The Markets March 20, 2009

Xerox Announces Match Suspension

To cope with effects from the economy, Xerox said it is taking steps that will save it as much as $300 million this year, according to MarketWatch.
Reported by

The steps include a freeze on hiring and salary increases, and suspending matching contributions to its U.S. employees’ 401(k) retirement plans, the news report said. The Norwalk, Connecticut-based company said it is seeking further savings by cutting back on travel, overtime pay, and the use of outside consultants.

Grappling with what it called an “increasingly more challenging global economic environment,” Xerox warned it expects to post first-quarter earnings of 3 cents to 5 cents a share—down from its previous forecast of 16 cents to 20 cents a share.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The new savings will add to the $250 million in savings Xerox already expects to achieve based on earlier restructuring initiatives, according to the news report.

While Xerox is another in a long line of companies announcing match suspensions to cut costs, studies still show companies choosing this option remain in the minority (see “Three-Quarters of Employers Have Not Touched 401(k) Match’).

Compliance March 20, 2009

Investment Advice Rule Implementation Delayed

The U.S. Department of Labor (DoL) has delayed the effective date of its final rules about providing retirement plan participant investment advice.
Reported by

In the final rule published in the Federal Register on March 20, the DoL said it is postponing the effective and applicability dates of its final rules from March 23, 2009, until May 22, 2009, “to allow additional time for the Department to evaluate questions of law and policy concerning the rules.”

According to the document, a number of commenters expressed the view that the final rules raise significant issues of law and policy that should be further reviewed by the Department. Specifically, questions were raised as to the scope of the final rules’ administrative class exemption, and disagreement was expressed with the interpretation of the statutory exemption’s conditions contained within the final rules.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Some commenters said the regulation did not adequately protect those in retirement plans from conflicted investment advice providers, and some lawmakers said the investment advice regulation “exceeds Congressional authorization’ (see “Controversy Brews over Investment Advice Regs’).

The final rule issued in January provided general guidance on the Employee Retirement Income Security Act exemption’s requirements, including computer model certification and disclosures by fiduciaries. The regulation also included a model form to assist advisers in satisfying the exemption’s fee disclosure requirement, and a class exemption expanding the availability of investment advice (see “DoL Finalizes Investment Advice Rule’).

«