A Prudential news release said that the opt-out option implemented in the Tar Heel state in September 2003 “gave members additional fund selection flexibility and more time to consider investment options offered by Prudential Retirement.” Prudential beat out the previous administrator, the Winston-Salem based BB&T, which had the $2.3 billion state account since 1985.
The plan is the nation’s largest public 401(k) Plan with $2.6 billion in assets and more than 181,000 participants, and is available to the state’s teachers, law enforcement officers and state and local government employees.
“During the transition many North Carolina plan members expressed some anxieties about whether their favorite funds would be eliminated,” said Paul Chong, senior vice president, Marketing and Strategy, Prudential Retirement. “In response, we offered a flexible opt-out investment program so that members could retain funds from their previous plan as part of their investment line-up at the conclusion of the transition to Prudential.”
Prudential successfully completed the transition in January 2004.
The change will also mean less out of pocket expenses for the plan’s 175,000 participants. Participants had been required to pay annual fees to BB&T based on the amount of money they keep in their accounts. Prudential waived all account fees, resulting in $22.3 million in participant savings over the next five years, according to the firm (See NC 401(k) Participants Will Reap Savings from Recordkeeper Change ).