After a 2000 restructuring, GFR Services Inc. found itself with nine affiliated companies and as many pension plans. Frustration was rampant. "The human resources people were screaming in desperate need for help," recalls Antonio Arias, CFO of the $200 million Puerto Rican media and real estate business.
It's not surprising. Officials from each plan selected and administered the funds for each of their pension programs. "We figured, 'let's take a look and see,''' says Arias, who has banking, securities and mutual fund experience. "This is our area."
GFR first revised the fund choices. Too many participants were heavy in technology, even those close to retirement, says Arias. "We provided immediate first-aid," he says. "But then it was clear we had to find a long-term solution."
A team of treasury, accounting and human resources officials--eventually aided by an outside attorney, a consultant and a bank to keep records--was selected for this purpose. Getting down to basics, the team unbundled every portion of service to break down costs. The GFR team included Arias, Sagry Vel?squez, benefits officer; Mar?a del Carmen L?pez, investment and cash manager; Ana Bonilla, CFO of El D?a Inc., the publishing business; and Jorge Mercado, human resources vice president, among others.
Eventually, seven of the diverse plans were consolidated into one plan managed by finance and administered by human resources. Two union plans remain. Treasury officials initially selected the investment choices and formed a benefits committee. Employees can pick from three pre-selected portfolios--conservative, moderate and aggressive.
Cost savings were immediate. The elimination of the insurance provider yielded a 70-basis point cut. Another 80 points were lopped off after the consolidated umbrella structure rolled out in 2005 and 2006. All the savings went directly to plan participants.
GFR, which owns Puerto Rico's biggest daily newspaper, El Nuevo D?a, reaped savings as well through productivity improvements. Officials now attend 40% fewer meetings and the decision-making process takes 50% less time.