| Sargent & Lundy Savings Investment Plan |
| STAYING PUT |
| Many of you may not realize that
full-time employees only represent 50% of the
participants in the Savings Investment Plan. While
unusual, the plan is not unique. The following excerpts
are from the April 1997 issue of "Plan Sponsor"
magazine. The opinions expressed by the author, Lynn
Brenner, may or may not reflect those of the SIP
Committee. Why encourage former workers to keep assets in your company's 401(k) plan? Doing so merely builds an additional liability into the plan, and additional expenses to boot. That is the traditional thinking at most companies, large and small, once workers depart due to downsizing, departure, or retirement. But that view is based on a couple of misapprehensions, some experts say. First, the employer is a plan fiduciary in any event, points out Rich Koski, a Principal at Buck Consultants in Secaucus, New Jersey. The liability is no greater if former as well as active employees are in the plan. Employers should be much more concerned about the potential liability of failing to inform departing workers that they have a legal right to stay in the plan, Koski contends. Second, the greater a plan's assets, the bigger the sponsor's clout in the financial services marketplace, and the less the plan costs to administer. Employers often are better off if former employees leave money in their plans, says Koski: "Costs are paid by asset management fees. The more assets there are in the plan, the less it costs to maintain and the more features you can offer. Everybody wins: the sponsor, the active employees, and the former employees." A defined contribution plan that welcomes retiree participation is also a recruiting tool. "It helps you attract and retain senior level people - especially late-career hires - if you let them stay in the plan after retirement, maintaining a good array of investment choices on a very economic basis, and tapping into their assets according to their needs," says Dennis Coleman, a principal with consultants Kwasha Lipton in Fort Lee, New Jersey, which encourages its own employees to leave money in the company 401(k) after they depart. "And there's very little additional cost." |
This page updated on 10/6/97