Comerica Inc. (CMA) was picked to help manage a retirement savings program President Barack Obama announced early this year in an effort to help Americans who don't have 401(k) plans.
The Dallas-based financial services company is custodian for the Treasury Department's “
myRA program” — short for “my retirement account.” Mr. Obama announced the plan in his State of the Union address in January. It's intended to help workers save by allowing them to deduct a portion of their paycheck each month to be invested in Treasury securities.
The program, which the White House said would be “offered through an initial pilot program to employees of employers who choose to participate by the end of 2014,” is in the trial phase.
(More: Advisers skeptical about Obama's “myRA” proposal)
Comerica has been selected to administer myRA, said Daniel Watson, a Treasury spokesman. The department hasn't said how many people are enrolled, which companies are participating or when it expects to move beyond the pilot program. The U.S. Office of Personnel Management is among the employers participating in the initial phase.
Comerica spokesman Wayne Mielke declined to comment on the myRA partnership, referring questions to the Treasury.
WEALTH MANAGEMENT
About 17.7% of Comerica's net revenue in fiscal year 2013 came from wealth and institutional management, based on data compiled by Bloomberg.
The myRA accounts allow people to make initial investments as small as $25, which will help lower-income people start saving, said Timothy Steffen, director of financial planning at Robert W. Baird & Co. in Milwaukee. The low balance threshold means myRA's financial partner would have to rely on volume, given the administrative costs of opening such small accounts, he said.
While the goal of encouraging saving “is a positive, the implementation of it is a little bit less clear,” he said. “Certainly there will be people who use it, but I don't think that this in and of itself will revolutionize retirement planning.”
The program was always expected to take some time to get started, said David John, a senior strategic policy adviser at the AARP's Public Policy Institute.
(More: Sen. Harkin pushes privately run retirement plan)
“If you look at the history of retirement plans, the ones that work the best are the ones that are rolled out slowly and carefully,” he said. However, given the number of Americans with no retirement savings, the slow beginning isn't ideal. “It's a start, but nowhere near the action that needs to be taken,” he said.
Comerica has partnered with the Treasury in the past. The department paid the company $32.5 million to run a debit-card program for the poor and elderly that the bank had initially agreed to run for free, an inspector general audit found in April.
That program, called Direct Express, was set up in 2008 to deliver payments electronically rather than by paper check. Under the original contract, Comerica didn't charge the government and planned to make money on the deal from user fees. In 2011, the Treasury's Bureau of the Fiscal Service changed the contract so that Comerica would earn $5 per new enrollee, and as much as $20 million for costs incurred while building customer services.
