State Street Boston Corp. will administer a new 401(k) program for Roadway Express Inc., the latest company to join the bank's six-month-old partnership with the teamsters' union.
Roadway, a trucking company based in Akron, Ohio, is the largest employer to sign up with the International Brotherhood of Teamsters' multi-employer 401(k) program with State Street. One of the first to sign on was Ryder Automotive Operations, the car- hauling division of Ryder Systems Inc.
For State Street, the partnership with the teamsters' union gives the bank access to the retirement funds of a variety of employers, which the bank couldn't easily tap on its own.
"Most of these small employers who don't have an existing plan would never be able to approach a bank or mutual fund company and say, 'Will you do a 401(k) for eight employees?'" said Robert L. Dawson, vice president of the retirement investment services division of State Street Global Advisors.
Most multi-employer retirement plans are defined benefit, a traditional arrangement whereby the plan administrator is responsible for making all investment decisions.
But State Street has started to administer some 401(k) plans for employees in the same fields. One is sponsored by the American Bar Association Membership Retirement Program and comprises 40,000 lawyers from 6,000 firms. In such plans, employees make their own investment choices.
The teamsters plan has a board of trustees representing labor and management, and can be co-sponsored by any private-sector teamsters employer.
"Multi-employer retirement plans have not really caught onto the 401(k) craze. They've been very pension plan-oriented," said Mr. Dawson. "This program with the teamsters could be a model for unions in general to offer their members a way to supplement pension plans."
There are 170 teamsters pension plans with more than $60 billion in assets. The union represents 1.4 million private- and public-sector workers in 17 trade divisions.
But many teamsters work for small employers that would not have access to a 401(k) plan.
Combined under union sponsorship, more than one million private-sector employed teamsters could be eligible. The teamsters plan accesses State Street Global Advisors' commingled funds. Employees can also sign up for a self-managed brokerage account choice.
One inspiration for the multi-employer plan was actually a single- employer plan. In 1987, the teamsters' union started a 401(k) plan for its 200,000 eligible members who work for United Parcel Service. Today, 60% of the UPS workers participate in the plan, which is also administered by State Street.