Swarthmore College. Changes to the 403(b) Retirement Plan. One Hundred Northfield Drive, Windsor, CT Toll Free:

Transcription

1 Changes to the 403(b) Retirement Plan One Hundred Northfield Drive, Windsor, CT Toll Free:

2 This presentation is provided for informational purposes only. It does not and is not intended to constitute legal advice. You should consult your professional, legal, and/or tax advisers with specific questions about your individual situation. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this presentation serves as the receipt of, or as a substitute for, personalized investment advice from Fiduciary Investment Advisors, LLC. To the extent that areader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of the Fiduciary Investment Advisors, LLC s current written disclosure statement discussing our advisory services and fees is available for review upon request. Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Fiduciary Investment Advisors, LLC), or any non investment related content, made reference to directly or indirectly in this presentation will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. 2

3 Topics for Review Background to Changes in the Retirement Plan Steps Taken by and the Fiduciary Committee The New Investment Menu Changes to Consider & Things You Can Do Now Important Dates to Remember 3

4 Why Are Changes Being Made? In recent years, Federal regulation over retirement plans has evolved and imposed a higher level of responsibility on 403(b) retirement plans, requiring them to operate more like 401(k) plans. Sponsors of 403(b) plans are subject to fiduciary responsibilities as guided by sections of The Employee Retirement Income Security Act of 1974 ( ERISA ). The primary changes that must adhere to include taking on fiduciary responsibility for: Selecting and monitoring plan investments; Assessing and monitoring the reasonableness of retirement plan fees; Distributing annual fee disclosure notices to participants; Providing an annual plan audit by a CPA. 4

5 Steps Taken to Comply with Regulations The Board of Managers of established the Fiduciary Committee which was charged with fulfilling the College s responsibilities for the Retirement Plan. The Committee retained Fiduciary Investment Advisors, LLC (FIA), a third party independent retirement plan consultant, to help the Committee assess the status of the current retirement plan and assist with changes. The Committee conducted a rigorous review of the 403(b) retirement plan and developed a strengthened and streamlined lineup of investment options. Investment options in the plan will continue to be monitored by the Fiduciary Committee with the assistance of FIA. 5

6 Overview of Plan Changes Current, TIAA-CREF & Calvert serve as recordkeepers. - TIAA-CREF,: 22 total investment options 10 annuities, 11 mutual fund options, and 1 suite of target-date funds - : > 60 mutual fund options and 1 suite of target date funds - Calvert: 17 mutual fund options Investment : proprietary at each institution (ie., TIAA-CREF,, Calvert offerings respectively). Participants have the ability to invest in: - TIAA Traditional, with its guaranteed rate of return and income in retirement. - CREF Stock, a competitive & popular option that provides broad equity market exposures. Investments and other fees on each menu are competitive when compared to peers and industry benchmarks. New and TIAA-CREF will serve as joint recordkeepers of the plan. TIAA-CREF platform: 8 investment options: 5 annuities 2 index mutual funds 1 suite of target date funds platform: 18 investment options 12 active mutual funds 5 index mutual funds 1 suite of target date funds Investments: Diversified investment options from a broad selection of mutual fund managers. Participants will continue to have the ability to invest in TIAA Traditional & CREF Stock, two popular options among participants. Participants will continue to have the ability to invest in several other annuity options from the former investment lineup as well. Investments and other fees will continue to be competitive, and may be lower over time. 6

7 Investment Evaluation and On Going Review Organization The investment firm must be financially and structurally sound and have the financial, operational and personnel resources to carry out its strategy. There should be no legal or regulatory proceedings surrounding the firm. The firm must have an appropriate compensation structure and demonstrate a passion for investing. Philosophy The investment manager must have a clearly defined and disciplined investment philosophy that is based on sound investment theory, which is followed consistently and with conviction. Investment Process The methods and procedures an investment manager uses to apply his philosophy constitutes the investment process. It is important that the manager s techniques for selecting and selling securities be sound, consistent and research intensive. Style Consistency The investment manager is expected to adhere to his particular investment style, despite prevailing market sentiment. Personnel The investment firm s professionals need to be skilled, experienced, properly credentialed and knowledgeable. Quality of Research The investment firm s research team must have the capacity and resources to evaluate and track the full universe of investment opportunities defined by its investment philosophy. The staff must possess extensive knowledge of the companies and particular securities being researched. Performance The investment manager must successfully demonstrate an ability to identify investment opportunities (their edge ). The manager should demonstrate competitive long term performance as compared to a relevant benchmark and peer group. Risk Controls Strong consideration is given to risk adjusted performance. The investment manager must implement appropriate risk controls, commensurate with their philosophy and process. Operations Asystemofoperationalpolicies,procedures,andriskcontrolsmustbeinplace. Thefirm should have contingency plans to control organizational risks, such as a physical disaster recovery plan. 7

8 Investment Tiers: Which Describes You? The investment lineup can be organized across a two tier framework that provides options among a range of investment styles. Participants will be able to invest in any or all of the following: Tier 1 Tier 2 Target Retirement Funds Annuity Options Index Mutual Funds Active Mutual Funds Tier Type Funds based on participant age, expected retirement, and a glide path that changes allocation relative to retirement age Fixed and variable annuity options that provide diversified market exposures and annuity features A streamlined selection of low cost passively managed index funds in 5 asset classes Actively managed investment options that span a diverse array of asset class categories Participant Type Participants who want a higher level of professional guidance Participants who want the benefits that annuity options provide Participants who want broad market coverage options at a low cost Participants who want to assume greater control of their investments # of Investment Options

9 /TIAA CREF: New Menus Large Value Large Blend Large Growth TIAA CREF TIAA Traditional CREF Money Mkt TIAA CREF Bond Index CREF Social Choice Suite of TIAA CREF Lifecycle Funds Money Mkt / SV Fixed Income Balanced Sm/Mid Value CREF Stock Sm/Mid Blend Domestic Equity Sm/Mid Growth TIAA CREF International Equity Index TIAA Real Estate International Other Large Value Large Blend Large Grwth VANGUARD Prime Money Market Total Bond Index Dodge & Cox Income Inflation Protected Secs Suite of Retirement Funds Windsor II Sm/Mid Value 500 Index Neuberger Berman Socially Responsible Sm/Mid Blend Primecap Sm/Mid Growth International Stock Index International Growth Artisan Int l Value Green: Annuity Investments Blue: Mutual Fund Investments Templeton Global Bond Diamond Hill Small Mid Cap Extended Market Index T. Rowe Price New Horizons Schroder Emerging Market Eq Columbia Acorn International 9

10 Investing in Annuities & Mutual Funds Annuities Types Fixed & Variable Index & Active Mutual Funds Objective Fixed: Guarantees principal and a specified interest rate and may offer dividends. Variable: Are designed to provide market like returns in their respective asset categories and can therefore fluctuate in value. Index: Seeks to replicate the returns of a specific index. Active: Seeks to outperform the returns of a specific index. Features The unique feature that annuities offer is the ability to convert balances into annual streams of income in retirement. Allows investors to have access to professionally managed and diversified portfolios. A mutual fund is constructed based on certain investment objectives. Source: TIAA CREF 10

11 TIAA Traditional Current Interest Rates (as of 9/12/13) Minimum Crediting Rate During Accumulation Phase Participant Initiated Withdrawals RA/GRA: 3.75% SRA/GSRA: 3.00% 3% RA/GRA: 10 installments over 9 years and a day SRA/GSRA: Fully liquid 1 Up to date crediting rates can be found at cref.org/public/tcfpi/investresearch Source: TIAA CREF 11

12 Target Retirement Funds Target Date Suite Target Retirement Income Target Retirement 2010 Target Retirement 2015 Target Retirement 2020 Target Retirement 2025 Target Retirement 2030 Target Retirement 2035 Target Retirement 2040 Target Retirement 2045 Target Retirement 2050 Target Retirement 2055 Target Retirement 2060 Underlying Funds Utilized Total Stock Market Index Total International Stock Market Index Total Bond Market II Index Total International Bond Index Short Term Inflation Protected Securities Source: 12

13 TIAA CREF Lifecycle Funds Target Date Suite TIAA-CREF Lifecycle Rtrmnt Income TIAA-CREF Lifecycle 2010 TIAA-CREF Lifecycle 2015 TIAA-CREF Lifecycle 2020 TIAA-CREF Lifecycle 2025 TIAA-CREF Lifecycle 2030 TIAA-CREF Lifecycle 2035 TIAA-CREF Lifecycle 2040 TIAA-CREF Lifecycle 2045 TIAA-CREF Lifecycle 2050 TIAA-CREF Lifecycle 2055 Underlying Funds Utilized Large Cap Growth Mid Cap Growth Global Natural Resources Large Cap Value Mid Cap Value Bond Enhanced Large Cap Growth Index Small Cap Equity Bond Plus Enhanced Large Cap Value Index International Equity High Yield Growth & Income Enhanced InternationalEquity Money Market Mid Cap Growth Emerging Markets Equity Index International Opportunities Source: TIAA CREF 13

14 Considerations for the New Funds 1 Future Contributions New Investments You can select a new allocation for your contributions. If you do not, any contributions to investments being closed will be directed into the Target Date Funds. Current Investment Balances New Investments You can transfer balances to the new investment options 1. If you do not: Balances in mutual funds that are closed will transfer into the Target Date Funds. Balances in Annuities that are closed will remain there. 1 Please review the Transition Guide for detail on the investments, transition timing, and recordkeeper requirements. Some investments may have unique characteristics that can influence the transfer of assets. Please review your holdings and consult an adviser at TIAA CREF and/or for more detail. 14

15 What Should You Do Now? Review your Quarterly Statement; Review the Transition Guide which was sent to you; Refer to the College Website for more information about the changes; Visit the and TIAA CREF websites to learn more about your investment choices; Evaluate your current investment portfolio & make changes if desired. You can make changes to your investments during this process or at anytime thereafter. 15

16 Important Dates to Remember in October On Campus Group Sessions Sessions will be led by and TIAA CREF and will highlight the resources and tools available to you. 16

17 Important Dates to Remember in October Individual Participant Sessions (Oct.) Consider making an appointment with a or TIAA CREF adviser to discuss your investment options in more detail. Additional sessions will be made available in the future as well. Phone and web support are also available. 17

18 QUESTIONS? 18

19 Disclaimer Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Fiduciary Investment Advisors), or any non investment related content, made reference to directly or indirectly above, will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Fiduciary Investment Advisors is neither a law firm nor a certified public accounting firm and no portion of the content should be construed as legal or accounting advice. Please remember to contact Fiduciary Investment Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of Fiduciary Investment Advisors' current written disclosure statement discussing our advisory services and fees is available for review upon request. 19