The Amherst College Defined Contribution Retirement Plan. Make the Most of Your Financial Future

Transcription

1 The Amherst College Defined Contribution Retirement Plan Make the Most of Your Financial Future

2 Agenda Introductions Background Benchmarking New Investment Menu Transitioning to the New Investment Menu Updating Your Investment Choices Learn More Questions ipad 2 Entries 2

3 Background Partnership with TIAA-CREF as primary 403(b) service provider since 1941; Strong partnership continues Changing 403(b) legislation/regulation prompted Amherst College to reassess/ enhance governance structure: Increased audit and reporting requirements Heightened DOL focus on fiduciary obligations In 2010, formalized Defined Contribution Retirement Savings Plan Investment Committee: Cross-functional membership: HR, Legal, Finance, Investments Engaged independent investment advisory firm to conduct benchmarking Benchmarking the current plan: Recordkeeping and administrative services Employee communication, education and advice Investment options: diverse and complimentary investment styles, consistent risk/return profiles, cost effective, etc Formalize risk management and ongoing oversight 3

4 Benchmarking Project Objectives Ensure administrative and recordkeeping services are at, or better, than market and simplify/consolidate services with one provider Increase/improve employee communications and investment education Provide participants with full array of diversified investment options; allow exposure to complimentary investment styles and return/risk profiles that are cost effective Make enhancements that can positively impact Participant s retirement outcomes What s Not Changing: Overall design of the Plan Contribution rates Eligibility requirements 4

5 Benchmarking the Recordkeeper Evaluative Criteria Included Ability To: Provide satisfactory services to employer and participants Provide open-architecture capabilities to recordkeep and coordinate multiple vendor funds Supply services at competitive rates Provide participant education and counseling services 5

6 Benchmarking and Selecting Funds Establishment of Investment Policy Statement Asset categories that enable diversification Allocation or asset mix is what drives return, not the funds themselves Selection and ongoing monitoring criteria 11 criteria evaluated and scored each and every quarter Data fields downloaded from Morningstar On average, historical net returns of new funds have outperformed net returns of existing funds offered in same category No guarantees but fair, reasonable, repeatable process with documented and actionable results Quarterly meetings/reports Continuous focus on best interest of plan participant 6

7 Fund Selection Criteria Minimum criteria for short list: 1. Inception Date: Must have 3 Yr track history 2. Tenure: Senior manager must have at least 2 Yr 3. Assets: Minimum of $75M 4. Composition: Greater than or equal to 80% 5. Style: Must match peer group 6. Net Expense: Must not be in lower quartile 7. Alpha: Top 50% of peer group 8. Sharpe: Top 50% of peer group 9. 1 Yr Net Rtn: Top 50% of peer group Yr Net Rtn: Top 50% of peer group Yr Net Rtn: Top 50% of peer group 7

8 An Illustration of Fund Selection Sample results for Large Growth: 22,785 mutual funds 1,605 Large Growth 32 in top 10% Fiduciary Score 13 top 25% 5 Yr Net Return Fund Wells Fargo Ridge worth T.Rowe Price Franklin Growth X TIAA-CREF X X X X X 8

9 An Illustration of Fund Selection Fiduciary Score Fiduciary Score Manager Tenure Name Ticker Qtr 3YR Average 1 Yr Rtn 3 Yr Rtn 5 Yr Rtn 10 Yr Rtn Sharpe (years) Wells Fargo Advantage Growth A SGRAX RidgeWorth Aggressive Growth Stock A SAGAX T. Rowe Price New America Growth PRWAX Franklin DynaTech A FKDNX JPMorgan Large Cap Growth A OLGAX MainStay Large Cap Growth A MLAAX BlackRock Capital Appreciation Inv A MDFGX American Century Growth A TCRAX Franklin Growth A FKGRX Wells Fargo Advantage Strat LgCp Gr A ESGAX Nuveen Large Cap Growth Opp A FRGWX Franklin Flex Cap Growth A FKCGX TIAA-CREF Large-Cap Growth R TILRX 49 Not Scored

10 Individual Fund Fact Sheets View investment objective, strategy and performance for each individual fund on the new Investment Menu online at Click on PLANS & INVESTMENTS and then select INVESTMENT CHOICES to view individual fund information 10

11 New Investment Menu 11

12 Transitioning to the New Investment Menu: Frozen Funds on Current Menu No Further Contributions After 12/1 ALL FIDELITY FUNDS 12

13 Transitioning to the New Investment Menu Unless you take action, Future Contributions, after 12/1, redirected to Age-Appropriate Target Date Fund 13

14 Transitioning to the New Investment Menu: New contributions for current employees Beginning October 24, you can access information about the new Investment Menu online at Welcome Kit(s) from TIAA- CREF for the new RC and RCP contracts/certificates Anytime, following the December 2 transition to the New Investment menu, you can choose to re-direct how your contributions are allocated to the new investment menu Retirement Choice Annuity (RC) and Retirement Choice Plus (RCP) contracts used after December 1, 2011 Beginning November 1, select how your contributions are invested after December 1 If you do not update your choices by December 1, your future contributions will be invested in an age-appropriate Target Date Fund managed by T. Rowe Price See the Transition Guide for more details. 14

15 Transitioning to the New Investment Menu: Existing assets in Frozen Funds Beginning October 24, you can access information about the new Investment Menu online at After December 5, transfers of existing assets in the frozen funds can only be made to funds on the new Investment Menu Existing assets can be moved between the funds on the existing investment menu until market close on December 5 Contributions received after December 1 will be redirected to an ageappropriate T. Rowe Price Target Date Fund if you do not take action See the Transition Guide for more details. 15

16 Transitioning to Lower Cost Share Class 16

17 Transitioning to the New Investment Menu: If you currently invest with Fidelity Beginning October 24, you can access information about the new Investment Menu online at Existing assets at Fidelity will remain, unless you transfer them to the new Investment Menu Select investment choices for future contributions from the new Investment Menu and designate your beneficiary, if necessary See the Transition Guide for more details. 17

18 Transitioning to the New Investment Menu: All current employees Review your 3 rd Quarter Investment Statements, including statements from TIAA-CREF and Fidelity, if applicable. Compare your statements to the new Investment Menu. Schedule a One-on-One Investment Counseling Session with a TIAA-CREF consultant by calling During your Counseling Session, you will receive assistance updating your retirement portfolio. Please Note: Bring your latest Investment Statements, including investments outside of your Retirement Plan, and your most recent Social Security statement, if available, to your counseling session. 18

19 Updating Your Investment Choices Beginning November 1, you can update your investments via the following ways: Online: Phone: Monday through Friday, 8 a.m. to 10 p.m. and Saturday, 9 a.m. to 6 p.m. (ET) In Person: On-Campus Counseling Sessions You will receive assistance updating your investment choices during your Individual Counseling Session 19

20 Updating Your Investment Choices Online Log into your account using your TIAA-CREF Contract Number(s) or current log-in information. If you are unsure about your contract number or have forgotten your log-in information, contact TIAA-CREF at LOG IN 20

21 Updating Your Investment Choices To update your investment choices: 1. Choose the plan/contract you want to change your asset allocation. 2. Select a new asset and input a percentage. 3. You will receive a confirmation in the mail anytime there is a change. 21

22 Learn More Be sure to review the detailed Transition Guide that was mailed to your home and posted on the Retirement Plan website, Set up an appointment for an Individual Counseling Session: Find out if you are saving enough Choose the right investment funds for your needs Receive assistance transitioning to the new menu To schedule your session, call TIAA-CREF at Monday to Friday from 8 a.m. to 8 p.m. (ET). 22

23 Q&A Remember to Register for the ipad 2 Drawing! One prize will be given away at the end of each seminar day. The winner will be announced via an from Human Resources. 23