401K Folktales

A lot of folks are confused about the folktales being told about the new 401K plan for lay archdiocesan employees. Hopefully, this post will help the benefits folks at 66 Brooks do a little better job of explaining things than they have done up to now, for the benefit of the folks who will rely on these benefits in the future.

One source of angst and confusion has concerned the listing of funds in the August mailing to archdiocesan employees. The letter sent to folks  gave a list of funds that included a number that were load funds. Because there was nothing in the letter to employees and supporting materials that suggested otherwise, folks naturally assumed that they were getting stuck with front-end fees, which go to the brokers that sell the fund shares and thus reduce the amount of your investment.  Here is a list of the funds at catholicbenefits.org, which is a slightly updated version of what was sent to folks in the mail in August:

It did not take much for folks to start looking up the investment options and find that funds like AIIEX, LSMAX, PEEAX, ACLAX and others charge front-end loads of up to 5.75%.  Who wants sales commissions taken right off the top that reduce the amount of your retirement investment?

Many load funds waive their loads for purchases of fund shares through 401K retirement plans, but since there was no mention in the communication from the archdiocese that the loads were being waived with this plan, folks understandably started to get a bit stirred up.

Now, in the most recent edition of The Pilot, Carol Gustavson, director of benefits trust and plan administrator, says there will be no front-loaded fees or sales charges on mutual funds offered in the package.  If indeed that applies to all of the funds, that is a good thing.  But, assuming that is the case, why was this not communicated up-front in the original mailing two months ago? Must folks subscribe to the The Pilot or attend a meeting in order to learn critical details like this? If it is true that the published load fees are being waived, why is this important information still nowhere to be found on the Benefits Trust website?

Last BCI heard, the person managing this important program is paid  about $150K/year and her multi-millionaire boss who has executive-level oversight for this area is paid $250K/year. These excessive salaries relative to other dioceses take a few hundred $K annually away from ministry programs.  Is it too much to hope and expect that for these excessive salaries, the so-called  “best and brightest” could put together a complete set of materials about the program and utilize the cost of printing and mailing effectively to communicate the critical details of the 401K program?

If the folks at 66 Brooks who are telling 401K folktales would like to email us when they have officially posted and communicated the provisions regarding the waiver of load fees, BCI will be glad to notify our readers.

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2 Responses to 401K Folktales

  1. BobofNewtn says:

    Hi BCI – You are correct: front-end loaded funds are a rip off! Perhaps there was a lack of communication here on the part of the diocese or, maybe, it was pur deception. However, thanks for pointing out the facts involved. I know many of the funds and it is not a bad mix IMHO. I say so not knowing anyone invloved in either the management or oversight of the portfolio (except PIMCO, whose Co-chief investment officer, ran the Harvard Management Company at the Federal Reserve in Boston for several years before her returned to the Company). Keep up the good work BCI and thank you for your efforts.

  2. qclou says:

    when there exists a ‘silo’ style of management , what do you expect ?? and the frequent examples of poor coordination and lack of professional information management further engender the morale challenges , lack of trust , etc. among many in the RCAB , as well as our Faith community as so often reported in this very useful news source !

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