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Retirement Plan - Implementation of the Delayed New Investment Options Fall Emory University Human Resources


Academic year: 2022

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Emory University Human Resources

Retirement Plan - Implementation of the Delayed New Investment Options Fall 2021



• Changes to the retirement plan had been planned for implementation in May 2020

➢ Review with Faculty Council, University Senate, Physician Compensation

Committee, Fringe Benefits Committee, Employee Council, Emeritus College had taken place

➢ Communications process was under way to faculty and staff

• In March 2020 changes were delayed due to pandemic and the uncertainty of the financial environment

• Class action lawsuit settlement in March 2021 required several actions including:

➢ Retain an independent consultant

➢ Consultant to review investment structure and make recommendations


Retirement Plan Governance

• Emory has a fiduciary responsibility to oversee the retirement plans in the best interests of participants, in accordance with IRS and DOL rules

• The Emory Pension Board, comprised of senior leadership of the University, Emory Healthcare and Emory Clinic, as appointed by the Board of Trustees, makes decisions for Emory’s Retirement Plans

• The Pension Board has engaged CAPTRUST as a consultant to assist with plan structure, fund selection, and investment oversight

CAPTRUST is an independent consultant who works with many higher ed and healthcare organizations

CAPTRUST’s fees are paid by Emory and they do not receive funds from investment companies


Current University 403(b) Plan

• Three Vendors – Fidelity, TIAA and Vanguard

• 72 investment options organized into Lifecycle, Core, Expanded and Brokerage Window

➢ Last major changes occurred in 2007 (although investments are regularly monitored)

➢ Several investment options per major asset class

• Investment options are vendor specific – Vanguard funds on Vanguard platform, Fidelity funds on Fidelity platform, TIAA funds on TIAA platform

• Participants must pick a vendor (or more than one), then select funds under that vendor

• The default vendor is Vanguard, and the default fund selection is the Vanguard Target Retirement fund with the maturity date closest to the year the

participant turns 65


Why Change the 403(b) Plan?

• Primary goal: Better retirement preparation for faculty and staff through a fund menu that’s streamlined and easier to understand/navigate

• New “open architecture” vendor platforms enable offering the same options across all three vendors(with a few exceptions), not limited to the Fidelity, TIAA and Vanguard fund families

➢ Previously, each vendor could only offer its own fund family

• More logical approach to the fund lineup

➢ Organized by type of fund: target retirement/lifecycle, index funds, actively managed funds, brokerage window

➢ Fewer funds overall, but covers all major asset classes

➢ The selection process for each fund in an asset class included qualitative and quantitative review to select the most appropriate fund in each asset class regardless of the fund family

➢ Selected and monitored by retirement plan investment experts at CAPTRUST


Investment Tier Structure

Allocation Tier Passive Tier Active Tier Brokerage Window

Target Date / Life Cycle Funds Intermediate Term Bond Capital Preservation Mutual Fund Window

Domestic Large Cap Equities Intermediate Term Bond Domestic Mid/Small cap Equities Large Cap Value

International Equities Large Cap Growth

Mid Cap Value Mid Cap Growth International Large Cap

Small Cap Value Small Cap Growth

Real Estate

For participants that desire a pre-made diversified portfolio (Do-It-For-Me)

For investors that do not wish to take on active management or want low-cost market

exposure via a passive index fund

For the investor that desires active management options

Satisfies desire of highly engaged investors to add specific funds, markets, or strategies

to their portfolio

Can qualify as a QDIA option for auto-

enrolled participants All major asset classes are represented Allows an engaged participant to create a fully diversified portfolio (Do-It-Yourself)

Potential Asset ClassesRationale

Desired level of investment engagement

Tier structure provides a solution for various types of plan participants from those preferring a more passive approach to those highly engaged


Allocation Funds

Target Date Series Vanguard Institutional Series Vanguard Institutional Series

Allocation--50% to 70% Equity - CREF Social Choice

World Allocation - CREF Stock

Passive Tier

Intermediate-Term Bond Vanguard Total Bond Market Index I Vanguard Total Bond Market Index I Large Blend Vanguard Institutional Index Instl Pl

Vanguard FTSE Social Index Admiral

Vanguard Institutional Index Instl Pl Vanguard FTSE Social Index Admiral*

Mid-Cap Blend Vanguard Mid Cap Index Institutional Vanguard Mid Cap Index Institutional Foreign Large Blend Vanguard Total Intl Stock Index I Vanguard Total Intl Stock Index I

Small Blend Vanguard Small Cap Index I Vanguard Small Cap Index I Real Estate Vanguard Real Estate Index Admiral Vanguard Real Estate Index Admiral*

Active Tier

Money Market Vanguard Treasury Money Market Fund Investor Vanguard Treasury Money Market Fund Investor CREF Money Market

Capital Preservation Prudential Guaranteed Income Fund TIAA Traditional Intermediate -Term Bond PGIM Total Return Bond R6 PGIM Total Return Bond R6

Large Value John Hancock Disciplined Value R6 John Hancock Disciplined Value R6 Large Growth Harbor Capital Appreciation

Fidelity Contrafund K6 Harbor Capital Appreciation

Large Blend Vanguard PRIMECAP Adm Vanguard PRIMECAP Adm

Mid-Cap Value MFS Mid Cap Value R6* MFS Mid Cap Value R6*

Mid-Cap Growth BlackRock Mid-Cap Growth Equity K* BlackRock Mid-Cap Growth Equity K*

Foreign Large Blend American EuroPacific Growth R6 American EuroPacific Growth R6 Small Value Goldman Sachs Small Cap Value R6 Goldman Sachs Small Cap Value R6 Small Growth Loomis Sayles Small Cap Growth Fund N Loomis Sayles Small Cap Growth Fund N

Real Estate - TIAA Real Estate

*Change from the previously approved menu.


Transition to New Menu

Participant options to transition their funds:

• Proactively select where to invest in new investment menu

• If a current fund if not available in new menu you may use the brokerage window

• If a participant does not take any action the funds will be mapped to

similar funds in new design on November 1, 2021


Next Steps for Faculty and Staff

• Review detailed information on the website

• If you are happy with the way your investments will change, you do not need to do anything

➢ This is a good time to look at your beneficiaries and make sure they are up to date on your vendor’s website

• If you have questions about or want to discuss your investment strategy, call your vendor – Fidelity, Vanguard or TIAA

• If you want to keep a specific investment that has been eliminated, you will need to open a brokerage window

➢ Instructions are available on the HR website, or by calling your vendor

➢ Note: Investments in the brokerage are not monitored by the Pension Board

• If you have an investment advisor, share the new fund lineup with them


New Fee Structure

• Today the “expense ratios” for each investment fund include two types of expenses and vary by investment fund:

Investment fees paid for the managing the investments in the fund

Recordkeeping fees paid to the vendor for administration of the plan (accounting, issuing statements, providing website, etc.)

• Beginning in October 2021 the expense ratio will change and only include the investment fees paid for fund management.

• There will be flat recordkeeping fees, charged quarterly and shown as a line-item on your statement. Therefore, the cost for administration does not increase as your balance increases. The fees will be:

Fidelity $9.75 per quarter

TIAA $9.75 per quarter

Vanguard $8.50 per quarter

• If you have assets at multiple vendors you might consider moving all your assets to one where you are only paying one fee per quarter.



• August 2021 – Newsletters mailed to home / website live

• October 1, 2021- New investment options available

• November 1, 2021 – Mapping of balances remaining in investment

options that have been eliminated to new options in similar “asset

class” or to Target Date Funds is a similar asset class does not exist

in the new line-up.


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