SEC IS URGED TO CONSIDER EMPLOYER RETIREMENT PLAN REALITIES AS IT ADDRESSES MUTUAL FUND LATE TRADING AND MARKET TIMING

CHICAGO (October 30, 2003) - In a letter sent to Securities and Exchange Commission (SEC) Chairman William H. Donaldson, the Profit Sharing/401(k) Council of America (PSCA) voiced strong support of SEC efforts to address mutual fund trading concerns while also urging that the administrative realities of 401(k) and other employer retirement plans be considered in any regulatory changes.

PSCA President David Wray applauded the Commission’s intention to move swiftly to end abuses in which market timing in violation of fund rules and illegal late trading occurred. "Such practices threaten to erode the trust tens of millions of American workers have in their profit sharing, 401(k) and other employer retirement programs," he said.

But Wray added that the administrative needs of employer retirement plans must be considered in any regulatory changes. For example, defined contribution plans like 401(k)s impose the 4:00 PM (ET) legally required cutoff for ordering trades that will be valued at that day’s closing net asset value (NAV). However, employer retirement plans frequently use an open architecture in which different parties provide services such as record keeping, trust services and investment funds. This results in time-consuming processes and calculations in order to complete the transaction and finally execute the trade; often several hours after 4:00 PM. Requiring the actual trade to be executed by 4:00 PM (ET) would place 401(k) plans at a competitive disadvantage and burden them with additional costs. This could have the unintended consequence of actually lowering retirement savings.

PSCA is presently engaged in an effort to identify and promote solutions for dealing with market timing in employer plans before it occurs and hopes to work with the Securities and Exchange Commission to design regulations that promote the transparency and trust in a system that continues to increase the retirement security of millions of American workers.

The Profit Sharing/401(k) Council of America (PSCA), a national non-profit association of 1,200 companies and their 6 million employees, advocates increased retirement security through profit sharing, 401(k) and related defined contribution programs to federal policymakers and makes practical assistance with profit sharing and 401(k) plan design, administration, investment, compliance and communication available to its members. PSCA, established in 1947, is based on the principle that “defined contribution partnership in the workplace fits today’s reality.” PSCA's services are tailored to meet the needs of both large and small companies with members ranging in size from Fortune 100 firms to small, entrepreneurial businesses.