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New Retirement Plan Update

New Retirement Plan Update. Board of Curators April 5-6, 2012. Today’s Discussion. Review structure for new retirement plan and tax deferred investment (TDI) plans Vote on recommendation for investment policy for new retirement plan and TDI plans.

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New Retirement Plan Update

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  1. New Retirement Plan Update Board of Curators April 5-6, 2012

  2. Today’s Discussion • Review structure for new retirement plan and tax deferred investment (TDI) plans • Vote on recommendation for investment policy for new retirement plan and TDI plans

  3. New Retirement Plan and Tax Deferred Program Master Administrator New 401(a) 457(b) 403(b) 457(b) New Retirement Plan (DC Portion) Employee Voluntary Contributions UM contributions Employee Voluntary Contributions UM match contributions Tax Deferred Investment Program

  4. Administrative Structure Employee/University Master Administrator Communication/education Online employee services Compliance Investment Platform for all Plans + TIAA-CREF Proprietary funds Open architecture with no proprietary fund requirements Brokerage Window (optional)

  5. Investment Structure Low involvement default investment Expanded choices Higher involvement / specialized portfolio Master Administrator tier 3 Mutual Fund Window / Self-Directed Brokerage tier 2 Core Lineup 15-20 funds tier 1 Target Date Funds • Professionally structured asset allocations based on target retirement date • Limited yet flexible options span the risk/return spectrum • Stable Value Fund with guaranteed return • Access to nearly 200 fund families • Broad array of options for highly customized portfolios

  6. Investment Asset Classes • Lifestyle Funds (default) • Domestic Equity • International Equity • Global Fixed Income • Global Tactical Asset Allocation • Inflation-Protected Blend • US Fixed Income

  7. Recommendation: New Investment Policy for New Retirement Plan and TDI • Currently CRR 140.040 and 140.050 provide the investment policy for all tax deferred plans • Remove current policy and replace with overall policy for new retirement plan and TDI plans, monitored by a single Investment Committee • Newly revised 403b regulations required this policy and committee, and it is a best practice for all employee directed investment retirement plans

  8. Investment Policy: Investment Committee • Investment Committee established in 2009 to oversee tax deferred investment program • Responsibility expanding to include new retirement plan • Appointed by the President and includes VP of Finance, VP of Human Resources, Treasurer, and Associate VP for Total Rewards

  9. Investment Policy: Committee Purpose • Selection of investment options offered to Plan participants • Monitor and report on benchmarks and performance standards • Evaluate performance for each investment category • Oversee investment option evaluation and formal investment option review • Follow guidelines and procedures for withdrawal, replacement, or addition of an investment option

  10. Investment Policy: Reporting and Monitoring Procedures • Review plan performance quarterly, including: • Current trends and developments in the capital markets and investment management community • Level of diversification provided by the investment categories and options • Changes in the investment management staff • Compliance of each investment option with stated investment guidelines • Risk and return characteristics

  11. Investment Policy: Investment Option Procedures • Investment option may be terminated or frozen for the following reasons: • Performance standards not met for the investment category • Principal investment manager has changed, or change appears imminent • Investment option has had a significant change in ownership or control • Style drift, departing from the investment objectives

  12. Investment Policy: Investment Option Procedures (continued) • Under investigation by the SEC or has violated a SEC rule or regulation • Fee structure for investment option has changed • For any reason, the Committee is uncertain about whether the investment option continues to meet the plan participant’s needs

  13. Investment Policy: Formal Review Actions • Investment Committee may: • Suspend contributions to the investment option for existing participants • Close the investment option to new enrollees • Continue the investment option under formal review status • Remove the investment option from formal review, or terminate the investment option

  14. Investment Policy: Termination of Investment • Upon termination of a fund the Committee will: • Seek a new fund appropriate for the given asset class • Notify all Plan participants that the Committee has terminated the fund as an investment option • Transfer, or “map”, the monies in the terminated fund to another fund of similar risk and return characteristics • Close the terminated fund to future contributions

  15. Questions?

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