Four-thousand companies, banks, trade groups and credit unions ”“ ranging from three employees to 5,000 ”“ avoid managing the retirement plans they offer. It”™s better, they reason, to master widgets or mortgages than to engage the complexities of institutional retirement management.
Instead, those 4,000 entities entrust some $8 billion of their workers”™ retirement funds to a White Plains company celebrating 70 years this month: Pentegra Retirement Services.
Pentegra manages accounts in 46 states, writing 13,000 individual retirement benefit checks every month. In a one-hour conversation with management, there was no mention of retirement”™s rocking chairs and never-ending golf, only of how to get there so a rocker and putter await.
New CEO and President John Pinto, who fills the leadership shoes of just-retired Robert Albanese, and Richard Rausser, senior vice president for client services, identified a corporate culture with integrity built in as something of a middle name. “Pentegra” is a portmanteau of pension and integrity and a point of in-house pride since an employee thought of it as part of a 1993 rebranding, besting the pros from Madison Avenue.
In 1943, Pentegra was known as The Savings Association Retirement Fund, managing the retirement plans of the Federal Home Loan Banks System. True to the times, the products were defined-benefit pensions. In 1970, it formed a companion to sell 401(k) and savings-plan products and management services. In 1982, it operated under two names: Financial Institutions Retirement Fund and the Financial Institutions Thrift Plan, known awkwardly as FIRF and FITP.
Twenty years ago, the more-encompassing Pentegra banner appeared and shows no signs of waning.
“With a breadth of products under a single umbrella, we”™ve created one-stop shopping,” Pinto said. “The equation is working; many of our clients have multiple plans with us.”
Pentegra employs 260 people. Besides its 40,000-square-foot White Plains headquarters, it operates offices in Shelton, Conn.; North Carolina, South Carolina, Ohio and Vermont.
Without committing to a date, Pinto would like to add to the already-established offices with a California office.
“A key to our longevity, I believe, is that unlike an investment firm, mutual fund or insurance company, Pentegra has always offered an unbiased approach to retirement plan management, free of proprietary fund requirements,” Pinto said. “We work directly with companies to structure the best plan based on specific objectives and tailored to business needs.”
Pinto said there has been a move away from defined benefits toward basic savings 401(k) plans and matching employer/employee plans. As such, he said, “There has been a shift from employer to employee and retirement now is more the responsibility of the employee.”
Citing variables like interest rates and investment returns, Rausser said, “Expenses with defined benefit packages can be volatile and CFOs do not like volatility.”
Rausser also focused on recent economics and how they affected companies”™ exodus from defined benefit plans. “Markets were down. Assets were down. Liabilities were up. It was a perfect storm leading to volatility all over the map,” he said. Another reason factored changes in tax law that gravitated toward numbing, but which remade retirement management. Rausser”™s tax anecdote demonstrated why the institutional retirement universe is no place for the uninformed.
No matter the plan, Pentegra engages in fiduciary outsourcing. “Our true expertise,” Rausser said. “We take that responsibility. We assume it. We make it easier for companies to run their plans.”
Yet even in the current recovery, “It”™s a more challenging environment than it was 10 years ago,” Pinto said.
One truth leaps from corporate retirement ledgers to the front porch rocking chair: plan early. “If you start late you have a lot of catching up to do,” Pinto said, ideally before constraints of schools, mortgages and caring for elderly parents begin. “If they get used to contributing, they”™ll be used to living within their budgets when these responsibilities arise.”
In April the company broadened its outreach by publishing “My Business is My Main Asset. I Want to Retire. Now What? A Business Owner”™s Guide to the Best Plan” by Mary Read, national director of pension and protection planning for the Pentegra division Alliance Benefit Group-Pentegra and national chairwoman for the Qualified Section of the Society of Financial Service Professionals.
After an hour with Pinto and Rausser, the book seems less surprising. “Everything we do in some way or another revolves around retirement,” Pinto said.
Pentegra celebrates its septuagenarian status with an open house and reception Wednesday, July 17, 3-6 p.m., at its 108 Corporate Park Drive headquarters, fourth floor.
