Reuters money matters: 401(k) change, fixing payroll mess-ups
Guild members enrolled in the Reuters Guild 401(k)/Pension Plan should know that Putnam’s Stable Value Fund is being removed from the investment fund lineup because executives who oversee the company’s retirement plans no longer believe the fund can deliver the same returns with minimal risk. The change will begin to take effect on Oct. 18. The Guild is not opposing the change, although the contract enables management to impose it unilaterally anyway.
As Herb Lash, a Guild-appointed member of the Guild-management Pension Advisory Group, explains, the fund was an attractive investment because it typically provided returns of 4 percent or higher for what appeared to be basically a very safe cash account. But, he said, its returns have been falling, leading to management’s prudent decision to remove it. As of the end of June, the most recent data we’ve got, Guild members had 18.2 percent of their assets in Putnam Stable Value.
The stable value fund was popular because of returns that were higher than the rate of inflation. But the perception the fund was nearly risk-free or a safe haven in turbulent times just was not true. And the risk that the fund could fall into negative territory during an economic upheaval is likely to grow.
Unfortunately, there are no other products that can replace the stable value fund and deliver similar returns with fairly low risk. The choices are either a very safe money market fund with a near-zero return at the moment, or an array of fixed-income funds that are generally riskier than the stable value fund. Fixed-income funds with higher returns generally have a higher-risk profile.
As of October 13 you will no longer be able to transfer money into the Putnam Stable Value Fund. On November 13, Putnam Stable Value Fund will be removed from the investment lineup, and any balances in it will transfer automatically to an age-appropriate LifePath target date fund. These LifePath funds provide a mix of investments that becomes more conservative as you get closer to retirement. Read more about LifePath target date funds here, or call your financial adviser if you have one.
TR'S OVERTIME ERRORS
Management says more than 160 Guild members have been either overpaid or underpaid for overtime worked this summer. See the July 27 Common Sense for the full story.
According to the company, the problem occurred for timesheets submitted and paid during the payroll periods ending July 14,, 2012 (when the 1.5 percent increase went into effect) and July 28, 2012 (when the lump sum payment was made). It appears that somehow these payments were miscategorized in the payroll system and as a result, overtime calculations were incorrect. While management did respond in mid-August to an information request from the Guild about the individuals affected, the matter still has not been straightened out to the Guild’s satisfaction. Nevertheless, management has told us that phone calls to members will resume this week. Until we have completed confirming the overpayments with Guild members, we think TR should hold off on its collection efforts. If you hear from the company’s minions on this matter, let them know that you will take no action, and certainly will not authorize repayment, until you hear from the Guild that the matter is settled.
TR FAILED TO COLLECT DUES ON LUMP SUM
The overtime mess isn’t the Payroll Department’s only error. The company failed to deduct Guild dues from the lump sum payments that Guild members received in July. Under the contract settlement reached in April 2011, the company agreed to deduct dues (1.3846 percent) from the lump sum payments. To correct the error, management has agreed to spread the lump sum dues collection over the next three pay periods – starting this Friday, September 14. Most members received a lump sum payment of $5,537.61 and will owe a total of $76.67. So, dues over each pay period will be about $25.56 higher than normal.
YOU DON'T HAVE TO SIGN THE CODE OF CONDUCT
The Guild’s contract with Thomson Reuters includes negotiated amendments to the Reuters Code of Conduct that apply only to Guild-represented employees. The language is in Side Letter #14. In addition to asserting that when the Code and our contract are inconsistent, our contract prevails, it says that Guild members shall not be disciplined for failing to sign the Code. But some managers haven’t gotten the message. If managers ask you to sign it, tell them that as a Guild member you are not required to do so; the Guild has already agreed to the Code – with the negotiated amendments – on behalf of all employees covered by the contract. You can print out a copy of the side letter here. It’s been part of the contract for 12 years.