retirement plan enhancements€¦ · retirement plan, requiring a minimum of four 2018 - ohio...
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RETIREMENT PLAN ENHANCEMENTSJoey Payne, Cammack Retirement GroupSpring 2020
AGENDA
• Introduction• What’s Changing?• Who Is Impacted?• Timeline• Next Steps• Questions
INTRODUCTION
2016 - Ohio Department of Education approved eight vendors for university Alternative Retirement Plan, requiring a minimum of four
2018 - Ohio Inter-University Counsel (IUC) selected Cammack Retirement Group to advise on beneficial changes to member universities’ ARP plans
2019 - Board of Trustees delegates authority to the Retirement Plan Review Committee to make changes to retirement plans; Ohio U, Cincy, Miami, BGSU begin working with Cammack to review plans
2019-2020 - Cammack and Retirement Plan Review Committee reviewed current ARP (401(a)) and 403(b) plans and recommended significant changes that will benefit employees in both plans
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WHAT’S CHANGING?
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Consolidate from six 401(a) and five 403(b) vendors to four- VOYA, AIG, TIAA, Fidelity
Converting wrapped annuities to open architecture mutual fund platform- Lowers funds fees and increases investment opportunities
Moving to TIAA as Multi-Vendor Coordinator (currently using Voya)-Lowers record keeping fees for plan participants
New Options- Self Directed Brokerage Accounts
- Add Roth 403(b) Deferral Option
WHY ARE FEES IMPORTANT
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Total fees paid over lifetime by typical workerSalary when worker starts saving at age 25 and retires at age 67: $30,502 (median)
Fee Percentage Total Fees0.25% $42,3091.00% $138,3361.30% $166,420
Total fees paid over lifetime by high-income workerSalary when worker starts saving at age 25 and retires at age 67: $75,000
Fee Percentage Total Fees0.25% $104,0331.00% $340,1471.30% 409,202
Source (“Fixing the Drain on Retirement Savings, How Retirement Fees Are Straining the Middle Class and What We Can Do about Them,” Jennifer Erickson and David Madland, Center for American Progress, April 11, 2014)
INVESTMENTS
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Data Source: Morningstar as of 12.31.2019Confidential Information - For Plan Sponsor Use Only © 2020 All Rights Reserved
EquityU.S. Large Cap P
U.S. Mid Cap PU.S. Small Cap PInternational Equity PEmerging Markets Equity P
Fixed IncomeU.S. Fixed Income P
U.S. TIPs PHigh YieldEmerging Markets DebtInternational Fixed Income
AlternativeCommoditiesReal Estate
ASSET ALLOCATION
TIER I- TARGET DATE FUNDS- TIAA-CREF LIFECYCLE INDEX
Fund Description- The Lifecycle Index Funds glidepath, the planned progression of asset allocation changes over time, has been structured with the objective of maximizing risk-adjusted outcomes by investing in a diversified portfolio of equity and fixed-income index investments.
EQUITYGLIDEPATH
Max/Min equity exposure for peer comparisons Target Date Glidepath
› Equity at retirement (age 65) is 50.0%› Equity at landing point (age 95) is 20.0%› 2010: Added EM Equity Index› 2013: Increased International Equity as a % of total equity from 25% to 30%› 2015: Added Short-term Bonds as distinct asset class› 2016: Increased equity for younger investors (2045-2060 funds)› 2019: The final landing point for the Lifecycle funds glidepath extended from 10 years past
retirement to 30 years past retirement. The asset allocation will remain static after age 95 with an20% of equity compared to the previous asset allocation of 40% after age 75.
A = Active Management P = Passive Management
Equi
tyEx
posu
re
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%2060 2055 2050 2045 2040 2035 2030 2025 2020 2015 2010 Ret Inc
GLIDEPATH NOTES Target Date Series
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INVESTMENT MENU- TIAATIER 1 – TARGET DATE,TIAA Lifecycle Index Target Date FundsTIER 2 – CORE INVESTMENTSCAPITAL PRESERVATIONFIXED/STABLE MONEY MARKET
Vanguard Federal Money Market
HIGH YIELDPGIM High Yield
LARGE BLENDVanguard 500 Index
LARGE GROWTHVanguard PrimeCap AdmVanguard Large Cap Growth Index Adm
HYBRIDCREF Social Choice R2 (Socially Responsible)
MID GROWTHMFS Mid Cap Fund
SMALL BLENDVanguard Small Cap Index
SMALL GROWTHFederated Kaufman Sm Cap Growth R6Vanguard Sm Cap Growth Index Adm
DIVERSIFIED GLOBALEQUITY
R2
CORE AND DIVERSIFYING FIXED INCOMEINTERMEDIATEVanguard Total Bond Market IndexWestern Asset Core Plus BondDOMESTIC EQUITYLARGE VALUEVanguard Equity Income Adm
MID VALUEVanguard Mid Cap Value Index Adm
SMALL VALUEWells Fargo Special Small Cap Value R6Vanguard Small Cap Value Index AdmINTERNATIONAL/GLOBAL EQUITYFOREIGN LARGE CAPClearBridge International GrowthVanguard Total International StockIndexINFLATION HEDGEINFLATION PROTECTEDBONDVanguard Inflation-Protected Secs
REAL ESTATE/REITTIAA Real Estate Account Vanguard Real Estate Index
CREF Stock
TIAA Traditional
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TIER 3- Brokerage Window
INVESTMENT MENU- VOYATIER 1 – TARGET DATE,TIAA Lifecycle Index Target Date FundsTIER 2 – CORE INVESTMENTSCAPITAL PRESERVATIONFIXED/STABLE MONEY MARKET
Vanguard Federal Money Market
HIGH YIELDPGIM High Yield
LARGE BLENDFidelity 500 Index
LARGE GROWTHVanguard PrimeCap AdmFidelity Large Cap Growth Index
HYBRIDCalvert Balanced (Socially Responsible)
MID GROWTHMFS Mid Cap Fund
SMALL BLENDVanguard Small Cap Index
SMALL GROWTHFederated Kaufman Sm Cap Growth R6Vanguard Sm Cap Growth Index Adm
CORE AND DIVERSIFYING FIXED INCOMEINTERMEDIATEFidelity U.S. Bond IndexWestern Asset Core Plus BondDOMESTIC EQUITYLARGE VALUEVanguard Equity Income Adm
MID VALUEVanguard Mid Cap Value Index Adm
SMALL VALUEWells Fargo Special Small Cap Value R6Vanguard Small Cap Value Index AdmINTERNATIONAL/GLOBAL EQUITYFOREIGN LARGE CAPClearBridge International GrowthVanguard Total International StockIndexINFLATION HEDGEINFLATION PROTECTEDBONDVanguard Inflation-Protected Secs
REAL ESTATE/REIT
Vanguard Real Estate Index
Voya Fixed
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TIER 3- Brokerage Window
INVESTMENT MENU- AIG VALICTIER 1 – TARGET DATE,TIAA Lifecycle Index Target Date FundsTIER 2 – CORE INVESTMENTSCAPITAL PRESERVATIONFIXED/STABLE MONEY MARKET
Vanguard Federal Money Market
HIGH YIELDPGIM High Yield
LARGE BLENDFidelity 500 Index
LARGE GROWTHVanguard PrimeCap AdmFidelity Large Cap Growth Index
HYBRIDCalvert Balanced (Socially Responsible)
MID GROWTHMFS Mid Cap Fund
SMALL BLENDVanguard Small Cap Index
SMALL GROWTHFederated Kaufman Sm Cap Growth R6Vanguard Sm Cap Growth Index Adm
CORE AND DIVERSIFYING FIXED INCOMEINTERMEDIATEFidelity U.S. Bond IndexWestern Asset Core Plus BondDOMESTIC EQUITYLARGE VALUEVanguard Equity Income Adm
MID VALUEVanguard Mid Cap Value Index Adm
SMALL VALUEWells Fargo Special Small Cap Value R6Vanguard Small Cap Value Index AdmINTERNATIONAL/GLOBAL EQUITYFOREIGN LARGE CAPClearBridge International GrowthVanguard Total International StockIndexINFLATION HEDGEINFLATION PROTECTEDBONDVanguard Inflation-Protected Secs
REAL ESTATE/REIT
Vanguard Real Estate Index
AIG VALIC Fixed
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TIER 3- Brokerage Window
INVESTMENT MENU – FIDELITY
WHO IS IMPACTED?Current employees contributing to the ARP/403b plans with the following vendors will be contacted to select a new vendor:
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• AXA• Nationwide• Mass Mutual• Lincoln• Ameriprise
Current assets can remain with current vendor or be mapped at a new vendor to equivalent investments
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VENDOR CONTACT & EFFECTIVE DATES
Visit your vendor’s website to open an account and select investmentsAIG: ohiohighered.valic.com/home (starting May 4, 2020)Fidelity: enrollonline.fidelity.com (starting May 4, 2020)TIAA: TIAA.org/utoledo (starting April 6, 2020)Voya: voyaretirementplans.com (starting April 6, 2020)
UToledo HR website at utoledo.edu/depts/hr/benefits/retirement-systems.html
TIMELINEAnnouncement Letter to Employees March 6Transition Guides Mailed March 20Group Presentations (Webinars) April 3, 9, 10Vendors Portals Open May 41:1 Counseling Sessions w/ Four Vendors – MC May 5, 6, 7, 12, 13, 14
• Sessions will be online or telephonic
1:1 Counseling Sessions w/ Four Vendors – HSC May 4, 5, 6, 7, 11, 12, 13, 14• Sessions will be online or telephonic
New Plan Begins (1st Payroll in July) July 3
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NEXT STEPS
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Watch your mail for transition information
Plan to attend educational sessions
Plan to attend 1 on 1 session with vendor
Select new vendor and investments
QUESTIONS
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