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Retirement Plan Review Discussions Purdue University. Advisory and Faculty Representatives May 2010. Current Circumstances .

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retirement plan review discussions purdue university

Retirement Plan ReviewDiscussions Purdue University

Advisory and Faculty Representatives

May 2010

current circumstances
Current Circumstances
  • There are five different investment sponsors with whom participants can invest their retirement savings (AIG VALIC, American Century, Fidelity Investments, Lincoln Financial Group, and TIAA-CREF)
    • University contributions are made only to TIAA-CREF
    • Participants have 381 investment alternatives
  • Review does not include the defined benefit/defined contribution plan provided to clerical and service staff through the State of Indiana (Public Employees’ Retirement Fund – PERF)
retirement review task force
Retirement Review Task Force
  • Co-Chairs
    • Jim Almond – Business Services
    • Mike Atallah – Computer Science
  • Faculty/Staff
    • David Denis – Management
    • Julie Mariga – Computer and Information Technology/Faculty Compensation and Benefits
    • Julio Martinez – Civil Engineering
    • John McConnell – Management
    • Joe Hornett – PRF/Related Foundations
    • Scott Seidle – Office of Investments
  • Regional Campuses
    • Steve Turner – North Central
    • Dolores Rinke – Calumet
    • Carol Sternberger – Fort Wayne
  • Employee Groups/Retirees
    • Dan Schuster – APSAC
    • Cynthia Dalton – CSSAC
    • Martha Chiscon – Purdue Retirees Association
retirement review task force goals
Retirement Review Task Force Goals
  • It is Purdue University’s expectation to continue to provide well-managed and competitive retirement plan offerings that provide:
    • An inclusive set of appropriate investment choices to meet the needs of a diversified faculty and staff;
    • Financially sound and reputable financial investment partners;
    • Best in class service and expertise in the financial industry, balanced with low to reasonably priced fees;
    • Improve plan sponsor support and federal compliance through a single record keeper

Making a good plan better.

review process and timeline

Review Process and Timeline

Jan 2009 Educational session to the Task Force Committee on retirement plans, including plan structures, trends and industry best practices; administrative and participant fees; investment options; plan architecture; and plan sponsor and participant services.

Feb – Apr 2009 Analyzed Purdue’s defined contribution plan, incumbent service providers, fees and investments to identify recommendations for future improvements to the plan structure, administration and investment line up.

May – Jun 2009 Issued an RFP to firms to provide defined contribution services, including: recordkeeping and administration, trustee services, communication, participant education, and recommended investment architecture.

July – Aug 2009 Reviewed RFP responses and selected vendor finalist for campus presentations.

Sept – Mar 2010 Completed finalist presentations, finalist evaluations, vendor demonstrations, vendor site visit, and investment review.

Mar 2010 Task Force Recommendation.

recommendation investment structure
Recommendation - Investment Structure
  • Consolidate and arrange the Plans’ investment options in a four-tier structure
  • Adopt an “open architecture” investment platform.
  • Use target date retirement funds as the Plans’ default investment option.
  • Leverage participant assets and provide institutional share classes of mutual funds for each investment category when available.
  • Establish an internal investment committee to select investment options for each tier and provide retirement plan oversight.
recommendation administrative configuration
Recommendation - Administrative Configuration
  • Adopt a single vendor administrative service model.
  • Implement a flat, per annum administrative fee for participants.
  • Add a Roth source to provide participants with the opportunity for tax diversification and non-taxed investment gains.
recommendation service delivery
Recommendation - Service Delivery
  • Retain Fidelity as the administrative service provider for all the defined contribution plans offered to Purdue faculty and staff.
  • Require provider to establish a local office in West Lafayette to serve participants.
  • Rely upon Fidelity’s Business Compliance Group to ensure ongoing conformance with IRS/DOL regulations.
recommendation investment advice
Recommendation - Investment Advice
  • Offer investment advice via an independent third-party provider.
  • Rely upon Fidelity’s planning and guidance tools to help participants make well informed investment decisions.
  • Retain the services of Financial Engines to deliver independent investment advice to participants.
key concepts
Key Concepts

The proposed task force recommendations will:

  • Provide high-quality and low-cost funds in the "target retirement" category.
  • Offer a comprehensive choice of low-cost index funds for the major asset classes.
  • Offer best available class of shares for any selected funds (institutional class when available).
  • Make a self-directed window available for greater investment flexibility.
  • Make available specific investment advice that is objective.
  • Improve plan sponsor support, federal compliance and reduce administrative cost through a single record keeper and state of the art technical capabilities.