newjerseynewsroom.com

BY WARREN BOROSON

NEWJERSEYNEWSROOM.COM

BOROSON ON MONEY

Did you know that there’s an organization, called BrightScope, that rates 401(k) plans?

Here’s the link: http://www.brightscope.com/ratings/

BrightScope’s criteria include fees, investment menu quality, vesting schedule, company contributions and eligibility period. Plans are compared with those of companies with a similar number of employees, similar level of assets and in the same industry.

BrightScope claims that it uses over 200 pieces of information regarding more than fourty-five thousand 401(k) plans, 403(b), and 457 plans.

But it gives the retirement plans a single numerical rating.

I checked the ratings of only companies with lots of New Jersey employees, and they ranged from a high of 88 (Novartis) to a low of 45 (Burlington Coats).

The state’s pharmaceutical companies, like Novartis, did very well. Bristol-Myers Squibb received an 87; Johnson & Johnson, 84; Merck, 84; and Schering-Plough, 84. Becton, Dickinson received a 76.

Other high-ranking companies: BASF, 87; Foster Wheeler, 84; Alcatel/Lucent, 84; PSE&G, 83; Telcordia Technologies, 83; Verizon, 82; Prudential Financial, 81; AT&T, 80; and Dun & Bradstreet, 80.

Lower down were Chubb, 79; Honeywell, 78; Panasonic, 76; Educational Testing Service, 74; Horizon Blue Cross/Blue Shield, 73; and ADP, 70.

Somewhat disappointing were the ratings of Bergen Regional Medical Center, 67; Pathmark, 67; Valley National, 59; North Jersey Media Group, 58; Campbell Soup, 56; Toys"R"Us, 54; and A&P, 47.

How reliable are the ratings? I saw one error: AT&T got an 80 in its official rating, but a much lower rating elsewhere. Also, a friend showed me her employer’s 401(k) plan (she works for a religious organization), and I told her that it stunk in the nostrils of God. But BrightScope gave it an “average” rating. Still, I had focused excluisively on the plan’s lousy investment choices.

BrightScope gives more than just a rating.

For Novartis, it writes that its 83 was lower than that of its leading peer, which received an 89. And that meant a typical Novartis employee would have to work an extra five years to match the assets of a typical employee of the top rival company—and lose up to $34,200 in retirement savings.

In evaluating Novartis, BrightScore reported that everything was “great,” but its employee participation rate was only “above average.”

For Burlington Coat, BrightScope claimed that its typical employee would have to work 20 additional years to match the gains of the company’s leading 401(k) rival, to make up a $331,900 deficit. BrightScope rated the company’s generosity as “poor,” its investment quality as “below average,” its participation rate as “poor,” its salary deferment as “poor,” and its account balances as “below average.”

Here’s an article on rating 401(k) plans: http://www.bankrate.com/finance/retirement/401k-plan-great.aspx

Next week, I’ll write about a 401(k) plan with miserable choices.

To receive Warren Boroson’s column regularly, drop him a note at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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