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Retirement Plan Review Discussions Purdue University

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

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Retirement Plan Review Discussions Purdue University

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  1. Retirement Plan ReviewDiscussions Purdue University Advisory and Faculty Representatives May 2010

  2. 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)

  3. 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

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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.

  9. 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.

  10. MetLife Stable Value and TIAA Traditional Annuity

  11. 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.

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