BPAS
A due diligence overview
Roadways to Retirement
Our corporate structure
Community Bank System, Inc. (NYSE: CBU)
Benefit Plans Administrative Services, Inc.
(BPAS)
Community
Bank, N.A.
- Regional Bank
BPA
DC Plan
Administration
HB&T
Institutional Trust
Company
(Member NSCC)
Harbridge
National Actuarial
Practice
(formerly PWC)
FlexCorp
Section 125
Practice
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Roadways to Retirement
BPA: A mid-sized provider with national reach
 Participants in 50 states plus
Puerto Rico
 Clients in 47 states
 Offices in two time zones
 Partnership with over
240 financial intermediaries
(Bank Trust, RIA, Broker Dealer channels)
 Able to tap several metropolitan areas for new talent
 Our core business is retirement plan administration and
consulting.
 Profitable and growing.
“Centralized operations, regionalized plan consulting.”
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The business we service
 Our Defined Contribution business
– 2,300 Defined Contribution plans
– 310,000 employee records tracked
– 205,000 participants with a balance
– $4.6 billion in DC plan assets
– Average plan: 148 employees, 102 participants, $2.4 million in assets
– Plans from 10 to over 5,000 participants (and over 10,000 employee records in total)
 Our Defined Benefit business
– 26 credentialed actuaries; 450 engagements; 50,000 participants
 FlexCorp (Houston)
– 30,000 Section 125 participants
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Some of the larger plans we administer
 Kinney Drugs leveraged kSOP
– $108 million in plan assets, 10,009 total employee records tracked (2,150 participants with
balance)
 Community Bank System, Inc. 401(k) Plan (kSOP)
– $100 million in assets, 3,868 total employee records tracked (2,100 participants with balance)
 Pay and Save, Inc. 401(k) Plan
– Retail convenience store chain in five states; 6,983 total employee records tracked (2,800
participants with balance)
 Plumbers and Pipefitters Local 520
– Taft Hartley Pension Plan with $73 million, 2100 participants
 Suncoast Schools Retirement Program
– $67 million in assets; 2,400 active participants.
 Stony Brook University Physicians Retirement Plan
– $120 million in assets, 700 participants
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Roadways to Retirement
Household name clients of BPA (across U.S. and P.R.)
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ADM Corporation
American Academy of
Actuaries
Bausch & Lomb
Black & Decker
Boston College
Braun Corporation
Burger King Corporation
Church's Chicken
CNA Insurance
Coca Cola
ConAgra
Cummins Engine
DaimlerChrysler Financial
Services
Direct T.V.
First Security Mortgage
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General Electric Corp.
Golub Corp. (Price
Chopper supermarkets)
Gunstock Mountain
Heineken, Inc.
Hellen Keller National
Center
International Food
Network
Kelly Services
KFC / Taco Bell / Pizza
Hut of P.R.
Kinney Drugs USA
Levitt Homes
Lexmark Corporation
Marriott Corporation
McDonald's Corporation
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Nestle Corporation
Oracle
Pall Corp.
Pay and Save, Inc.
SAP
Star Sea Lines
St. Jude Medical Center
Stony Brook University
Sunsetter
Suzuki
Syracuse University
The Doug Flutie
Foundation
Twentieth Century Fox
Unilever
Waste Management
Between our business in the 50 U.S. states plus Puerto Rico, our client base includes divisions or subsidiaries
of the above companies and organizations.
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Organizational Chart for our Defined Contribution business
Translation? Accountability.
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Retirement partnerships: Two distinct paradigms
Plan Sponsor
Plan Sponsor
Trustee /
Advisor
Trustee /
Advisor
Recordkeeper
Recordkeeper
Issues to consider:
• Flow of daily communication
• Involvement in routine daily transactions
• The “liability chain” for recordkeeping issues
• Trading / custodial / settlement issues
• Staffing requirements for a given book of plans
• Billing / collecting for recordkeeping and trustee fees
• Client’s perceived “value added” for various activities
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A strategic combination of local and national resources
Persistent participant
education program
Simplifying life for
Human Resources
Accessibility for one-on-one
participant needs
Robust participant and plan
sponsor websites (technology)
Helping plan sponsor meet
its fiduciary obligations
Strength in compliance
and technical matters
Investment Policy Statement,
ERISA 404(c) assistance
Flexible universe of no-load
mutual funds, with SDBA option
Maintaining fund menu,
meeting with RP Committee
Transparent processing
of daily transactions
Responsive, proactive
service (a relationship)
Responsive, proactive
service (a relationship)
The Relationship
Trustee / Advisor
The Platform
BPAS
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Roadways to Retirement
Who owns liability for errors in this model?
BPAS
 Recordkeeping:
X
 Administration:
X
 Clearing:
X
 Custodial functions, tax reporting:
X
 Enrollment forms:
X
 Transaction disputes
X
 Data security, firewalls
X
 Fiduciary functions
FI Partner
X
 Plan consulting, document work
X
(possibly)
 Other issues:
X
X
(Not an exhaustive list of all functions)
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Roadways to Retirement
Systems that drive our operation
 Sungard OmniPlus 5.80 (RK system)
 Delta Data for NSCC trading, reconciliations and other needs
 Wystar (DB, FAS 106, etc)
 FT Williams (5500s)
 Relius Government Forms (1099Rs, 1099-Div 5498s, etc)
 ASC Compliance Testing System (compliance testing, new comp,
allocations, general non-discrimination testing)
 CensusPro™ (our proprietary, web-based census gathering
application)
 Plan and Task Manager (proprietary business management system)
 Visual Accountmate (billing, accounts receivable)
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Roadways to Retirement
Our bundled structure provides compelling advantages
 Trustee or Advisor: Relationship Manager, and local point of contact
 BPAS: Administrator, NSCC clearing firm and agent-to-trustee under
one roof (BPA, HB&T)
 We do our own trading (with the exception of
Merrill Lynch for company stock
and TD Ameritrade for SDBA)
 We host our own websites, maintain our own team of Omni
programmers
 In-house printing and fulfillment shop
 We handle all trust accounting and custodial functions as the agent to
Trustee (HB&T)
 Translation? Accountability and control; one stop shopping; quick
resolution of issues.
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Roadways to Retirement
Plan versus Trust? A major BPAS advantage
Plan sponsor
A5. Funds ACH pulled on T+1
to settle trades from trade date
B4. Check cut to participant.
Funds are a general asset of
CBNA until payment clears.
Participant
A2. ACH verification
to plan sponsor
B1. Requests
distribution
HBT Trust Department Cash
(not a plan asset)
A3. ACH is
approved
SunGard OmniPlus
A1. BPA reads
census file
Our daily recordkeeping
system
A4. BPA / HBT makes
purchases on T+0
NOW funds become plan assets
Our trust accounting
system
B2. BPA / HBT initiates sales. As
of NOW, funds are no longer plan
assets.
A6. Net
settlement of
funds (T+1)
B3. Funds received
on T+1
Mutual Funds / Stock
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Roadways to Retirement
Plan versus Trust, cont’d
 Since plan and trust is the same system, no possibility of being out of sync
 BPAS reconciles fund prices every day (T+1 vs. T+0)
 Company stock positions reconciled daily (Merrill Lynch, etc)
 Daily reconciliation to fund family positions
 NSCC file for dividends / capital gains
 There is no “Plan Trust Cash” in our model (a paradigm shift for many
clients)
 Our operational and reconciliation procedures are subject to multiple levels of
review (Trust examiners, DOL, IRS, SAS-70, Plan auditors, etc)
 “Do it once.” – BPA Mantra
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Our Plan and Task Manager system (PTM)
 Internal application that is proprietary to BPAS
 Organizes the workflow for our entire business
 Every action item is organized as a “task” (census file, loan,
distribution, hardship request, PS allocation, etc)
 All tasks are logged and can be viewed on the system by any team
member, along with notes and comments
 Workflow management
 Monitoring of performance and standards
 Allows us to see when additional resources need to be deployed
 Modules for plans, funds, contacts, financial intermediaries, CSR
activity, conversions, compliance testing, documents and many other
needs
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Roadways to Retirement
Examples of how PTM helps manage our business
 Participant forms are immediately PDF scanned into system, allowing any of
our staff to view current status and respond to any questions or issues
 Full visibility of the census file process (when file was uploaded, when ACH
verification was sent, when client approved the ACH, when funds traded, etc)
 Real-time monitoring of key transactions and tasks (e.g., contributions,
distributions, loans, etc) – additional staff can be allocated to cure any backlog
 Robust tracking of compliance testing and 5500 completion process (viewing
results by Plan Consultant or office to ensure timely completion, week-byweek completion percentages, etc)
 On-demand reports covering all aspects of our business (fund availability,
funds traded, revenue analysis, plan types, etc)
 Multi-office coordination of effort
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Tracking CSR activity
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Other innovative offerings from BPAS
 The MyPlanLoan loan automation program
 Price guaranteed method for trading company stock
 Automated self-directed brokerage windows
 Certified audit package, delivered to all plans, regardless of the
number of participants
 Freedom Savings Plans
 Auto Rollovers (www.autorollovers.com)
 IRA Select
 Delinquent contribution reminder notice (DCRN)
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Roadways to Retirement
Expertise in company stock: Four trading methodologies
 Book entry / self custody
 Price guaranteed approach
 Pended Trades approach
 Unitization (with Matrix)
 Strong proficiency in kSOP plan
design
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Partnership Highlights
(as presented to plan sponsors)
Roadways to Retirement
Simplifying life for the Employer
(administration versus recordkeeping)
 We track all employees on our system (not just those with a balance)
 We process census files for a variety of edits before notifying employer of
amount to be funded
 Eligibility determination by
source: standard service
 Online enrollment, deferral rate
changes
 Vesting updates real time
“You’d be amazed how many errors are found in a
typical payroll system. The BPA approach to
administration provides a vital ‘check and balance’ to
catch many possible errors before they are traded
into your Plan. This additional audit is a major advantage
of BPA versus other providers we have worked with.”
- Recent comment from plan sponsor client
 Streamlined process for loans, distributions
 Greatly reduced workload for compliance
testing and Form 5500 process
 Certified audit package (big advantage for larger plans)
 Interacting with HR through “Action Items”
in plan sponsor website
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Roadways to Retirement
What the flow looks like for new contributions
3
Plan
Sponsor
Plan
Plan sponsor
sponsor logs
logs onto
onto
CensusPro,
reviews
CensusPro, reviews //
approves
approves ACH
ACH verification
verification
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If approved by 3:30 PM EST, BPA initiates
mutual fund purchases at that evening’s
prices. If after 3:30 PM EST, purchases
made on next business day.
1
Plan sponsor
imports census file
into CensusPro,
submits to BPA
2
BPA reviews file for
numerous edit
checks, sends email
to plan sponsor
instructing them to
log onto CensusPro
and review ACH
verification, which
includes corrections
we made to data
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The next morning, participants see trades
reflected on website. BPA ‘ACH pulls’
required funds from plan sponsor checking
account to settle prior day’s contributions.
Note: for plan sponsors who prefer, authorization can
be given to have BPA automatically trade new
contribution if there are no edits on ACH verification.
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Roadways to Retirement
Small benefits that made a big difference
 We adjudicate loans, hardships and distributions, dealing directly with
participants
 We handle all age 70 ½ notices for the entire plan
 We prepare all required notices (safe harbor, QDIA, SMM, SAR)
 No redemption fees (opposite way trade block used where needed)
 No blackout period for fund changes
 Plan sponsors can assist participants in a variety of ways (obtaining
paperwork in website, transactional access, etc)
 Benefits of new website (additional streamlining of many processes)
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Roadways to Retirement
A specialist at plan design
Entry dates
QNEC and QMACs
True-ups
Safe harbor designs
Vesting
New comparability
Allocations
Hours requirements
Roth, catch-up contributions
We help you navigate
ERISA and its complexities,
helping you make informed
plan design decisions.
Automatic
enrollment
Handling of
forfeitures
Last day rules
Distribution options
QDIA options
Loan provisions
In-service
distributions
Compensation
definitions
Age-weighted
allocations
Deferral rate changes
Age or service-weighted allocations
Contribution limits
Social Security integration
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Roadways to Retirement
Assisting participants through our Call Center
 instant management reports
 real-time reporting of:
 incoming call volume
CSR Team Manager
CSR
CSR
CSR
CSR
CSR
CSR
CSR
 number of calls on hold
 average hold time
 call abandonment rate
 individual CSR performance
 can add additional CSRs to
queue at any time based on
volume
ideal system for managing,
training individual CSRs
CSR
• All calls recorded and archived
• ‘Next available routing’ across multiple offices
• If queue exists, approximate hold time is provided
• Option to hang up, receive immediate callback when next CSR becomes available
• Translator line covers approximately 100 additional languages
• Current team hours: 8:30 AM – 6:30 PM EST
• Email and voicemail available 24 / 365
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Roadways to Retirement
Strong commitment to technology
 Bilingual voice response unit, participant website, and sponsor website
(English and Spanish)
 Personalized rate of return
 Automatic rebalancing
 Automated loan and distribution processes
 Online fact sheets and prospectuses
 Quarterly statement archive (e-delivery)
 All participant forms, SPD, confirms, and newsletter posted online
 Self-directed brokerage account option
 Upgrading websites to Enveritus ™, Summer 2010
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True Open Architecture on Investments
 Over 230 fund families currently traded across our
platform (2,100+ funds in total)
 No proprietary funds or “ratio requirements”
 Able to select the strongest possible mix of investments
for your plan since we are 100% revenue neutral
 Full range of A, Advisor and R shares,
plus “pure institutional” share classes
 All funds trade no-load
 A critical distinction versus retirement
programs offered by asset gatherers
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Roadways to Retirement
Industry behemoths versus our approach
Many of the largest firms:
Roadways to Retirement Solution:
 Highly functionalized (“I only
handle loans.”)
 Plan Consultant: your main point of
contact
 Loop lines
 Dedicated backups
 The bullpen strategy for servicing
clients
 Direct dial phone numbers, email
addresses
 Technical issues handled by small
group of specialists
 Quick resolution of issues
 Multiple firms often involved
 Rigid and bureaucratic (charging
you for an overnight package)
 It’s your job to navigate provider’s
maze
 One organization handles all
administrative, trading and
operational functions
 Our employees know each other
 Your business is important to us
 Taking ownership
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Roadways to Retirement
Answering the Call on Participant Education
 Trustee or Advisor Partner conducts regular, onsite meetings (semiannually, quarterly, etc)
– Initial year enrollments
– Continuing education classes devoted to
specific topics
 Quarterly statements and newsletters
 Education and guidance delivered via
participant website
 Enrollment booklets, workbooks,
slide rules and other printed pieces
Communicating with your employees on their
level – in a friendly, non-intimidating way.
 Customizable education pieces for various needs
 Collaborating with HR to deliver the message, using a variety of
media
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Various presentations we offer
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Enrollment kits and our online enrollment kit
 Enrollment kits
 EBN – the Online enrollment kit
 Full online enrollment
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Roadways to Retirement
The Market Dashboard (real-time market insights)
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Roadways to Retirement
Online library of planning calculators
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Roadways to Retirement
The MasteryPoint ™ Guidance Plus Suite
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Roadways to Retirement
The Annual Plan Review Report (APRR)
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Our participant website
Welcome screen
Account realignment
Statement on demand
Online enrollment screen
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Roadways to Retirement
Various capabilities of participant website
 Account breakdown by fund, source
 Personalized rate of return
 Statement on demand with dynamic
date ranges
 Fund research library
 Transaction research, export to
Excel
 Fund-to-fund transfers
 Account rebalance
 Automatic rebalancing
 Online enrollment, deferral rate
changes, auto-escalation
 Loan modeling and request
 Loan, hardship, distribution
paperwork
 Online fact sheets, prospectuses,
performance history
 Education and guidance suite
 Multimedia library
 Secure email with CSR team
 Archive of past statements and
newsletters
 Required notices
 Site maps
 More features coming in 2012
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Roadways to Retirement
Our plan sponsor website
Welcome screen
Log on as a participant
The Resource Center – an online
“file cabinet” of all data and reports
Participant messaging
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Roadways to Retirement
Various capabilities of plan sponsor website
 Account breakdown by fund, source
 Statement on demand with dynamic
date ranges (plan level)
 Transaction research, export to
Excel
 Drill down as a participant
 Transactional access (enabled or
disabled)
 Resource Center (vast library of
tools and reports)
– Action Items
– Annual Plan Reports
– Quarterly Plan Reports
– Utilization Reports
 Complete data table on employee
population through .CSV files
 Research status of transactions
(loans, hardships, distributions, etc)
 View login, transaction history by
participant
 Fund research library
 Online fact sheets, prospectuses,
performance history
 Education and guidance suite
 Multimedia library
 Banner messaging at participant
level
 Ongoing rollout of new
enhancements
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Roadways to Retirement
How the platform charge works
Platform Charge: 35 basis points on mutual fund assets
10 bp
custodial
fee
American
Growth
Fund of
America
R4
35 bps
Buffalo
Small Cap
Stock
25 bps
35 basis
points
25 bp
custodial
fee
Dodge & Cox
International
10 bps
= platform true up
35 bp
custodial
fee
= revenue sharing
“Pure institutional”
funds (Vanguard T.
Rowe, etc)
Any custodial fee is applied as a level monthly charge against holdings in the fund. For example, if a 25 basis point
custodial fee is required, it would be charged as 2.08 basis points / month from that fund, or $2.08 / month for a
participant with $10,000 invested. This fee is does not appear on quarterly participant statements (it is netted from
earnings), but would be found in the “activity history” area of the participant website.
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Roadways to Retirement
How we convert plans to our services
Enrollment / education meetings,
Forms returned (or online enrollment)
Plan Profile Form and
enrollment booklet
order form submitted.
Fund selections made.
Fund mapover process /
re-registration of shares
(typically 1-2 business days)
Plan is live!
$ $
2 months prior
1 month prior
-- Our Conversion Team manages
conversion process, coordinating
with all parties to minimize work for
the plan sponsor --
Month #1
File received
from prior
recordkeeper
New provider memo
and blackout notice
given to employees
Blackout
period ends.
PINs
mailed to
participant
homes.
Begin processing
employee contributions
per investment elections
This illustration depicts the typical sequence of events in a conversion where a fund mapover process is used. Actual circumstances of
each plan conversion will drive the ultimate outcome, including the timeliness and accuracy of data received from the prior recordkeeper.
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Roadways to Retirement
Summary
 Partnering with a mid-sized provider offers key advantages, especially
in terms of accountability.
 BPAS has built a very efficient mousetrap, thanks to our vertically
integrated operations. (Difficult to replicate today because NSCC is
generally not accepting new settling bank members)
 The next decade will be one of flexibility. An open architecture
solution like ours can give your organization a powerful edge.
 Strong understanding of the FI partnership model, great expertise
helping partners build their business.
 Continuous upgrades and enhancements with a focus on technology.
 We look forward to additional discussions with your organization.
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