CitiStreet Wins New Government Contracts in Four States; Retirement Plan Business Landed in Washington, Michigan, S. Carolina, California.

Business/Technology Editors

QUINCY, Mass.--(BUSINESS WIRE)--Oct. 30, 2000

CitiStreet, the global benefits provider formed earlier this year by combining the retail strength of Citigroup with the institutional prowess of State Street Corp., has won key government accounts with about $2 billion in assets in markets of all sizes, the firm announced today.

CitiStreet was selected to provide full administration of the 457 plan for the state of Washington, which involves $1.6 billion in assets and 40,000 state employees; full service of the 401(k) plan for the Kent County Road Commission in Michigan; optional retirement plan services for K-12 teachers in the state of South Carolina; and, in partnership with the California Public Employees' Retirement System (CalPERS), an expanded role in the deferred compensation plan for the city of Anaheim, Calif.

"This new business shows that in government, as in all retirement sectors, CitiStreet has the ability to serve all types of customers," said Randy Taylor, CitiStreet senior vice president, government markets.

In Washington, CitiStreet, in addition to providing all administration, is partnering on customer service and providing communication and education services for the participants.

"We are very keen on these kinds of partnerships with the states, and in assisting them in their efforts to offer plans to local governments," said Taylor.

The new CitiStreet business in Michigan with the Kent County Road Commission involves full service of a defined contribution plan that covers 300 participants and has approximately $30 million in assets.

Dave Bosch, director of finance for the road commission, said his group was especially impressed with the investment offerings of CitiStreet, including the funds and services of State Street Global Advisors, Smith Barney and SSB Citi Asset Management Group.

"We also were very interested in CitiStreet's ability to provide their own staff and to bring the people of Smith Barney into the picture for help in financial planning," said Bosch.

He said that after half-hour meetings with CitiStreet counselors, some road commission employees said they "had learned more about 401(k)s and investing from those sessions than they had in six to 10 years" with the prior plan administrator.

In South Carolina, CitiStreet is now among several vendors providing defined contributions options and services to teachers who had been on a defined benefits plan. The new option for employees to invest in a defined contribution plan rather than a defined benefits plan covers all new teachers this year, about 10,000 of them, and in succeeding years.

Taylor said CitiStreet looks upon its business in South Carolina as another example of its role as a partner who can help government entities change to optional retirement plans, a growing trend being allowed by state legislatures across the nation. CitiStreet has 10 financial professionals in South Carolina helping with education and communication for the plan participants.

"We are glad to have CitiStreet as one of those selected to provide services for our teachers," said Ed Haynsworth of the state's Budget and Control Board's Retirement Systems office.

Several states have converted all or parts of their benefits plans from defined benefits to defined contributions, a movement that began in earnest in 1997 when sweeping changes to defined contribution plans were permitted by the state of Michigan, a CitiStreet client.

In Anaheim, the CalPERS 457 plan now involves a wider role for CitiStreet, which manages the deferred compensation plan in partnership with CalPERS, the nation's largest pension fund. The Anaheim plan has about $40 million in assets.

"CitiStreet is aggressively seeking all types of government benefits business because we have the combination of people-based and technology-based solutions needed in today's market," said Taylor, who noted that CitiStreet now has won government contracts of various sizes in 30 different states.

About CitiStreet

CitiStreet, one of the largest global benefits delivery firms in the United States, is headquartered in Quincy, Mass. It has 3,000 employees and offices in East Brunswick, N.J., Jacksonville, Fla., Minneapolis and Boston, and 35 field offices around the nation. CitiStreet services more than 5 million participants and administers approximately $200 billion in assets for defined contribution, defined benefit and health and welfare plans of corporate, government, healthcare, Taft-Hartley and not-for-profit organizations. CitiStreet is a 50/50 joint venture between State Street Corp. (NYSE:STT) and Citigroup (NYSE:C).