Compliance July 1, 2009

Anheuser-Busch Sued over QDIA Selection

Anheuser-Busch has been hit with a federal court lawsuit alleging the brewer and a trustee improperly designated an overly risky qualified default investment alternative (QDIA) for participants’ cash proceeds from a stock sale.
Reported by

Employee David K. Parsons alleged that Anheuser-Busch was obliged under the Employee Retirement Income Security Act (ERISA) to pick a less risky QDIA in November 2008 to house funds in participants’ accounts generated when InBev acquired Anheuser-Busch by paying shareholders $70 a share. Shareholders included participants who had built up blocks of stock through their pension plan.

According to Parsons’ complaint, which seeks class action status, Anheuser-Busch circulated a flyer to its employees just after the sale was completed telling them they would have until November 7 to choose an investment fund for the cash from their stock sale and that if they did not, the money would go to an “Indexed Balanced Fund.”

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Parsons argued that reasonable notice of the QDIA was not given, there was a limited election window to direct a transfer to another investment fund, and there was no description of the Indexed Balanced Fund in the flyer mailed out by Anheuser-Busch.

He charged in the suit that, despite the flyer’s representations, the plan mandated that the QDIA for employees not choosing an investment choice for their cash assets would be a “Short-Term Fixed Income Fund.”

The plaintiff did not submit a choice and trustee BNY Mellon Bank transferred $271,024 of Parsons’s cash to the Indexed Balanced Fund. The money transferred to the Indexed Balanced Fund remained in the fund for just under two days, when Parsons took steps to move it to the Short-Term Fixed Income Fund. In those two days, Parsons allegedly lost $20,000 due to the market volatility of late 2008.

According to the suit, Parsons wrote Anheuser-Busch, requesting that he be reimbursed for his investment loss. Parsons argued in the letter that his cash assets from the InBev sale were transferred by BNY Mellon to the Indexed Balanced Fund without his permission. The company responded by saying the Indexed Balanced Fund was selected as the plan’s default because it was a diverse fund and satisfied the QDIA requirements.

The complaint is available here.

Data & Research July 1, 2009

More Productive away from the Office?

A new survey suggests all of you road warriors might feel happier and more productive when you telecommute.
Reported by

A study of almost 2,000 employees at the tech giant Cisco said those who telecommute experienced a significant increase in work-life flexibility, productivity, and overall satisfaction.

A Cisco news release said the company also reaps substantial benefits. The company has generated an estimated annual savings of $277 million in productivity by allowing employees to telecommute and telework.

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Cisco said its survey found telecommuters recognize the benefits gained by their work program:

  • Approximately 69% of the employees surveyed cited higher productivity when working remotely, and 75% of those surveyed said the timeliness of their work improved.
  • By telecommuting, 83% of employees said their ability to communicate and collaborate with co-workers was the same as, if not better than, it was when working onsite.
  • 67% of survey respondents said their overall work quality improved when telecommuting.
  • An improved quality of life through telecommuting was cited by 80% of survey respondents.

Telecommuting can also lead to a higher employee retention rate, as more than 91% of respondents said telecommuting is somewhat or very important to their overall satisfaction.

Another survey last year study of 212 IT and other professionals in a range of industries by CompTIA shows that the benefits of telecommuting to organizations include improved employee productivity (67%), cost savings (59%), access to more qualified staff (39%), employee retention (37%), and improved employee health (25%).

However, the respondents cited challenges also, including securing corporate information systems (53%), limiting use of unauthorized and unsupported devices (38%), and controlling personal use of corporate mobile assets (33%).

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