Economic and Corporate Upheavals Cause `Benefits Planning Earthquake,' reports employee benefits expert Dan Cassidy, President of Argus Consulting Ltd

    CONCORD, Mass.--June 4, 2003--Pension plans have lost almost half their value while liabilities have skyrocketed. Analysts are calling it a "Perfect Storm," but it's really an earthquake, according to Dan Cassidy, President of Argus Consulting Ltd, Concord Massachusetts, in an article to be published in the Handbook of Business Strategy 2004. "You can ride out a storm," says Cassidy. "But the landscape of pension plan management has been changed forever by seismic shifts in economics and policy."
    Since the early 90s, interest rates have been declining, increasing liabilities in the defined contribution plans, such as 401(k)s, covering most workers. And since the crash in 2000, most such plans have lost almost half their value. "These are the fault lines," explains Cassidy. "They're dangerous, but survivable."
    The actual quake came with the recent string of corporate downfalls, from Enron to Polaroid, along with the collapse of trust in public accounting. "This triple whammy--rising interest rates, falling investment returns, and serial corporate meltdowns--is more than a storm," insists Cassidy. "There's a big hole in the ground where a lot of normal business practice used to be. Companies have plenty of rethinking to do."
    For example, since Enron, the Department of Labor is holding companies much more responsible for the investment choices they offer employees. Cassidy advises Human Resources and Finance managers to reassess their due diligence and plan for continued monitoring.
    The DOL is also looking harder at outside plan managers who limit their liability by saying they are "directed trustees." Management should review all outsourced plan management contracts and processes, and expect outsourcers themselves to be more proactive. Companies should also review and document who is a fiduciary and what authority they have.
    "Finance and HR managers who have survived this earthquake can't just rebuild the same structures over the same fault lines," warns Cassidy. "Shareholders and regulators alike will be watching."

    Dan Cassidy is President of Argus Consulting Ltd of Concord MA, providing employee benefit plan consulting services for qualified and non-qualified benefit plans of clients in the US, UK and Canada. To conduct a media interview with Mr. Cassidy, email danc@arguscl.com, call 978-371-8029, or visit Argus' website at www.arguscl.com.