PLANSPONSOR - March 2012

Rowe Price Blue Chip Growth Trust is being reduced from 0.50% to 0.40%.

For participants who previously allocated deferrals to an affected fund, Ferguson says, they are moved automatically to the new investment. “The funds are very similar,” she says. Participants did receive written material explaining the changes and the savings.

Participants relying more on defined contribution benefits also need more help with decumulation planning. Beckman Coulter implemented T. Rowe Price’s Retirement Income Manager tool in 2011, after serving as a pilot test site during its development. “It seems like a very easy tool for participants to understand,” Ferguson says. “It tells them what that lump sum might equate to over time.” Participants can go with a drawdown schedule and asset allocation recommended by T. Rowe Price, or select a drawdown plan and investments themselves. In 2011, the income-modeling calculator was the most popular tool visited by Beckman participants on the participant website. —Judy Ward

Lufthansa Airlines Before a recent investment-lineup shift at the 401(k) plan covering 12 of Lufthansa German Airlines’ U.s. subsidiaries, participants paid an average 51 basis-point investment fee annually. That has declined to 47 basis points. “It is not a big drop, but every basis point counts,” says Ruth Ann Baker, Lufthansa’s human resources and benefit manager, North America. The plan also ended revenue sharing and implemented a flat administrative fee.

The Lufthansa German Airlines U.s. division 401(k) plan, which includes employees from 12 of its U.s.-based subsidiaries, has 1,171 participants and $107 million in assets. The company froze those subsidiaries’ defined benefit plan to new hires in 2005, and then did a partial freeze for existing workers based on seniority in 2008.

In 2010, Lufthansa’s U.s. division comprising the 12 subsidiaries decided to harmonize investment lineups with two other Lufthansa divisions in the United states, LsG sky Chefs and Hawker Pacific. “The three of us decided not to combine plans, but to have the same investment lineup, so we could pass along the economies of scale to employees,” Baker says. The three Lufthansa divisions opted not to do a full-scale consolidation of their plans, partly because LsG and Hawker Pacific both have union membership, so the company would have to negotiate a consensus with all unions involved. Also, the three groups have different population types, with the Lufthansa German Airlines division of 12 subsidiaries including a lot of cargo workers and white-collar employees such as salespeople.

The Lufthansa divisions did a joint RFP for recordkeepers, and selected Bank of America Merrill Lynch as recordkeeper, which the group of 12 Lufthansa German Airlines subsidiaries already utilized. After the new investment lineup went live in mid-2011, the other two Lufthansa divisions saw even bigger declines in average annual investment fees for a participant, from 81 basis points to 56 at LsG sky Chefs and from 151 basis points to 48 at Hawker Pacific.

The harmonized investment lineup includes 11 target-date funds, which Lufthansa had never offered before. The menu now has 15 core funds, and the shift meant the group of 12 Lufthansa German Airlines subsidiaries dropped several funds, but also added a diversified emerging-markets equity fund and one stable-value fund. The new lineup includes four index funds, with the rest actively managed.

In tandem with the investment consoli-
dation, Lufthansa rethought its adminis-
trative-fee approach and looked at both
the revenue-sharing model and breaking
out administrative costs into a separate
participant fee. “We had the traditional
revenue sharing, but it actually ended
up being cheaper and more efficient for
participants to go with a flat fee,” Baker
says, “and it provided greater transpar-
ency to participants on the fees they
pay.” so each participant pays a $14 flat
quarterly fee for administration.

Even though Lufthansa sent out communication and offered educational seminars about the administrative-fee change to participants beforehand, some initially believed they had to pay a new fee. “They forgot that they were paying before. Fee transparency is not there when you do revenue sharing, and now it is,” Baker says. “once we actually proved to them that they had lower fees, they were fine with it.” —Judy Ward

Mountaire Corp. “You have to be willing to try a lot of different things,” says shelly Cable, corporate benefits manager at Mountaire Corp., of convincing employees who speak little or no English to contribute to a 401(k) plan. “You just have to be flexible, and realize that whatever works for your English-speaking people does not necessarily work for your non-English speakers.” Forty percent of the company’s workers identify themselves as preferring to speak in a language other than English, which Cable says is typical of the poultry-processing industry. These employees most commonly prefer spanish, followed by Haitian Creole. The Little Rock, Arkansas-based company has three integrated poultry operations in North Carolina, Delaware and Maryland. It has many blue-collar employees working in settings such as grain-storage facilities, hatcheries, feed mills and processing plants. Hourly workers have an average tenure of about 3. 8 years, with salaried employees averaging a little more than nine years. For hourly workers, turnover runs about 5% monthly.