Chase Manhattan Corp. is planning to introduce a retirement-planning service for midsized companies by early next year.
The new service will fill in a gap in the current slate of 401(k) retirement-planning services marketed by Chase.
Last year, Chase began marketing a 401(k) service to companies with fewer than 250 employees. Previously; it had only sold the service to very large companies. The new service will target employers that fall in between.
Chase currently provides 401(k) services to 300 companies as part of the banking company's Vista Retirement Plan.
The banking company will use an outside vendor, Trust Consultants, San Mateo, Calif., to handle participant record keeping for midsized companies. Boston Financial Data Services, handles record keeping for small companies.
Chase's role for small and midsized companies is to provide investment options, namely, its Vista mutual fund family. Chase offers both investments and record keeping for the 401(k) service it sells to large companies.
401(k) plans are an employer-sponsored benefit that allows employees to save money on a taxdeferred basis until retirement.
Early next year, Chase will add other companies' mutual funds as investment options, said David B. Master, vice president overseeing retirement plans. Mr. Master would not say whose funds will be offered.
Jeffrey Close, a director with Access Research, Windsor, Conn., said Chase's focus on small companies jibes with market trends.
According to Access, which studies the retirement market, employers will launch more than 100,000 401(k) plans in the next five years.
Nearly 95% of these plans will be started by companies with fewer than 100 employees, Access notes.
Chase is hoping that the popularity of its Vista mutual funds will help sell its 401(k) services. The Vista fund family had $6.4 billion of assets as of Sept. 30, up $2.2 billion form the preceding year.