Less faith in Fidelity
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Dear Mr. Berko:
I’m fortunate to have worked for AT&T for 20 years. Our pension and 401(k) plans are currently administered by Fidelity, which is also a good company. But now I’m concerned about Fidelity’s ability to accurately value our pension and 401(k) accounts. It can take months to get answers from them to simple questions concerning the value of our accounts. I’m familiar with several instances where employees have retired after being told a dollar amount for their retirement only to receive a notice months after their retirement that mistakes were made and the employee would not get the original amount and in some cases had to pay money back to the plan. One employee delayed his retirement for a full year trying to get a proper figure from Fidelity. When he finally retired, he too was told that his monthly income would be lower than he was told the day he retired. This is scary. Our human resources department doesn’t know how to help us. There are a number of us who are afraid to retire because we can’t trust the numbers given to us by Fidelity. What advice can you give us to help employees ensure that their pension and 401(k) plans are accurately valued for disbursement?
B.F., Indianapolis
Dear B.F.:
I find it hard to believe that the great Fidelity folks, based in Beantown, have chewing gum for brains. At first I thought you were spoofing me until I visited with several other folks who also work for AT&T.
So I called Fidelity in Boston, and their spokesman said, “We are unable to comment on individual accounts.”
According to Jennifer Engle, “Fidelity will not comment on its clients. Many of the plans we manage are complex with multiple mergers and acquisitions. While miscalculations occur, this represents a small number of overall cases among the thousands of plans we manage.”
Bollocks. AT&T ain’t no individual account; it’s one of the largest companies in the country with 310,000 individual employees.
Because I know a few people in Boston, I was able to phone some folks who, in various professional capacities, conduct business with Fidelity. The consensus was that the quality of the labor pool from which Fidelity makes its hires has been in a constant state of decline for more than 20 years. So when the good folks at Fidelity begin to retire after years on the job (and lots of Fidelity folks are handing in their passwords), they are replaced by high school and college graduates with diminished capacity. (This is what we get when we pay Kevin Garnett or Shaquille O’Neal $20 million a year to drop a ball through a hoop, then pay $40,000 to a grade school teacher with a master’s degree to teach our children English and math.)
It seems that Fidelity’s pension plan administration division may have a disproportionately higher number of “feebles” than other Fidelity departments. But don’t worry, because other Fidelity departments will catch up in the coming decade.
As you know, human resources departments at most firms are not held in high esteem by management. As a result, many HR departments are staffed with average people and average people only solve average problems with average results. Apparently the human resource department at AT&T has just as many “feebles” as Fidelity’s plan administration division. But that’s the way it is at most large corporations.
Shame on AT&T for not caring enough to resolve this problem! So I will make the following suggestions:
1. Compose a letter to Randy Stephenson, who is chief executive officer of AT&T. Tell him just what you told me and have your affected friends sign the letter. Enclose this column, too. You should get a response within 10 days to two weeks.
2. You guys are union members, and your union representative should hop on this problem faster than a duck on a June bug. You should expect an answer with 10 days to two weeks. If he or she doesn’t help, you should cancel your union membership.
3. Sue. A recent Supreme Court decision now allows 401(k) participants to sue their plan administrators for negligence. Until recently, the Employee Retirement Income Security Act of 1974 (ERISA) barred individuals from recovering losses due to an incompetent fiduciary. Certainly Fidelity’s actions reek of incompetence. So find an attorney who is familiar with ERISA and give him the facts, and he may decide that you guys have an actionable complaint.
Or:
4. Be a “feeble.” Stop making waves; accept the situation as it is; walk the line; be a company man; and take whatever they want to give you.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © Copley News Service
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