Voluntary Retirement Plans Update Leadership Update – June 2012
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
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
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
Investment Platform Structure Master Administrator Tier 2 Tier 3 Tier 1 Core Lineup Self-Directed Brokerage Target Date Funds ► Professionally ► Limited yet flexible options ► Access to nearly 300 fund structured span the risk/return families asset allocations spectrum ► Broad array of options for based on target ► Stable Value Fund with highly customized portfolios retirement date guaranteed return ► TIAA-CREF Annuities (403b only)
Investment Platform 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. Tier 2: Core Lineup – active funds, index funds and annuities Build your individual portfolio with an array of options Domestic Fixed Income International Equity Stable Value: Principal Fixed Account ACWI ex-US: Hartford International Opportunities Inflation-Protected Bond: BlackRock Inflation Protected Bond Global Fixed Income US Fixed Income: PIMCO Total Return & Vanguard Total Legg Mason Brandywine Global Opportunities Market Index Global Tactical Asset Allocation Domestic Equity PIMCO All Asset Fund Large Cap Blend: Sentinel Common Stock & Vanguard Institutional Index Annuities All Cap: Vanguard Total Stock Market Index TIAA-CREF Annuities (no change from current TIAA-CREF Large Cap Growth: Fidelity Contra Fund options) Large Cap Value: T. Rowe Price Equity Income Small Cap Blend: Royce Pennsylvania Mutual Fund & Vanguard Small Cap Index 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.
Payroll Deductions Beginning October 1 Contributing to a “legacy” vendor Deferral elections will be or investment option 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 Contributing to an investment Select your current options option that will remain in the during the enrollment period plan(s) Contributing to a TIAA-CREF TIAA-CREF options will remain the same – no action needed option
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
How You Can Help • Stay informed about changes at: http://www.umsystem.edu/totalrewards/retirement – Watch a video of the recent employee presentation – Read the FAQ – Try out the one-on-one retirement consultant services 1-800-642-7131 or www.fidelity.com/atwork/reservations – 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
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