has teamed up with ADP Employer Services to create a strategic relationship, to be called Benefit Services Alliance
. The alliance will provide comprehensive retirement plan solutions, marking the third such key industry alliance announced in recent weeks.
In April, Wachovia took over the WyStar retirement plan recordkeeping of PFPC and most recently Northern Trust sold its retirement services division to Hewitt Associates.
The service alliance announced today covers all of Scudder's 401(k) plan business from its SunGard Omni
-based large-market plans to the KempFlex
-serviced small market programs.
Over time, the alliance will offer employee benefits clients a full range of services that also will include administration of executive deferred compensation and workplace 529 education savings plans, as well as health and welfare plan services.
Officials at both firms hope that combining Scudder retirement plans division's employee and client services with ADP's transaction processing and recordkeeping capabilities will increase economies of scale and operating efficiencies.
ADP will acquire Scudder's Salem, New Hampshire and Kansas City, Missouri retirement plan recordkeeping operations, as part of the deal. In addition, the two companies have agreed on an important ongoing relationship, with Scudder Retirement Services retaining a continuing financial interest in the future performance of the business.
The alliance will be comprised of some 860 employees, including 350 from Scudder's two facilities and 510 from ADP's Roseland, New Jersey and Louisville, Kentucky retirement service centers. No layoffs were announced as part of this deal, according to a spokesperson for ADP.
Together, the two firms will provide retirement recordkeeping services to a client base of over 30,000 retirement plans representing 1.1 million participants, with $16 billion in assets under administration, according to the release. ADP's mega-market, custom retirement services business is not included in the alliance. Scudder Investments recordkeeps for some 634,724 DC participants, according to the 2002 Pensions & Investments DC Service Provider survey, while ADP is listed with just over 1.8 million.
According to Scott David
, managing director and president of Scudder Retirement Services, ADP and Scudder have developed a groundbreaking way to service the defined contribution industry.
"Through this alliance, organizations of all sizes will have the opportunity to take advantage of truly comprehensive retirement and benefit outsourcing solutions," said Mark Phillips
, general manager of ADP Retirement Services.
Phillips will lead the Benefit Services Alliance management team. Along with David, he also will be part of a six-person Strategic Advisory Committee comprised of representatives from both organizations that will monitor the alliance's performance.
According to industry analyst Joshua Dietch
, associate director, Cerulli Associates
, finding innovative ways to streamline operations and improve efficiencies is a strategic imperative, and this new alliance is an important step in that direction.
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