State Street Boston Corp. is hoping to capitalize on the recent popularity of certificates of deposit by adding CDs as an investment option to the retirement plans it offers for public-sector employees.
The $21.7 billion-asset banking company announced recently that participants in 457 plans, the public-sector equivalent to 401(k) retirement plans, can now choose to invest in three different CDs.
The CDs are the first to be offered through a defined contribution plan, the company said in a statement. And at least one industry expert predicts they will be a hit with plan participants.
"There's a strong sense of conservatism among public employees, and it's not hard to figure out the attraction with this product," said David B. Master, a senior consultant with Optima Group, Fairfield, Conn.
The CDs are all covered by federal deposit insurance. Offerings include a fixed-rate CD and two indexed CDs that give participants a base rate plus a bonus that fluctuates according to the performance of the Standard & Poor's 500 stock index.