Ford Motor Co. has yanked a retirement plan servicing contract away from a leading Detroit bank and handed it to Fidelity Investments.
The move, a blow to Comerica Inc., is intended to give Ford's employees a better 401(k) retirement savings plan, the company said.
Currently, some 53,000 Ford employees participate in a 401(k) plan administered by Comerica. With this plan they can invest a portion of their paychecks, on a tax-deferred basis, in one of five investment options.
These options are Ford stock, or one of four trust fund portfolios managed by Comerica in basic money market, stock, and bond investing styles.
In the new plan, which Fidelity will administer, more than 60 investments will be offered. The investments will include all of those in the old plan, plus six Fidelity mutual funds, and more than 50 mutual funds from Fidelity's BrokerageLink service.
In the new plan employees will be able to move money between investments daily, rather than monthly, as is now the case.
"This provides a certain added flexibility," a Ford spokesman said. "It is an added benefit."
The new plan is to be made available to Ford employees in the fourth quarter, the spokesman said. He added that it will help compensate for other changes in employee benefits that will result in Ford employees' paying for more of their health care expenses.
Ford announced the changes in its benefits earlier this week.
With $6.7 billion of assets, Ford's 401(k) plan ranks as the seventh largest in the country, according to Money Market Directories Inc., a Charlottesville, Va., unit of McGraw-Hill.
That this plan will be administered by Boston-based Fidelity further solidifies that company's position as one of the country's largest 401(k) administrators.
Last year the unit picked up contracts to administer the 401(k) plans of AT&T and General Motors Corp.. As of September, Fidelity was managing a total of $70 billion in 401(k) plans for 4,500 companies, with a total of three million participants, according to a Fidelity spokeswoman.
Comerica is a much smaller player. According to a Comerica spokesman, the company manages $10 billion of assets for 600 401(k) plans.
The Comerica spokesman would not comment on the bank's dealings with Ford. But he added that at this time no layoffs or staff reductions are foreseen among the 100 employees that manage Comerica's 401(k) record- keeping and administration services.
But when General Motors moved its 401(k) plan from Bankers Trust New York Corp. to Fidelity, it was reported that the 70 people working on the GM account at the bank were offered buyout packages and outplacement help.
The Comerica spokesman said the bank provides investment management, recordkeeping, and trustee services for a total of 2,500 retirement plans, including 1,900 profit sharing and pension plans.