Plans Update Leadership Update June 2012 Rationale for - - PowerPoint PPT Presentation

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

Tier 1

Target Date Funds

► Professionally

structured asset allocations based on target retirement date

Tier 3

Self-Directed Brokerage

► Access to nearly 300 fund

families

► Broad array of options for

highly customized portfolios

Tier 2

Core Lineup

► Limited yet flexible options

span the risk/return spectrum

► Stable Value Fund with

guaranteed return

► TIAA-CREF Annuities

(403b only)

Investment Platform Structure Master Administrator

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

• ptions)

Tier 2: Core Lineup – active funds, index funds and annuities

Build your individual portfolio with an array of options

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 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.

Investment Platform

Contributing to a “legacy” vendor

• r investment 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

• r leave them where they are

Contributing to an investment

• ption that will remain in the

plan(s) Select your current options during the enrollment period Contributing to a TIAA-CREF

• ption

TIAA-CREF options will remain the same – no action needed

Payroll Deductions Beginning October 1

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