TRANSAMERICA The current job market is unusually challenging for most companies. There are too few people qualified for too many jobs. As a result, being able to compete with other companies for employees has never been more important. Potential new hires at any company are interested in two important questions before accepting a job offer: how much will they earn, and what benefits are available? A retirement plan is one of the most important benefits, but putting one together and managing it is not a once-and-done process. Retirement plan investment menus have to be revisited continually. Companies change, and sometimes they change what their plan’s investment choices are. Also, an investment class needs to be represented appropriately, but that also changes over time. Shifts and slippages can take place, such as when an investment might not be performing well. All of this requires specialized research and analysis. Under the 1974 Employee Retirement Income Security Act (ERISA), a plan sponsor has fiduciary duties and responsibilities. The sponsor can be sued for negligence if those duties and responsibilities are not met. Outsourcing a company’s retirement plan is no different than outsourcing tax preparation, especially since handling a retirement plan on a company level exposes the company to legal liabilities. Hiring a company to handle the retirement plan is like hiring a tax planner, but the focus is on investment instead of taxes. It is a service that mitigates liability. Any company that prefers to focus on company growth instead of implementing and maintaining a retirement plan in-house may want to transfer the responsibility and the requirements to an investment adviser. The adviser collects and monitors data and informs the plan sponsor before making any changes. The advantage of having a retirement exchange is that it is simple, easy to join, and has a proven 401(k) process. For slightly more than a year, the Transamerica Retirement Plan Exchange has been available to employers who are UAPA members. UAPA recently interviewed Wayne Ericson, Transamerica’s Regional Vice President, Retirement Plans, about the Transamerica program. Wayne, a 14-year Transamerica employee who lives in Utah, works closely with UAPA and can be a resource for potential members who have questions. The following article summarizes the information Wayne gave to UAPA during his interview. There are several reasons why UAPA members may want to consider using Transamerica’s Retirement Plan Exchange: 1. It can give them economies of scale. For example, smaller companies can provide employees with better options than they could otherwise. Grouping people together is a great way to lower costs. 2. The Retirement Plan Exchange can make administration significantly easier. It can help with notices, approval and tracking administration duties. 3. It delegates fiduciary liability. On the administrative side, the Retirement Plan Exchange helps companies comply with ERISA section 3(16), which outlines the administrator’s duties. On the investment side, it helps them with ERISA section 3(38), which contains the rules for outsourcing the fiduciary investment position of the plan sponsor. Transamerica and its partners lift the burden of plan sponsorship. They work with companies that don’t have the time or knowledge to run a plan. They also work with companies that don’t want the responsibility. Organizations offering retirement strategies to companies generally involve three parties: a record keeper, an administrator and a financial adviser. They can be part of the same company, but separate companies can also choose to work together as part of a Retirement Plan Exchange. That’s the model for the plans Transamerica offers UAPA. Transamerica has the record-keeping role, DWC handles third-party administration, and financial advice comes from Taylor Dance, a managing director and consultant at GBS Retire. DWC is responsible for complying with section 3(16). GBS Retire acts as the plan’s registered investment adviser and is responsible for compliance with section 3(38). 10
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