ING Closes Acquisition of CitiStreet

S U M M E R / F A L L
02
2 0 0 8
“ T H E
A
T R O U B L E
W I T H
R E T I R E M E N T
P U B L I C A T I O N
F O R
I S
T H A T
I N G
Y O U
N E V E R
P L A N
G E T
A
D A Y
O F F ”
A B E
L E M O N S
S P O N S O R S
ING: GLOBAL AND
DOMESTIC LEADERSHIP
POSITION
03
04
TARGET DATE FUNDS: STILL
MAKING DECISIONS EASIER
NEW PARTICIPANT
INVESTMENT ADVISORY
SERVICE NOW AVAILABLE
05
07
10
STAYING AHEAD OF
THE CURVE
FIDUCIARY SOLUTIONS
WHAT’S RIGHT FOR YOU?
YOUR NUMBER
This information is not intended to be
considered tax or investment advice.
It is provided, for your education
only, by ING Financial Advisers, LLC
(member FINRA, SIPC). For more
information about the ING family of
companies, please contact your local
ING office or representative, or visit
us at www.ing.com/us
C08-0808-002 (9/08)
ING Group announced on July 1, 2008 that it
received final regulatory approvals and
completed its acquisition of CitiStreet LLC, one of
the premier retirement plan and benefit service
and administration organizations in the US,
which includes CitiStreet’s Australian operations.
The transaction closed quickly, in approximately
60 days from signing, reflecting the
complementary nature of the two organizations
and the seamlessness of the transition.
ING’s US Wealth Management business has a
leadership position in a wide range of businesses,
including defined contribution retirement plans,
defined benefit pension plans, fixed and variable
annuities, retirement income solutions, managed
accounts, financial planning, retirement plan
rollovers, stable value programs, as well as
a health and welfare operation.
ING Closes Acquisition
of CitiStreet
Solidifies Leadership Position in Defined
Contribution Retirement Plan Market
“
Kathleen Murphy, CEO, ING US
Wealth Management said, “We have all
the characteristics of an undisputed market
leader – scale in our market segments,
an outstanding technology platform,
innovative products, strong distribution
relationships, and a powerful global brand.
In addition, what truly differentiates ING
and will allow us to further grow the
business is our committed focus on our
customers, and helping them successfully
prepare for their retirement. ING is one of
the few retirement services companies that
has a scaled leadership presence in the
small-, mid- and large-corporate,
education, and government and health
care markets, which allows us to design
and implement retirement and benefit
solutions for any plan sponsor we
encounter.”
Sandy McCarthy, previously
president, CitiStreet, and now
president, Institutional Plan Services,
ING US Wealth Management said,
“The integration of our customer-centric
organization has been seamless, orderly,
and has revealed the true potential of the
combined organizations to meet the
retirement and other benefit needs of plan
sponsors and plan participants. We have
generated significant momentum and
enthusiasm, and are ready to address the
marketplace with a value proposition that
spans the full spectrum of the plan sponsor
marketplace.”
In aggregate, the combined ING US Wealth
Management and CitiStreet businesses,
which includes CitiStreet’s Australian
operations, has more than US $408 billion
in combined assets under management
(AUM) and assets under administration
(AUA) and more than 16 million customers
(as of March 31, 2008).
According to the most recent third-party
data1, ING is now the third largest defined
contribution business in the US based on
combined AUM and AUA with more than
US $300 billion; the second largest based
on number of plan participants with
approximately 9.8 million; and the largest
based on number of plans with
approximately 60,000.
Under the terms of the agreement, ING
acquired 100 percent of CitiStreet for a
total consideration of approximately US
$900 million. The acquisition was financed
entirely from existing internal resources
and will be booked in the third quarter.
1
From 2008 PLANSPONSOR recordkeeping survey data
SUMMER/FALL ‘08 – IMPACT – 1
EDITOR:
KRISTIN McMANUS
BOARD:
LOU BACHETTI
RON BARHORST
BRIAN COMER
DOROTHEA GLATTE
BRIAN HAENDIGES
BILL JASIEN
BILL LOWE
RICK MASON
JANICE MELVIN
PAM MULVEY
SRI REDDY
LINDA SEGAL-BLINN
MIKE SMITH
RUSS WAESCHE
JUDEEN WRINN
CONTRIBUTING:
DIANA CRECCO
DEB DUPONT
DESIGN & PRODUCTION:
WINDSOR DESIGN TEAM
BOB REGAN
ING: Global and Domestic
Leadership Position
When you choose
to do business with
the ING family of
companies, you
are choosing to
do business with
a global leader.
Every year Fortune publishes a list of the world’s leading companies based on
revenues; this list is a frequently cited thermometer – both in the United States
and across the globe – of what are thought to be top companies. In 2008,
ING Groep, N.V. was No. 7 on the global list, and the only financial services
company in the top ten.
PLANSPONSOR magazine is an industry publication for employers who sponsor
workplace retirement plans such as 401(k)s, 403(b)s and 457 Deferred Compensation
plans for employees of corporations, healthcare and educational institutions and
governmental entities. Each year, PLANSPONSOR analyzes and ranks the companies
that provide products to these plans based on a number of measures, including
number of plans, number of employees participating and assets under management.
For 2008, the newly combined ING/CitiStreet organization in the United States ranked
No. 1 for number of plans, No. 2 for number of employees, and No. 3 for plan assets
under management.
ING is committed to the retirement plan marketplace for the long term, and we're
honored to be your service provider. We continue to seek innovative solutions to
meet your unique company benefit needs.
ONLY Financial Services Company in the Fortune Top 10!
For Qualified Default
Investment Alternative
(QDIA) and Cost of
Living Adjustment
(COLA) updates, visit
the ING Institute for
Retirement Research:
ing.com/us/sponsorIIRR
www.ing-usa.com
www.ing.com/us/sponsorIIRR
2 – IMPACT – SUMMER/FALL ‘08
COMPANY
#1 Wal-Mart Stores
#2 Exxon Mobil
#3 Royal Dutch Shell
#4 BP
#5 Toyota Motor
#6 Chevron
#7 ING Groep, N.V.
#8 Total
#9 General Motors
#10 ConocoPhillips
CATEGORY
General Merchandisers
Petroleum Refining
Petroleum Refining
Petroleum Refining
Motor Vehicles & Parts
Petroleum Refining
Financial Services
Petroleum Refining
Motor Vehicles & Parts
Petroleum Refining
Source: Fortune Global 500 List; Rankings based on revenues, July, 2008
PLANSPONSOR 2008 Defined Contribution Recordkeeping Survey
(Combined ING Life Insurance and Annuity Company/CitiStreet
organization in the United States)
#1 Number of Plans
#2 Number of Participants
#3 Assets Under Management
59,798
9,756,510
$307 Billion
TARGET-DATE FUNDS:
STILL MAKING DECISIONS EASIER
Over the years, asset allocation decisions have been
made easier by target-date funds. That’s because the
participant makes one investment decision based on
an expected retirement date. Compare that to
participants not taking the time to make informed
decisions, taking advice from co-workers, or perhaps
worse, chasing performance.
“Many defined contribution plan participants have
a common problem: They cannot separate their
investments from their emotions,” said Lisa Gilarde,
ING Vice President, Mutual Fund Due Diligence and
Analysis. “Left to their own devices, participants make
common mistakes like chasing recent performance,
over-allocating to safe, low-return investments, loading
up on familiar, brand-name funds and company stock,
or misallocating their portfolios initially and never
rebalancing.”
Target-date funds are designed to make diversification
easier, and provide automatic rebalancing. These are
crucial points as over 50 percent fail to diversify and
almost none rebalance in response to age or market
returns.
“Target-date funds make it easy for participants to
choose their portfolio – no further decisions are
required. Ongoing professional management handles
all the details,” Gilarde said.
In addition to aiding with diversification and
rebalancing, target-date funds also help employers:
• increase plan participation through streamlined
decision-making processes; and
• satisfy Qualified Default Investment Alternative
Requirement (QDIA).
New Target-Date Investment Solution:
ING Index Solution Portfolio
ING has rounded out its target-date fund offerings
by adding a suite of passively managed index-based
funds: ING Index Solution Portfolios. This suite joins
the actively managed ING Solutions Portfolios, with
both suites having the same target dates for their
range of portfolios (2045, 2035, 2025, 2015, and
Income).
This new suite rounds out ING’s target-date fund
solution for sponsors wanting to give plan participants
more investment selection options. All portfolios will
fluctuate in value, and there is no guarantee that any
investment option will achieve its stated objective.
Stocks are more volatile than bonds, and portfolios
with a higher concentration of stocks are more likely to
experience greater fluctuations in value than portfolios
with a higher concentration in bonds. Foreign stocks
and small and midcap stocks may be more volatile
than large cap stocks. Investing in bonds also entails
credit risk and interest rate risk. Generally investors
with longer timeframes can consider assuming more
risk in their investment portfolio. The ING Solution
Portfolios are actively managed and the asset
allocation adjusted over time. Refer to the prospectus
for more information about the specific risks of
investing in the various assets classes included in the
ING Solution Portfolios.
You should consider the investment objectives,
risks, charges and expenses of the investment
options offered through a retirement plan
carefully before investing. Prospectuses
containing this and other information can be
obtained by contacting your ING Registered
Representative. Please read the information
carefully before investing.
“
Target-date funds
make it easy for
participants to
choose their
portfolio – no
further decisions are
required. Ongoing
professional
management
handles all the
details.
”
- LISA GILARDE, ING VICE PRESIDENT, MUTUAL FUND
DUE DILIGENCE AND ANALYSIS
SUMMER/FALL ‘08 – IMPACT – 3
New Participant Investment
Advisory Service Now Available
Now, you can provide professional investment expertise to help the specific
needs of different participants and their individual savings and investment
goals. ING makes advice and managed accounts participant advisory
services available online from independent third party Morningstar
Associates, LLC (“Morningstar”) through Morningstar® Retirement
ManagerSM.
> Morningstar, a leading provider of investment advisory services for
the retirement plan industry, is a registered investment advisor and
wholly owned subsidiary of Morningstar, Inc., a company known for
its independence and investor focus. Morningstar serves institutions
and individuals at all stages of retirement plan development – including
plan lineup development, investment monitoring, and participant
recommendations.
A pollster or marketer might look at
your employee population and see all
kinds of labels: gen-Xers, baby-boomers,
sandwich generation – even soccer
moms and helicopter parents.
As a plan sponsor and fiduciary, you
might look at that population and see
two distinct groups: those who want
to manage their investments and those
who prefer to have a qualified
professional do it for them.
Morningstar® Retirement ManagerSM
Helps Different Employees
Managed by You
This service provides participants the
tools and information needed for them
to actively and intelligently manage their
retirement account investments. As with
any active investment management,
the participant must assess and make
changes when necessary. There is no
additional charge for using Managed
by You.
Managed by Morningstar NEW
[NOTE: Not available in all products]
Participants who enroll in this new
service generally lack the time or desire
to actively manage their retirement
account. Morningstar provides
participants a personalized retirement
strategy, discretionary asset
management, and ongoing oversight
to help them meet their retirement
4 – IMPACT – SUMMER/FALL ‘08
objectives. The participant assigns
Morningstar the responsibility for
managing their retirement income
assets, and pays a fee based on a
nominal percentage of his or her
account balance (less than 1%).
Participants can be confident knowing
that a professional investment manager
is overseeing their custom strategy on
an ongoing basis.
A Retirement Strategy for Everyone
Whether participants choose Managed
by You or the Managed by Morningstar
service, the underlying methodology is
consistent across services. Morningstar
uses sophisticated quantitative and
qualitative analysis to provide
participants with a retirement strategy.
“Investing for retirement can be a
challenge for many individuals who may
be overwhelmed by the complex
decisions they face in their employers’
plan,” said Rick Mason, Head of
Intermediary Market Segments at ING.
“These investors recognize that
retirement is not a ‘do-it-yourself’
project they can handle on their own.”
Participants receive a personalized
retirement strategy consisting of
recommendations for:
• target retirement income goal;
• savings rate;
• asset mix;
• investment selection; and
• handling company stock (if applicable).
widely recognized and trusted brand
name: Morningstar.
“Plan sponsors and their advisers
increasingly seek products like
Retirement Manager, which can give
participants the added confidence
they need in their investment decisions,
which helps them to remain invested,”
Mason said.
So, no matter what labels can be
applied to your workforce, the most
important are the ones they give
to themselves when they describe
themselves as investors. As a plan sponsor,
you can feel confident you are meeting
your employees’ needs when you offer
Morningstar Retirement Manager.
“Investors can panic during times of
economic uncertainty and sabotage
their retirement goals. Having a
long-range plan and staying the course
through bull and bear markets can help
investors save enough to provide income
after they leave the workforce,” said
Patrick Reinkemeyer, president of
Morningstar Associates. “Consequently,
we’re focused on helping people create
a retirement strategy that establishes
long-term savings, contributions,
and income goals. Once a strategy is
established, our investment professionals
can then create and manage an
investment portfolio that is designed to
meet those long-term objectives, and
move investors closer to a successful
retirement.”
Enrollment is Easy
Enrollment in the Managed by
Morningstar service is made possible
through the Internet or at enrollment
into the plan. Participants can use the
Managed by You service through the
ING retirement site.
Morningstar Retirement Manager
also Benefits Plan Sponsors
Offering Managed by You and Managed
by Morningstar can help reduce
fiduciary risk because Morningstar is
a registered investment advisor and
accepts fiduciary responsibility for
the advice it provides.* These services
also help plan sponsors improve the
competitiveness of their benefits
package by offering professional
investment advice from an independent,
objective investment expert with a
*For the managed account service, Morningstar acts as
the investment manager with discretionary authority. If a
named fiduciary of the Plan properly appoints Morningstar
as the investment manager, Morningstar will have fiduciary
responsibility for its investment decisions.
IMPORTANT: The projections or other information generated
by Morningstar Retirement Manager regarding the
likelihood of various retirement income and/or investment
outcomes are hypothetical in nature, do not reflect actual
results (including investment results) and are not
guarantees of future results. Results may vary with each
use and over time.
Annual Retirement Income Outlook considers such things
as your asset mix and Morningstar Associates’
(“Morningstar”) own forecasts for return, risks and
correlation for various asset classes. The Expected
Retirement Income noted within the tool is the amount the
simulation has determined as having a 90% probability
of being achieved.
Annual Retirement Income Goal is calculated by taking
70% of your projected salary at retirement, expressed in
today’s dollars. Your projected salary at retirement is
determined by a proprietary salary growth curve and your
projected social security benefits. Morningstar’s salary
growth curve assumes your salary will grow at rates that
vary with your age. Projected social security benefit is based
off an algorithm supplied by the Social Security
Administration.
Proposed Asset Mix is derived from various factors such as
your years to retirement, your projected salary growth and
results from an asset-liability analysis. The asset-liability
analysis is an economic concept that is helpful in
understanding your ability to withstand financial losses by
incorporating a projected future stream of income into
your current financial situation.
Investment advisory products and services are provided by
Morningstar Associates, LLC (“Morningstar Associates”), a
registered investment advisor and a wholly owned
subsidiary of Morningstar, Inc. Morningstar Associates’
advisory service relates solely to the investment options
offered under the plan. Retirement plan funding is offered
through ING Financial Advisers, LLC (member SIPC) or other
broker dealers with which it has selling agreements. ING
provides Morningstar Associates with the plan's investment
options and information about participants but the
decisions regarding the advice provided are made by
Morningstar Associates. ING and its companies are not
affiliated with Morningstar Associates or its affiliates, and
receive no fee or other direct financial benefits from
Morningstar Associates in connection with the use of its
services. The Morningstar name and trademarks are used
under license from Morningstar Associates.
Staying Ahead of the Curve
It has been just over a year since the IRS issued final
regulations that changed 403(b) plans dramatically. ING
has spent that time helping plan sponsors take control
and keeping them ahead of the curve. The January 1,
2009 deadline for adopting the regulations is looming,
but plan sponsors can continue to count on ING for
expertise and tools to handle the changes with ease.
“We are committed to helping 403(b) plan sponsors meet
the new IRS rules, whether or not they are subject to
ERISA,” said Linda Segal Blinn, ING’s Vice President of
Technical Services. “Our 403(b) plan documents,
information sharing toolkits, 403(b) plan administrative
services capabilities, local presence and dedicated 403(b)
expertise all distinguish ING in the marketplace.”
Knowing that the time and resources of plan sponsors can
be limited, ING has created comprehensive tools for the
education, healthcare, and not-for-profit markets, including:
• Specimen plan documents for 501(c)(3) organizations;
• Specimen plan documents for public schools;
• Common Remitter service that accepts and splits plan
contributions to multiple investment providers;
• planwithease.com® plan administrative service that is
designed for use by both sponsors and
employees of 403(b) plans and their
side-by-side 457 plans;
• executable information-sharing
agreements;
• plan sponsor checklist for plan
document drafting;
• sample resolutions to request authority
from school boards to adopt a plan
document and select vendors;
• and more.
ING will continue to take a proactive approach to
easing the complexities of plan administration and
operations. If you have questions, please contact
your ING representative.
Common remitter services offered through ING Financial Advisers, LLC (IFA), a
broker/dealer registered with the Securities and Exchange Commission and the Financial
Industry Regulatory Authority and ING National Trust, a national banking association
limited to fiduciary powers. IFA is responsible for collecting all data and payment
instructions and forwarding such information to the investment product providers. ING
National Trust is responsible for holding the bank account that will receive remittances
from the Employer and forwarding such payment to the investment product providers
as directed by IFA pursuant to the Employer's instructions.
planwithease.com is a plan data aggregation and management service, providing contribution limit testing, an
automated approval process for plan distribution requests, and more, freeing sponsors from the day to day administration
of their 403(b) plan. It also provides their employees with plan information, financial education and, once enrolled under
the plan, access to a consolidated view of their account status across all vendors – including legacy vendors.
It’s Time to Restate
Pre-Approved
Plans for EGTRRA
Harry Truman nicknamed the 80th Congress
the “Do Nothing Congress”; one wonders
what he would think if he were a plan
sponsor today dealing with legislation
pertaining to retirement plans!
It’s time to restate pre-approved plans for the
Economic Growth and Tax Relief Reconciliation Act
(EGTRRA) of 2001. The Internal Revenue Service
(IRS) has stated that all pre-approved plans (e.g.
prototypes and volume submitters) must be restated
(re-written) and signed by adopting employers for
the requirements under EGTRRA by April 30, 2010.
Under the final 403(b) regulations,
sponsors of voluntary 403(b) plans
must have a higher level of
involvement in documenting and
operating the plan. Among other
requirements, sponsors will be
responsible for:
• a written plan document;
• vendor selection;
• approval of loans, hardship
withdrawals, transfers and
other distributions; and
• annual notices to employee
about their eligibility to
participate in the plan.
Complete details are
available online:
www.ing.com/us/403bregs.
Some of the key provisions of EGTRRA include:
• the option to permit catch-up contributions
by older workers
• rollovers permitted between different
plan types
• enhanced deduction limits
• accelerated vesting rules
Annuity Company, and you use a Third Party
Administrator (TPA) to assist you with plan
administration and plan drafting services, the
EGTRRA restatement information will be
forwarded to you from your TPA. Your TPA will
work with you to restate your plan document
for EGTRRA.
While plans are required to comply in operation
with the changes under EGTRRA according to
the effective date of each provision, the IRS
mandates all plan sponsors eventually to modify
their written plan document to conform to the
way the plan has been operated.
All other adopters of the ING plan will receive
the document directly from ING to be completed
and executed by the adopting employer. As a
plan fiduciary it is important that you make sure
your plan is updated and signed by the April 30,
2010 deadline. The restatement process can be
time consuming so it is important that you
include this crucial task in your planning process.
ING Prototype Plan and Trust Approved
ING has received IRS approval on its defined
contribution prototype plan and trust updated
to comply with EGTRRA. (ING Prototypes are
only available to 401(k) plans).
If you have adopted a pre-approved plan
document sponsored by ING Life Insurance and
Count on ING
Congress is making changes continually to the
laws affecting retirement plans. ING is committed
to keeping you informed of any important
regulatory developments affecting your
retirement plans.
SUMMER/FALL ‘08 – IMPACT – 5
Top retirement industry leaders and
academics named to Board of Directors
at ING’s Institute for Retirement Research
ING TO BROADEN ITS STUDY OF BEHAVIORS
IMPACTING RETIREMENT SAVINGS
The ING Institute for Retirement Research recently announced the
addition of eight academic and retirement industry pioneers to its
Board of Directors. The ING Institute for Retirement Research is
dedicated to exploring the new dynamics of an evolving
marketplace for defined contribution plans. ING believes by
joining forces with these independent thought leaders, it can
achieve its goal of uncovering strategies most likely to motivate
savings, and move the needle closer toward retirement readiness.
“We’re thrilled to be partnering with such a well-respected team
of visionaries who share ING’s commitment to understanding the
behaviors preventing many Americans from saving as much as
they can,” says Rick Mason, Head of Intermediary Market
Segments at ING. Mason, along with Brian Haendiges, head of
ING’s Center for Savings Innovation, will serve as Institute
co-Chairs.
The ING Institute for Retirement Research has also made the
following appointments to its Board:
• Dr. David Laibson, Professor of Economics, Harvard University.
Professor Laibson’s research focuses on psychology and
economics; he is currently working in the fields of behavioral
finance, cognitive decision and cognitive sciences, and
macroeconomics. He served as an external peer reviewer for the
Department of Labor regulations that accompany the Pension
Protection Act.
• Dr. Sheena Iyengar, Professor of Management, Columbia
Business School. Professor Iyengar is one of the leading experts
on the psychology of choice; her research examines the
importance of choice in all aspects of people’s lives, from the
seemingly mundane to the most consequential.
• Dr. Alessandro Previtero, Postdoctoral Fellow and member of
the Behavioral Decision Making Group at The Anderson School
at UCLA. Dr. Previtero is currently conducting research with
UCLA Professor Shlomo Benartzi on retirement income, and on
helping retirees to hedge longevity risk.
• Dr. Thomas Woodruff, Director, Retirement & Benefit Services
Division, State of Connecticut. Dr. Woodruff was also the
Executive Director of the President’s Commission on Pension
Policy during the Carter administration, a visiting professor at
Cornell University, and Executive Director of the foundationsupported Commission on College Retirement.
6 – IMPACT – SUMMER/FALL ‘08
• Ted Benna, Chief Operating Officer, Malvern Benefits
Corporation.* Benna is widely referred to as the “Father of
401(k),” having created and gained IRS approval for the first
401(k) savings plan. He has received many citations for his work
in the retirement industry, and is the author of four books.
• Warren Cormier, Co-founder of the Be-Fi Forum, and founder
and President of the Boston Research Group.* Cormier is widely
recognized as a leading market research provider in the defined
contribution industry today.
• Charles Ruffel, Founder and Chief Executive Officer of Asset
International.* Asset International is the parent company
of PLANSPONSOR Magazine, PLANSPONSOR.com, the
PLANSPONSOR Institute, and Global Custodian Magazine.
Ruffel is an authority on global pension issues. He previously
held posts at Institutional Investor and McCann-Erickson.
• Marcy Supovitz, Principal, Boulay, Donnelly & Supovitz
Consulting Group.* Supovitz is recognized industry-wide as
an architect of innovative retirement plan strategies, most
recently pioneering the Uni-K concept, which became the
first IRS-qualified 401(k) plan for owner-only businesses.
She is a nationally known speaker on retirement issues.
The addition of these new board members deepens the inroads
ING’s Institute for Retirement Research has already made in the
area of behavioral finance. It has embarked on several research
initiatives, having sponsored cutting-edge work with Harvard,
Yale, UCLA and Columbia. “The concept of ‘benchmarking’ is of
particular interest to ING, as it explores whether individuals are
motivated to improve their retirement savings when they compare
themselves to their peers,” explains ING’s Haendiges.
“As a leading provider of workplace savings plans, ING recognizes
the challenges many working Americans face in achieving their
retirement goals,” Mason added. “Our research can perhaps
influence the design of ING’s next generation of retirement
investment products.”
More information about the Board of Directors for the ING
Institute for Retirement Research can be found at
www.ing.com/us/sponsorIIRR
* Not a member of the ING family of companies.
Fiduciary Solutions:
What’s Right
for You?
ING Fiduciary Toolkit
Walk into any home improvement
store and you can find all types of
people. There are the avid do-ityourselfers who delight in
remodeling their own kitchens.
At the other end, you have the
folks who go straight to the design
center and hire the professionals.
There is no one-size-fits-all answer
and the same is true for sponsors
of ERISA retirement plans managing
their fiduciary responsibilities.
While managing that responsibility
is paramount, it doesn’t have to
be difficult if you have the proper
tools. Providing employers with
the fiduciary management tools
they need is what ING’s Fiduciary
Solutions are all about.
Third-Party Certified
ING FUND
EVALUATION
SCORECARD
CERTIFICATION
According to Wilshire
Associates, a renowned
investment management firm
that offers independent,
third-party consulting services,
analytics tools and solutions
worldwide, the ING Fund
Evaluation Scorecard is an
appropriate and sound fiduciary
assistance tool that reflects an
analytical evaluation process that
is fair, sound, prudent and
consistent with industry norms.
The ING Fiduciary Toolkit is for the
“do-it-yourselfers” who prefer to take
a more active role in managing their
fiduciary responsibility. The toolkit is
comprised of several components.
The Fiduciary Investment Guide
provides sponsors with a framework for
carrying out the fiduciary responsibilities
associated with the investments in their
plan. The guide helps you identify many
issues fiduciaries need to consider when
sponsoring a retirement plan, including:
• establishment of written policies;
• selection and ongoing evaluation
of investment options; and
• diversification of investment options.
The ING Fund Evaluation Scorecard
is a proprietary analytical tool that
offers a thorough investment option
review to help you with fund selection
processes:
• analyzing fund characteristics;
• comparing investments within
asset classes; and
• monitoring investments on an
ongoing basis when using Scorecard
reports consistently over time.
This tool provides a meaningful
comparison of a fund’s historical
performance relative to its appropriate
peer group. Each investment offering is
evaluated against its peers on the basis
of nine different factors that fall into
five broad categories: performance,
risk, risk-adjusted return, style
consistency, and fund expense.
• A sample Investment Policy Statement
(IPS) provides a framework for
sponsors to work with their legal
counsel to craft an IPS that is tailored
to their plan. The IPS defines how the
investment options and investment
managers are selected, monitored,
and evaluated. It also describes how
the investment objectives are related
to investment decisions.
• The ING Fiduciary Checklist is an
easy-to-use reference tool that
helps plan sponsors organize
plan documents and fiduciary
requirements.
ING Portfolio BlueprintSM
Professional Assistance
ING Portfolio Blueprint is for plan
sponsors who want professional
assistance and an enhanced level of
fiduciary support in the industry. ING
joined forces with Morningstar
Associates, LLC to offer defined
contribution retirement plan fiduciaries
an enhanced and objective level of
investment expertise and fiduciary
support. Morningstar Associates, a
registered investment advisor, and an
independent third party with
tremendous brand recognition and a
high-quality reputation in the financial
industry, acknowledges a fiduciary
adviser role under Section 3(21)(a)(ii)
of ERISA.
• Morningstar Associates uses the
sponsor’s chosen Workforce Profile
to recommend an appropriate
fund menu based on employee
demographics, education levels,
investment sophistication, investment
allocation, and plan participation. Plan
fiduciaries work with their financial
professional to select appropriate
investments from Morningstar’s
recommended Fund menu.
• Morningstar Associates creates
a customized Investment Policy
Statement (IPS) to establish objectives
for structuring a retirement plan
suitable for the long-term needs and
risk tolerance of employees. The IPS
states appropriate asset categories
and investment options within the
framework of the retirement plan. It
also establishes prudent procedures
for monitoring and evaluating the
performance of investments within
the plan, as recommended by
Morningstar Associates.
• The plan sponsor’s fiduciary
responsibility is mitigated because
Morningstar Associates will indemnify
and bear the reasonable cost,
including attorneys’ fees, of
defending a claim related to breach
of their fiduciary obligation with
respect to investment advisory service
as long as the employer accepts the
Recommended Fund Menu and
subsequent recommendations.
Through a strategic relationship with Morningstar
Associates, LLC, a registered investment advisor and
wholly owned subsidiary of Morningstar, Inc., ING makes
available Portfolio Blueprint, a service offering investment
solutions and fiduciary support from Morningstar
Associates for plan sponsors. Morningstar Associates
makes its fund selections from the fund platform that is
available under the applicable ING product, which is a
subset of the broad fund universe. The fund platform
includes both proprietary and non-proprietary funds.
Only ING proprietary options are made available in the
money-market and stable-value categories. ING may at
times request that Morningstar Associates reconsider
specific fund selections but the final decision on which
funds are selected for Portfolio Blueprint is Morningstar
Associates'. The Morningstar name and logo are
registered marks of Morningstar, Inc. All other logos and
marks are the property of their respective owners.
ING and its companies are not affiliated with the
Morningstar family of companies and receive no fee
or other direct financial benefits from Morningstar in
connection with the use of its services.
SUMMER/FALL ‘08 – IMPACT – 7
INVESTORS BEHAVIN
DALBAR Study Finds that “Average” Investors Under
Behaviors have consequences. It’s something everyone learns –
hopefully productively – early in life. Presumably, bad behavior
produces unpleasant consequences. And vice versa.
Investors demonstrate certain behaviors as well, and
many of these behaviors run counter-productive to
long-term results. An entire field of study, Behavioral
Finance, explores the reasons – and potential fixes –
for retirement and investment behaviors that do not
significantly contribute to long-term retirement
security.
With respect to investment behaviors, it’s becoming
common knowledge in the academic, investment,
provider, and plan sponsor universes that presumably
irrational behaviors are at the root of many individuals’
investment decisions:
• rules of thumb that are easy to follow – for example
spreading an investment evenly among
available options;
• overconfidence in their own abilities;
• familiarity bias driving investment
to what’s familiar (i.e., company
stock) or safe (i.e., money
market or Stable Value;
8 – IMPACT – SUMMER/FALL ‘08
• representativeness, in which people over-weight
recent experience at the expense of considering
long-term averages; and
• fear of loss, or “loss aversion,” in many folks who
find loss far more painful than they find “gain”
to be pleasurable.
What is the end result of practicing some of these
behaviors for the individual? It can be a powerfully
negative effect on long-term investment results.
DALBAR, Inc., a Boston-based research firm, regularly
studies the results of investor behavior over time.
Released in May 2008, DALBAR’s Quantitative Analysis
of Investor Behavior compares “average” investor
behavior – in equities, fixed income, and asset
allocation mutual funds – with that of relevant
industry benchmarks and
inflation. The results are
dramatic…
Average Investor Annualized Returns vs.
Benchmarks and Inflation
20-Year period ending 12/31/07
14.00%
12.00%
11.81%
10.00%
8.00%
6.00%
7.56%
4.48%
4.00%
3.45%
3.04%
1.55%
2.00%
0.00%
Equity
Asset
Fixed
Allocation Income
S&P
500
Lehman Inflation
Aggregate
QAIB 2008, Quantitative Analysis of Investor Behavior,
May, 2008, © 2008, DALBAR, Inc. QAIB uses data
from the Investment Company Institute, Morningstar
Associates, and Lehman Brothers to compare mutual
fund investor behavior with an appropriate set of
benchmarks. Covering the period from January 1,
1988 through December 31, 2007, the study utilized
the net of aggregate mutual fund sales, redemptions
and exchanges each month as a measure of investor
behavior. These behaviors are then used to simulate
“average investor return” on both a cumulative (total)
and annualized basis. The study then compares, both
in real dollar and percentage terms, the results in a
$10,000 investment made in a pattern identical to
the average investor with the results of a systematic
investing program, also totaling $10,000 in principal
over the same time period.
G BADLY?
Perform Market Benchmarks
• With respect to the equity, fixed income and asset
allocation “investors,” in no instance did individual
results outperform either benchmark
• The S&P 500 returned 7.33% more than the average
equity investor
• The average fixed income investor earned 6.10%
less than the Lehman Aggregate Bond Index
• The Asset Allocation investor lagged the S&P by
8.36 and the Lehman Bond Index by 4.11
• Inflation BEAT the Fixed Income investor by 1.45%;
Asset Allocation only edged ahead of inflation
by 0.40%
14.00%
12.00%
7.33%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
Equity
“
Different approaches
to plan design,
new approaches
to communication,
options that take
the guesswork out
of investment decisions,
such as lifecycle funds,
all can play a role in
helping these
individuals make
better decisions,
long-term.
8.00%
14.00%
7.00%
12.00%
6.00%
”
- RICK MASON, HEAD OF INTERMEDIARY MARKETS SEGMENTS
S&P 500
5.00%
0.40%
Helping plan sponsors and individuals – you and your
employees – to invest appropriately and productively
remains one of ING’s highest priorities on an ongoing
basis. Two recent initiatives, the ING Institute for
Retirement Research (see related story) and the Center
for Savings Innovation are dedicated to uncovering and
developing new breakthrough strategies to usher in
the next wave of advances in turning “bad” behavior
around in investors and in your employees.
4.41%
8.00%
4.00%
There’s no one easy answer, because there’s no one
“reason” that your employees may act in ways that
could counteract their long term financial well-being.
“Different approaches to plan design, new approaches
to communication, options that take the guesswork
out of investment decisions, such as lifecycle funds,
all can play a role in helping these individuals make
better decisions, long-term,” said Rick Mason,
Head of Intermediary Markets Segments at ING.
8.36%
10.00%
6.10%
Given the importance of defined contribution plans
(401(k), 403(b), and 457 employer-sponsored plans)
to building retirement income in an environment of
dwindling and even disappearing defined benefit
pension coverage, and changing Social Security,
“fixing” these behaviors among your employees,
in your plan, assumes a heightened importance.
6.00%
3.00%
4.00%
2.00%
2.00%
1.00%
0.00%
0.00%
Lehman Aggregate
Fixed Income
Inflation
S&P 500
Asset Allocation
Lehman Aggregate
SUMMER/FALL ‘08 – IMPACT – 9
It is unique to all people. It is not
a thumbprint. It is not DNA. It is
not that quirky something that
makes someone special. It is what
the Employee Benefit Research
Institute’s (EBRI) 2008 Retirement
Confidence Survey® (RCS) says can
change behavior in 44% of the
people surveyed this year.
Your Number
ING calls it “Your Number.” It is a recently launched
integrated marketing campaign that strives to help
simplify the process of retirement planning for
Americans. How? By encouraging them to identify
and calculate the total amount of money they need
to have saved by the time they retire. This “number”
is unique to each individual or couple, and depends
upon individual retirement goals.
As proof of how daunting retirement planning can
be, ING conducted a survey in conjunction with
the new campaign.
According to those polled, Americans view numbers
relating to their sense of identity and their closest
personal relationships as most important to them.
The numbers frequently mentioned as significant are
their own birthday (cited by 26% of respondents) or
someone else’s birthday (22%). Other important
numbers include a Social Security number (16%),
a wedding anniversary (16%), a phone number
(13%) and the number of children or siblings in
one’s family (12%).
Only a small fraction (5%) considers a financial
number, such as their retirement nest egg, as being
among those most important to them.
“It’s ironic that birthdays top the list of most important
numbers,” said Kathleen Murphy, CEO of U.S. Wealth
Management for ING. “As people live longer and
celebrate more birthdays, they also face a greater
risk of outliving their retirement savings. We hope
that identifying and working towards one’s retirement
number will be as important as achieving each
additional birthday.”
The survey also revealed the following information on
how people view their retirement number:
• Two thirds of Americans (67%) say they think at least
sometimes about how much they need to save and
invest for retirement.
• Nearly one in two (49%) say calculating that number
is not easy and they wouldn’t know where to start.
• While more than half agree they’ve calculated the
money needed for retirement, over a third (36%) say
all they could do is guess.
10 – IMPACT – SUMMER/FALL ‘08
• Four in 10 adults (42%) say they do not like thinking
about their retirement number, and nearly as many
(39%) say it’s boring.
Boring is not a word that would be used to describe
the television ads promoting the new “Your Number”
campaign or the microsite where employees can get
their actual number.
In one of the new television spots, a series of people
go about their normal lives, except they each have a
large six- or seven-figure number with a dollar sign
accompanying them. The characters are seen
interacting with their numbers – at home, at work,
shopping and traveling – as if these numbers are
a natural extension of themselves and their lives.
The narrator explains that everyone has their own
retirement number, yet most don’t know what that
number is, how to reach it, or what to do after they’ve
reached it. The campaign positions ING as a resource
for determining one’s retirement number, with the
company’s familiar brand promise to help make the
process “Easier.” A second spot uses the same
concept, but suggests how the ING family of
companies, through their array of products and
services, can help consumers use their number to
generate a steady income stream in retirement.
The last scene in each ad showcases the ING Bench,
and directs viewers to visit www.INGyournumber.com.
This new microsite guides visitors through an
interactive experience that helps calculate their
number. The ads are also viewable on the microsite.
“ING – with its new “Your Number” campaign –
is in a great position to help Americans better
understand their retirement needs,” Murphy said.
“By visiting www.INGyournumber.com, they can
work with a user-friendly tool to calculate their
number, learn about ING’s products and services, and
get connected to a qualified financial professional.”
Plan sponsors will hear more in the coming months
about how ING will help them raise awareness with
their workforce on the simplicity of retirement
planning.
What’s Your Number?
Commissioned by ING and conducted by Ipsos in January 2008, the ING
Retirement Number Study included a representative randomly selected sample
of 1,008 adult Americans. The margin of error for the overall sample is +/-3.1%.
Data was weighted to ensure the sample's regional and age/sex composition
reflects that of the actual American population according to Census data.
For a complete overview of the ING Retirement Number Study, visit
http://www.ipsos-na.com/news/pressrelease.cfm?id=3823
INGT
UP
E
N
W
SH
O
A
D AT
T H E L AT E S T N E W S
ON PLAN RULES
Investing for participants who won’t
More guidance has been issued to help
401(a), 401(k) and 403(b) plan sponsors invest
contributions when participants don’t select
investments.
The proper use of lifecycle, target-date
retirement, balanced and stable value funds
as qualified default investment alternatives is
the focus of Field Assistance Bulletin 2008-3.
It was released by the Department of Labor’s
Employee Benefits Security Administration to
address questions and amend certain provisions
after the final regulations on qualified default
investment alternatives were published
Oct. 24, 2007.
These regulations are especially important for
plans with automatic enrollment. They also
cover other situations where no investment
instructions are given by participants or
beneficiaries, such as after a plan’s investment
alternative is eliminated, a change in service
provider occurs, or there is a rollover from
another plan.
Under the Pension Protection Act of 2006, the
Employee Retirement Income Security Act of
1974 (ERISA) was amended to provide a safe
harbor for plan fiduciaries investing participant
assets in default investment alternatives.
According to the final regulations’ preamble,
a sponsor could have fiduciary relief as long
as the default investment alternative met the
regulatory safe harbor, even though plan
fiduciaries remain responsible for prudent
investments under ERISA section 404(c).
Here are highlights of conditions for fiduciary
relief set by the final rules:
1. Assets must be invested in a qualified default
investment alternative.
2. A qualified default investment alternative:
• may be offered through variable annuity
contracts or other pooled investment funds.
• generally may not invest participant
contributions in employer securities.
• may be a stable value product or fund if:
> it is designed to preserve principal, provide
a rate of return generally consistent with
that earned on intermediate investment
grade bonds, and provide liquidity for
withdrawals by participants and
beneficiaries, including transfers to
other investment alternatives.
> no fees or surrender charges are imposed
on a participant’s or beneficiary’s
withdrawals.
> it invests primarily in investment products
backed by state or federally regulated
financial institutions, or the principal and
interest on the product or fund may be
backed by contracts issued by such
institutions.
3. Participants and beneficiaries must have
been given an opportunity to provide
investment direction, but failed to do so.
Notice must be furnished at least 30 days
in advance of:
• the date they are eligible to participate in
the plan, or
• the first investment in a qualified default
investment alternative, as long as the
participant has the opportunity to
make a withdrawal under automatic
contribution rules.
• each subsequent plan year.
While the final regulation did not include a
model notice, Field Assistance Bulletin 2008-03
describes what a notice must contain at
http://www.dol.gov/ebsa/regs/fab2008-3.html
4. No restrictions, fees, or expenses (other than
investment management fees and expenses)
on the transfer or withdrawal of assets are
allowed during the 90-day period after the
assets first go into the qualified default
investment alternative. Such charges may
apply after the 90-day period ends.
Changes in reporting by ERISA 403(b)s
• must be a product that’s a mix of investments
that takes into account the individual’s age or
retirement date and the characteristics of the
employee group as a whole.
Expanded Form 5500 reporting requirements
for ERISA 403(b) plans go into effect for plan
years that begin on or after Jan. 1, 2009.
• must be managed by an investment manager,
plan trustee, plan sponsor or a committee of
mostly employees.
Currently, the Department of Labor receives
only basic non-financial information on Form
5500 from ERISA 403(b) plans. Starting with
the 2009 plan year, ERISA 403(b) plans must
file financial information, applicable schedules,
and depending upon the plan’s size, an
independent qualified auditor’s report.
These new requirements do not apply to 403(b)
plans not subject to ERISA, such as plans of
public schools, churches that don’t voluntarily
elect into ERISA, and certain 501(c)(3)
organizations that satisfy the Department
of Labor safe harbor for non-ERISA status.
The number of participants at the beginning
of a plan year determines whether the plan will
file as a large plan (100 participants or more)
or small plan (99 or fewer.) A plan that would
have filed as a small plan in 2008 whose
participant count has gone up to 120 may
still file as a small plan.
Large plans must submit Form 5500 plus an
independent qualified auditor’s report. Small
plans are exempt from filing the auditor’s
report if two criteria are met:
1. At least 95 percent of the plan’s assets are
classified as qualifying plan assets. Since the
Internal Revenue Code generally requires
403(b) plans to invest primarily in annuity
contracts and custodial account mutual
funds, it is anticipated that 403(b) plans
will meet this requirement. If not, the plan
assets that do not qualify must be covered
by a bond.
2. The Summary Annual Report (SAR) must
disclose the financial institutions holding
the plan assets and any additional bonding
requirements. A SAR, which is a summary
of the financial information in Form 5500,
must be supplied to plan participants and
beneficiaries no later than 60 days after
filing the annual Form 5500.
basis, the salary amounts they deferred to the
12-month period would be considered taxable
in the year of the deferral and subject to tax
underpayment interest penalties and a 20
percent excise penalty tax.
Most teachers will fall within the relief offered
by Notice 2008-62. As a result, school districts
offering their teachers the ability to be paid
over a 12-month period will have few, if any, of
those teachers considered as having a deferred
compensation arrangement under Internal
Revenue Code Section 409A. If not subject to
Code 409A, employees do not need to make
an election before the school year starts.
The proposed Section 457(f) regulations and
conforming modifications to the Code Section
409A regulations were pending as of the
publication date. However, Notice 2008-62 can
be relied upon beginning with the first taxable
year that includes July 1, 2008, and Information
Release 2007-142 no longer applies.
Supreme Court backs participant
A 401(k) plan participant whose account values
were affected when the plan fiduciary did not
follow his investing instructions has the right
to sue, according to the Supreme Court.
The lawsuit is significant for raising the issue
of whether plan participants can bring claims
seeking individual plan account recovery under
the Employee Retirement Income Security Act
of 1974 (ERISA).
Good news for educators
In ruling on LaRue v. DeWolff, Boberg &
Associates, Inc., the Supreme Court stated
ERISA “does authorize recovery for fiduciary
breaches that impair the value of plan assets
in a participant’s account.” The decision cleared
the way for LaRue to present his claim in trial
court as he seeks to recover $150,000 in
account losses.
School districts and teachers saving for
retirement will welcome a change announced
by the Internal Revenue Service in Notice
2008-62.
This material was created to provide accurate and reliable
information on the subjects covered. Neither ING nor its
affiliated companies or representatives provide tax or legal
advice. Consult your legal counsel for guidance specific to
your individual situation.
A teacher’s decision to receive compensation
over 12 months instead of the 10-month school
year will no longer be viewed as a deferred
compensation arrangement subject to Internal
Revenue Code Section 409A or 457(f).
Until this IRS announcement, teachers who
elected the annual payment arrangement in
lieu of payment over the school year needed
to make this election before the school year
began, as required by Code Section 409A. If
teachers did not make this election on a timely
SUMMER/FALL ‘08 – IMPACT – 11
I N G
P L A N
S P O N S O R S
“By sponsoring the National Teacher of the
Year program, we are able to honor
teachers across the country who are
“ING’s commitment to education extends
beyond programs that recognize teachers,”
said Rhonda Mims, president of the ING
Foundation. “The ING Foundation focuses
its giving on financial literacy, children’s
education, and diversity. We partner with
other organizations like Junior Achievement
and Operation Hope through volunteer
efforts, grants, and sponsorships to deliver
sustainable programs to help close the gap
in student achievement,” Mims said. ING
also is making strides to combat childhood
obesity among America’s schoolchildren
through the ING Run for Something Better
program, which has contributed $2 million
dollars nationwide to fund school-based
running programs.
The National Teacher of the Year Program,
which began in 1952, is the oldest and
most prestigious national honors program
that focuses public attention on excellence
in teaching. ING congratulates Michael
Geisen and all educators who innovate and
inspire their students.
1
2
David Cook and Marion Cotillard, respectively
Excerpted from the National Teacher of the Year
Award Recognition Dinner Program
PRESORTED
STANDARD
U.S. POSTAGE PAID
HARTFORD, CT
PERMIT #1382
ING proudly sponsors the National Teacher
of the Year Program, a project by the
Council of Chief State School Officers
(CCSSO). This year marks the fourth
consecutive year ING has sponsored the
program. On April 30, 2008, ING executives
joined the officials of the CCSSO at the
White House as President Bush named
Michael Geisen of Prineville, Oregon, as the
2008 National Teacher of the Year. All of
the 2008 State Teachers of the Year were
also on hand for the celebration.
F O R
Great teachers see the potential in their
students, light a spark, and inspire them
to excel. They not only are responsible for
influencing the workforce of tomorrow,
but also future leaders. While many gifted
teachers do it with little fanfare or
attention, some extraordinary educators
were recognized recently in Washington.
P U B L I C A T I O N
It’s not hard to understand. Well-paid
actresses and actors may thrill us on
screen throughout their careers and we
may anguish along with contestants on
reality shows, but do they really have
a profound impact on our lives?
A
Despite the hype, do you remember who
won this year’s American Idol or who was
the 2008 Best Actress Oscar winner?1 An
easier question is sure to be, “Who was
your favorite teacher?,” because that’s
someone you never forget!
In addition to the National Teacher of the
Year sponsorship, ING honors excellence in
education through the ING Unsung Heroes®
grant program, which has awarded more
than $3 million to fund innovative
classroom projects nationwide. Each year,
100 educators receive grants that recognize
and reward their innovative teaching
methods, creative educational projects, and
the ability to make a positive influence on
the children they teach.
WWW.ING.COM/US
Michael Geisen, a science teacher
at Crook County Middle School in
Prineville, is the 58th National
Teacher of the Year. His approach
to teaching and learning is creative,
collaborative, and student-centered and
focuses on uniting his students with the
community while connecting everyone
to science.2 Geisen began his year as
a full-time national and international
spokesperson for education on June 1.
> ING Closes Acquisition of CitiStreet PAGE 1
> Investors Behaving Badly? DALBAR
Study Finds that “Average” Investors
Under Perform Market Benchmarks PAGE 8
> ... and more!
committed to helping our children excel,”
said Brian Comer, head of Wealth
Management Public Markets Distribution,
ING Americas. “While ING’s primary goal is
to empower educators to better manage
their financial future by providing
retirement programs and planning, we also
understand the importance of being a
responsible corporate citizen and are proud
to recognize the hard work and devotion to
improve education.”
150542 v0 MS M.S.PB.48 (10/08)
ING Sponsors
National
Teacher of the
Year Program