote Employee Appreciation

Charles Schwab Corporate Services is expanding its defined benefit plan services for both traditional and cash balance pension plans. The enhanced services are focused on helping plan sponsors improve the operation of their pension plans while helping employees gain a better appreciation of their benefits.

"Pension plan assets have suffered along with 401(k) balances and personal stock portfolios during the past few years. Since employers are responsible for funding pension plans, this bear market has created an urgent need to refocus attention on investment management and cost control. These two financial issues and the desire to increase employee appreciation of pension benefits are the key challenges employers face today," said Ben Brigeman, senior vice president, Charles Schwab Corporate Services.

New Investment Management Tools

Schwab's defined benefit offering will include access to online investment management tools that will provide plan sponsors and their investment consultants with comprehensive business applications for selecting and monitoring investments. InvestorForce, Inc., a leading provider of technology-based business solutions for the institutional investment community, is tailoring its web-based investment platform for Schwab. The platform will allow plan sponsors and consultants to perform detailed fund screening, rebalance investments, view plan holdings and transactions, and monitor investment performance. "InvestorForce technology will enable Schwab to deliver advanced pension investment management business applications right to the desktops of plan sponsors and their consultants for the first time," said Brigeman.

"We are very excited about this alliance and the opportunity to customize our platform for Schwab's delivery of a leading-edge defined benefit plan services solution," said Jim Morrissey, president and CEO, InvestorForce, Inc.

The product is to include a broad array of institutional mutual funds and collective trust funds from leading management companies such as Barclays Global Investors, Goldman Sachs and Mellon. Schwab's own institutional trust funds are also planned to be included. These Schwab funds offer low institutional pricing and are subadvised by leading money managers including PIMCO, Dodge & Cox and Invesco.

"Our goal is to provide an online environment where plan sponsors and consultants can easily manage defined benefit plans," said Brigeman. This includes managing investments, benefit estimates, payroll updates, termination processing and retirement distribution requests. The streamlining of these tasks can help save both time and money.

Building employee appreciation and awareness

Defined benefit pension plans are often less visible to employees and are therefore less understood than other retirement programs, such as 401(k) plans. This can represent a missed opportunity for employers. Schwab will provide quarterly benefit statements to put plan information in front of employees regularly. Employees will also have access to a website as well as a Voice Response System (VRS) that will provide useful information on their benefits and offer the option to speak directly with a Participant Service Representative. Using web tools, employees will be able to plug in different "what if" scenarios based on expected salary increases and different retirement ages to help them project future benefits.

"The more people know, the better they can plan for retirement. When an employer can effectively convey this information, it builds employee appreciation of workplace benefits, which can help promote both retention and recruiting," said Brigeman.

Bundled and semi-bundled solutions

Schwab plans to offer both bundled and semi-bundled defined benefit services to meet the varying needs of plan sponsors. "Clients can choose our comprehensive bundled solution for their defined benefit plan, or they may ask us to help in specific areas of the plan that they want to improve while they retain other services or systems that are working well," said Brigeman.

In addition to access to investment management resources and sponsor/participant services, which include recordkeeping and related administrative services, Schwab also provides actuarial consulting and trust/custody services.

Integration with defined contribution plans

Plan sponsors may choose to integrate Schwab's defined benefit services and defined contribution services. Benefits may include cost and time efficiencies, streamlined plan administration and an integrated service structure with a single point of contact for both plans.

Employees will also benefit from multiple sources of plan information that will show their defined benefit and defined contribution benefits side-by-side, helping to increase understanding and appreciation of their retirement benefits.