Certainly that has been the experience of JP Morgan/American Century and Towers Perrin, whose year-old alliance offering total retirement outsourcing has signed up 11 corporate clients in that short span, representing more than $10 billion in assets and covering some 686,000 participants.
All of the 11 signed up for DB/DC integrated administration: Some will also include actuarial services as wealth as health and welfare administration, both provided by Towers Perrin. The typical contract is either a three-year or five-year commitment, says JP Morgan/American Century chairman Jeff Garrity.
According to Towers Perrin managing director Bob Hogan, third-party consultants were involved in more than half of the 11 searches. “Plans aren’t looking for either a fully integrated solution or a best-in-class solution – they want both,” Garrity says.
One of the most recent to embrace the model is Broadview, Illinois-based Robert Bosch, a manufacturer of industrial and automotive parts. Bosch tapped the alliance to administer, manage, and integrate its $475 million, 16,000 participant DC plan and its DB plan.
Plans with 5,000 participants and above are perhaps best suited for outsourcing, Garrity says, although a handful of the 11 plans the alliance has taken on include plans with between 1,000 and 5,000 participants.
While hardly a new concept, HR outsourcing is enjoying a fresh level of interest from providers and plan sponsors alike. In the November issue of PLAN SPONSOR magazine , Mellon Senior Vice President Tony Martin notes that while only about 2% of the 500 largest US corporations have made large-scale outsourcing deals to date, 15% to 20% are likely to have done so five years from now. At the same time, proposing such a move is bound to attract the attention of numbers-conscious bigwigs such as CFOs.
A handful of other firms have begun to focus on total retirement outsourcing – Cigna, Fidelity, Mellon and New York Life are among the more prominent.