Age Band Rebalance Program User Guide

Transcription

1 Schwab Retirement Technologies, Inc. Schwab Automated Retirement Processing (SchARP) Age Band Rebalance Program User Guide

2 Schwab RT Age Band Rebalance Program March 2017 The material contained herein is proprietary to Schwab and for informational purposes only. The information is not intended to provide tax, legal or investment advice. Schwab does not guarantee the suitability or potential value of any particular information source. Certain information presented herein may be subject to change. The information or material contained in this document may not be copied, assigned, transferred, disclosed or utilized without the express written approval of Schwab. The Charles Schwab Corporation provides services to retirement plans and participants through its subsidiaries: Charles Schwab & Co., Inc. (Member SIPC), Charles Schwab Bank, Schwab Retirement Plan Services, Inc., Schwab Retirement Plan Services Company and Schwab Retirement Technologies, Inc. (Schwab RT). Schwab RT is engaged in developing and licensing proprietary retirement plan recordkeeping systems to independent Third Party Administrators. For further information, contact Schwab Retirement Technologies, Inc. at 4529 Sharon Road, Charlotte, NC 28211, USA. Web site: schwabrt.com Schwab Retirement Technologies, Inc. All rights reserved. March 2017 Page 2 of 13

3 Age Band Rebalance Program Schwab RT s new Age Band Rebalance Program provides the ability to automatically rebalance participant investment elections and current balances into the appropriate age banded investment. This option is available only for those participants who do not choose an investment election. Schwab RT s new Age Band Rebalance Program provides the following features and benefits: Helps retirement advisors deliver a program to automatically rebalance participants into a predetermined investment based on a specified age band or age range. Gives advisors the ability to develop risk-based alternatives for participants that could serve as Qualified Default Investment Alternatives (QDIAs) within the plan and providing flexibility to control the risk that participants could be exposed to at different ages. Rebalances participants into the appropriate risk-based funds each time they reach the prescribed age band. This option is an alternative to assigning a participant to a target date fund based on birth date. The investment used in this program may be a Collective Investment Trust (CIT) managed outside the recordkeeping system by the retirement advisor or it can be an investment model created by the retirement advisor consisting of an allocation of mutual funds and tracked on the recordkeeping system. A sample Age Band Rebalance Program is illustrated below: For illustration purposes only. March 2017 Page 3 of 13

4 New Recordkeeping Settings The Default Investments window in Plan Maintenance and Plan Inquiry includes a new Age Band option. Selecting this option displays the new By Age Band table where you can define beginning and ending Age Band ranges, along with the corresponding investment IDs and descriptions. The investment IDs and descriptions are selected from a drop down menu of available investments. The window also includes new Rebalance Information options, including the Cycle, the Rebalance Day within the specified cycle, as well as an indicator that shows the Last Rebalance Day. The rebalance options apply only to the Age Band program for the selected plan. A sample Default Investments window in Plan Maintenance appears below: March 2017 Page 4 of 13

5 Important Prerequisite The Age Band Rebalance feature requires that consolidated sources are enabled for the plan on the VRS/OPI Settings window in Plan Maintenance. All three options (VRS, Call Center, and Web) must be turned on. March 2017 Page 5 of 13

6 New SchARP Business Activity After you have established the Age Bands, investments, and rebalance cycle for the plan, a new SchARP business activity will check the plan s Age Band settings and build applicable transactions to rebalance investments and investment elections. Transactions will be created only for participants with investment election settings of either Default or Age-Based (or undefined), as indicated on the Investment Elections window in Participant Maintenance. When the SchARP Age Band Auto Rebalance business activity runs on the specified cycle, it processes any Age Band participant who is ready to move to the next Age Band (based on birth date) or rebalances the participant s account back to the appropriate age based investments, if transfers or realignments have occurred in the account. When SchARP processing is complete, the resulting report and any warnings are available in the OUTPUT section of the SchARP Monitor, shown below. Note: Regardless of the Cycle and Rebalance Day, the first time the SchARP Age Band Auto Rebalance workflow runs, it will pick up any participant that needs to be rebalanced. March 2017 Page 6 of 13

7 Age Band Investment Auto Rebalance Report The Age Band Investment Auto Rebalance Report, shown below, includes Age Band data for applicable participants in the plan. The Prior Investment and the New Investment columns show before and after rebalancing of money currently held in the participant s account. The Prior Investment Election and the New Investment Election columns show before and after rebalancing of new money that will be invested in the future. Warnings Report The warning report appears if any of the following exceptions are encountered during processing: No Birth Date on file (No Participant Service Record (PSR) is created) Participant balance and investment elections are not aligned (PSRs are created) If the birth date was changed, the rebalance will still process but there will be a notation on the report for the user to manually validate the change in birth date (PSRs are created) - If a manual adjustment is required, the recordkeeper may cancel the pending rebalance transaction - If the rebalance has already been processed, the recordkeeper can transfer the balance manually and adjust the investment elections Invalid Birth Date (No PSRs are created) No address on file (PSRs are created) Pending transfer/realignment (Only the Age-Band Investment Election PSR has been created) March 2017 Page 7 of 13

8 A sample warnings report is shown below. Customizing Notifications After Age Band PSRs are created, the system sends notifications to all affected participants. To customize the content of the message, do the following: 1. In Schwab RT Administration, open Content Manager from the Web Options menu. 2. Select the edelivery - Confirms and Notifications page for modification. 3. Locate the Financial Changes - Body (Age Band) field and make your changes. 4. Click Update. The default content of the message appears below: Financial Changes - Body (Age Band) <pre><font size='3' face='times New Roman' >Dear ${ParticipantFirstName},<BR> <BR/>This confirms the following change to your retirement account has been requested because you are currently defaulted in the Age Banded Qualified Default Investment Alternative for the plan.<br> <BR/><b>${RequestType}</b><BR><BR/>Plan Name : ${PlanName}<BR/>Date/Time of Request : ${DateTime}<BR><BR/>{$ChangeItself}<BR> <BR/>Please do not reply to this , as this mailbox is not monitored. ${LogontoText} If you have any questions or need assistance, please:<br> <BR/><UL><LI>login to our site at [TPA URL] and use the Contact Us feature</li><li> us at [TPA Address] or</li><li>call our participant services center at [TPA Phone Number]</LI></UL></font></pre> March 2017 Page 8 of 13

9 Impact on Participant Web Experience The following behavior applies to the participant experience on Schwab RT Web: There are no restrictions for participants in the Age Band Rebalance program. When a participant submits a transfer or realignment, the following warning message appears to notify the participant that the account may be automatically rebalanced if their investment elections remain unchanged. To avoid having the account rebalanced on each cycle, the participant is offered the option to cancel the transfer or realignment. If cancelled, the participant account is only rebalanced when the participant passes into the next Age Band, as determined by birth date. Note: As a result of the transfer or realignment, new contributions could be invested differently from their portfolio allocation once the transfer or realignment is processed. Regardless, these participant accounts will be rebalanced into the appropriate Age Band fund when the Age Band Rebalance workflow runs on its designated cycle (Monthly, for example) and the participant will be notified each time. If the participant changes their investment elections, they will no longer be included in the Age Band Rebalance Program. The option to choose an Age Band investment frequency will not be available for transfers, realignments, or Online Enrollment (OLE ). Participant will be able to cancel pending Age Band Rebalance transactions on the web. March 2017 Page 9 of 13

10 New Ad Hoc Report: Age Band/Birth Date Default Investment This release includes a new report that you can run to identify participants who do not have 100% of their account balances invested in the proper default fund. The first part of the report shows plans with the Birth Date default investment option enabled; the second section of the report is reserved for plans with the Age Band default investment option enabled. The report is generated via the SchARP Generate Report workflow or from the Report Generator/CP50 module in Recordkeeping. We recommend that you generate the report for all plans that use either the Age Band or Birth Date default investment option. The report includes participants with the investment election status No choice, Default, or Age Based. The following illustration shows the completed Generate Reports workflow in the SchARP Monitor along with the corresponding report history page where you can view the report. March 2017 Page 10 of 13

11 Report samples for Birth Date and Age Band options appear below. All participants listed in this report have less than 100% of their account balances in the default investment. March 2017 Page 11 of 13

12 The same report can be generated using the Report Generator module in Recordkeeping, as shown in the following example. March 2017 Page 12 of 13

13 Appendix: Sample Age Band Flow