Bank of America Merrill Lynch’s retirement services unit is generating significant new business, much of it from existing clients of the bank.

Last year, the institutional retirement business racked up $17 billion of new retirement benefit plan assets across the 401(k), pension and equity compensation plan markets.

The momentum has carried over into 2011, according to the company.

As of the end of February, Bank of America Merrill Lynch has $12 billion of new funding commitments from 249 clients. Forty percent of these clients are existing clients of the bank — companies with ties to its Global Commercial Banking business or its Global Corporate & Investment Bank.

“We’re by no means declaring victory,” said Andy Sieg, head of Bank of America Merrill Lynch Retirement Services. “We’re just scratching the surface in terms of the opportunity.” Sieg noted, for example, that the global commercial banking business serves one of every three mid-size companies in the United States.

BofA Merrill Lynch credits the strengthening partnership between Bank of America Global Commercial Banking and the institutional retirement business. That cooperation led to $3.6 billion in new client benefit plan assets in 2010, compared with $700 million in 2009.

Last year’s retirement business gains occurred even though economic challenges had distracted many employers from employee benefits issues. But Doug Dannemiller, senior analyst at research firm Aite Group, LLC, says it’s not surprising given the strength of the legacy Merrill sales force. 

“They are a highly effective financial services sales force are were presented with warm lead relationships for cross-sell,” he said. “Nobody else in the marketplace had that.”

Overall, BofA Merrill Lynch’s retirement services assets stood at $535 billion at the end of 2010, up from $489 billion at the end of 2009. Its 401(k) assets, for all sizes of clients, rose to $118 billion at the end of 2010, a net increase of $14.5 billion from 12 months earlier.

During the recession, the market for retirement plan sponsors slowed considerably as businesses focused on survival. But that’s changed as the recovery begins to take hold, said Kevin Crain, head of institutional client relationships for BofA Merrill Lynch.

“I think it’s a very active sales market place,” he said. “Client attention has turned back to their retirement programs and what they should do about them.”

Part of the reason for that is the current legislative and regulatory focus on the cost and value of retirement plans, he said. “It has made sponsors realize, that, at a minimum, they should know the marketplace,” he said.

One innovation that has boosted BofA Merrill Lynch’s 401(k) business has been aligning it with employers’ health benefits. Presenting retirement savings as part of an overall health and financial wellness concept has led an increasing number of workers taking positive action regarding their 401(k)’s, according to Crain.

During last year’s health benefit enrollment season, BofA Merrill found that, of 401(k) participants who took some type of action, 93% started or increased contributions. Seven percent stopped or decreased contributions. The results were an improvement on 2009, when 85% started or increased contributions and 15% stopped or decreased them.

As of the end of February 2011, assets within Bank of America Merrill Lynch’s institutional retirement business — comprising 401(k), defined benefit and SEP and Simple IRAs — stood at a single-month record of $186 billion.

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