Voluntary Retirement Plans Update

Transcription

1 Voluntary Retirement Plans Update Leadership Update June 2012

2 Rationale for Restructuring Program Simplify the program to: - Better meet the needs of faculty and staff (only 16% currently participate) - Increase participation by making it easy to enroll and make changes Increase communication and education resources Leverage University purchasing power to lower participant costs Meet changing regulatory requirements

3 What s Changing? Moving to the use of a master administrator (Fidelity) for all existing voluntary retirement plans This will impact anyone who participates in the 403(b), 457 or 401(a) plans All participant savings; no university contributions Current participants may choose to leave assets with current vendor no action required for assets After October 1, 2012, payroll deductions must go to a fund on the consolidated platform Flat dollar contribution elections will be changed to a percentage, rounded up to the next whole percentage

4 Advantages of a Master Administrator Lowers overall participant cost and leverages the value of combined assets Caps administrative costs paid by participants Administrative costs are capped at 8/100ths of a percent or 8 basis points (bps) Investment expenses are at the institutional, or wholesale level, rather than the retail level Creates transparency of fees Increased tools for participants Access to FREE one-on-one consulting with an unbiased financial advisor Consolidated and on-demand statements Ability to make changes online Interactive retirement and financial planning tools

5 Investment Platform Structure Master Administrator Tier 1 Target Date Funds Tier 2 Core Lineup Tier 3 Self-Directed Brokerage Professionally structured asset allocations based on target retirement date Limited yet flexible options span the risk/return spectrum Stable Value Fund with guaranteed return TIAA-CREF Annuities (403b only) Access to nearly 300 fund families Broad array of options for highly customized portfolios

6 Tier 1: Target Date Funds Fidelity Freedom K Funds A simplified investment approach based on your retirement date Single-fund approach to choosing and managing plan investments. Diversified portfolio that balances risk and potential reward over time. Ongoing professional management. Investment Platform Tier 2: Core Lineup active funds, index funds and annuities Build your individual portfolio with an array of options Domestic Fixed Income Stable Value: Principal Fixed Account Inflation-Protected Bond: BlackRock Inflation Protected Bond US Fixed Income: PIMCO Total Return & Vanguard Total Market Index Domestic Equity Large Cap Blend: Sentinel Common Stock & Vanguard Institutional Index All Cap: Vanguard Total Stock Market Index Large Cap Growth: Fidelity Contra Fund Large Cap Value: T. Rowe Price Equity Income Small Cap Blend: Royce Pennsylvania Mutual Fund & Vanguard Small Cap Index International Equity ACWI ex-us: Hartford International Opportunities Global Fixed Income Legg Mason Brandywine Global Opportunities Global Tactical Asset Allocation PIMCO All Asset Fund Annuities TIAA-CREF Annuities (no change from current TIAA-CREF options) Tier 3: Self Directed Brokerage Window For the investor looking for specific funds, the brokerage window offers over 300 fund families and thousands of funds. For specific information regarding this option, please speak with a retirement advisor.

7 Payroll Deductions Beginning October 1 Contributing to a legacy vendor or investment option Contributing to an investment option that will remain in the plan(s) Contributing to a TIAA-CREF option Deferral elections will be maintained Select a new vendor and investment options during the enrollment period Note: Contributions will default to Target Date funds if no election is made Decide to move current assets or leave them where they are Select your current options during the enrollment period TIAA-CREF options will remain the same no action needed

8 Timeline for Communication & Implementation Phase I Leadership (June and July) Reach key individuals/groups that can help drive communication and participation for employees Phase II Participant/Employee (July September) Informational Group meetings Department and Individual meetings Retirement Consultant face-to-face and phone support Phase III Ongoing communication (October 1 forward) Ongoing group and individual education Targeted communications and reminders Web-based education and financial tools

9 How You Can Help Stay informed about changes at: Watch a video of the recent employee presentation Read the FAQ Try out the one-on-one retirement consultant services or Attend an Informational Group Meeting Allow time / encourage faculty and staff in your area to attend Schedule a meeting for your department / building StahlT@umkc.edu