The following email was sent to faculty and staff by Chief Administrative Officer Jerry Berenson on Monday, October 19.
Dear Faculty and Staff Members,
Please read the attached [see below] important letter about changes to the College Retirement Plan that will be effective March 1, 2016. There will be meetings on October 27 at 11 a.m. and 4 p.m. in Thomas Hall room 110, for faculty and staff members to learn about the changes and to ask questions. There will be additional meetings and communications later in the semester for those who are not able to come to one of the meetings on October 27. Thank you.
Dear Faculty and Staff Members,
The College’s Retirement Plan will be going through a change beginning March 1, 2016. On October 27 at 11 am and 4 pm, in Thomas Hall, Room 110, there will be town hall meetings for all College faculty and staff to learn more about the changes to the Retirement Plan and to answer questions. The College Benefits Committee has been working on the changes for the past three years. The Committee has met many times over this time period, working with a consultant, to determine the changes to the Plan that will best serve faculty and staff members. The Benefits Committee membership consists of administrators and faculty and staff representatives.
What is the reason for changing the College Retirement Plan?
One of the major reasons for the change has been the evolving federal regulations for retirement plans of not-for-profit institutions. Previously, it was mostly the responsibility of the employees and not the employer to manage retirement accounts. After the change, there has been clarification regarding institutions and their fiduciary responsibility over their Plan. Institutions have been required to form an investment committee (for us that is our Benefits Committee) to oversee the Plan administration and investment options. In determining Plan administration, committees must consider:
- Participant access to information, such as the value of their account, fund performance, fees, investment options etc.
- Services provided to participants by the Plan administrator including financial educational opportunities, written and electronic communications and a well-designed website
- A variety of other factors
In determining investment options, the committee must consider:
- The reputation and stability of the fund management
- A variety of other qualitative and quantitative measures
What changes are being made in the Retirement Plan Administration?
Currently, TIAA-CREF and Vanguard are the administrators of the Retirement Plan. For those faculty and staff members that have assets with both institutions, there are two administrators of their retirement assets and they must obtain information from both administrators in order to track their retirement investments. The College Benefits Committee has selected Transamerica Corporation to be the main administrator for the new plan; however, TIAA-CREF will continue to be the administrator for the investments that remain with them. There will be a link from the Transamerica website to TIAA-CREF so that all faculty and staff members can view the information about their retirement assets from the Transamerica website.
What are the major reasons that Transamerica was selected as the main Plan administrator?
- The College Benefits Committee believes that it is very important that the financial and retirement planning services provided by the Plan administrator to faculty and staff members be independent of the investment managers. Both TIAA-CREF and Vanguard have provided these services in the past; however the advice given has generally been restricted to the investment fund choices offered by each company. The College Benefits Committee carefully reviewed the proposal from Transamerica to provide financial and retirement planning services both to groups and individually to College employees and believe that they will provide improved services.
- Transamerica has a good track record of administering Investment Funds from many managers. Both TIAA-CREF and Vanguard have only recently begun to provide administrative services for Investment Funds from other companies.
- Transamerica has provided Retirement Plan Administration for many Colleges and Universities for many years and has a good reputation. The services were provided under the name Diversified Investment Advisors for many years prior to the name changing to Transamerica.
- The cost is reasonable and competitive with industry standards.
- The Transamerica website is easy to use and provides comprehensive information for all faculty and staff Plan participants.
What changes are being made to the Retirement Plan investment choices?
Some of the TIAA-CREF and Vanguard investment options are being closed, although the investment funds that are most used will remain open. The College currently has a large number of investment options and we have been strongly advised to reduce the number. Research has shown that when there are too many investment options people often defer necessary changes to their investments or do not focus as much on asset allocation which is the most important aspect of maintaining an investment portfolio. Asset allocation is the decision to invest in the major asset classes which are stocks, bonds and cash or money market funds. Also, there are a few investment options for Funds managed by companies other than TIAA-CREF and Vanguard.
How was the decision made to include investment fund options in the College Retirement Plan?
The College Benefits Committee made the decisions based upon recommendations from the consultant we are working based upon the long-term performance, cost and a variety of other qualitative and quantitative measures of the funds.
What happens if a Fund in which I currently have retirement assets is closed?
Transamerica will hold individual sessions with all faculty and staff and will assist those who have investments in Funds that are being closed to select Funds to move their current investments and future retirement contributions. If faculty and staff members do not make selections to move their investments the College will move the investments to active Funds that are as similar as possible to the current investments. The similar Fund may be with a different company than the one currently being usied. If the current Investment Fund that is being closed is a TIAA-CREF annuity fund the College is not permitted to move investments and so only new contributions will be moved to a new Fund.
What happens next?
In addition to the town hall meetings on October 27 at 11 am and 4 pm, in Thomas Hall Room 110, there will be a transition newsletter and website with details about the changes. During February 2016, there will be an opportunity for all faculty and staff members to register for individual sessions with a financial planner that will provide general financial planning advice and help individuals to review their current Retirement Fund investment allocations and to implement any changes the employee decides to make.
Chief Administrative officer