rensselaer defined contribution retirement plan fund option enhancements november 2010 curtis...

RensselaerDefined Contribution Retirement Plan Fund Option Enhancements

November 2010November 2010

Curtis Powell, SPHRCurtis Powell, SPHR Scott A. Wertheim, CEBS, AIF® Scott A. Wertheim, CEBS, AIF®

Vice President for Human ResourcesVice President for Human Resources Vice President Vice President

Rensselaer Rensselaer CAPTRUST Financial AdvisorsCAPTRUST Financial Advisors

Ewart A. MckayEwart A. Mckay Darren J. LopesDarren J. Lopes

Managing Consultant Managing Consultant Senior Managing DirectorSenior Managing Director

TIAA-CREFTIAA-CREF Fidelity InvestmentsFidelity Investments

Peter CrehanPeter Crehan

Consultant – Field Consulting GroupConsultant – Field Consulting Group

TIAA-CREFTIAA-CREF

AgendaAgenda

I.I. IntroductionIntroduction

II.II. Rensselaer’s Retirement Committee and their Fiduciary Rensselaer’s Retirement Committee and their Fiduciary ResponsibilitiesResponsibilities

III.III. Purpose for the Fund Line-Up EnhancementsPurpose for the Fund Line-Up Enhancements

IV.IV. Process of Reviewing Current Fund OptionsProcess of Reviewing Current Fund Options

V.V. CAPTRUST Representative will provide an overview of how CAPTRUST Representative will provide an overview of how enhanced fund options will benefit plan participantsenhanced fund options will benefit plan participants

VI.VI. Fidelity and TIAA-CREF Representatives will provide an Fidelity and TIAA-CREF Representatives will provide an overview of Rensselaer’s enhanced fund line-upoverview of Rensselaer’s enhanced fund line-up

VII.VII. Question and Answer SessionQuestion and Answer Session

Division of Human ResourcesNovember 2010 2

Introduction Introduction

Scott A. Wertheim, CEBS, AIF®Scott A. Wertheim, CEBS, AIF®

Vice PresidentVice President

CAPTRUST Financial AdvisorsCAPTRUST Financial Advisors

Darren J. Lopes Darren J. Lopes

Senior Managing Director Senior Managing Director

Fidelity InvestmentsFidelity Investments

Ewart A. MckayEwart A. Mckay

Managing Consultant | Institutional RelationshipsManaging Consultant | Institutional Relationships

TIAA-CREF I FinancialTIAA-CREF I Financial


Rensselaer’s Retirement Rensselaer’s Retirement Committee Committee

Roles & ResponsibilitiesRoles & Responsibilities


Rensselaer’s Retirement CommitteeRensselaer’s Retirement Committee

Retirement Committee Members:

Curtis N. PowellCurtis N. Powell, SPHR, Chair, Vice President for Human Resources, SPHR, Chair, Vice President for Human Resources

Virginia GreggVirginia Gregg, Vice President for Finance & CFO, Vice President for Finance & CFO

William Wallace ’61William Wallace ’61, Yamada Corporation Professor, ISE, Yamada Corporation Professor, ISE

Arturo EstrellaArturo Estrella, Professor and Department Head, Economics, Professor and Department Head, Economics

Eileen G. McLoughlinEileen G. McLoughlin, Director of Financial Planning and Budget, Director of Financial Planning and Budget

Iftekhar HasanIftekhar Hasan, Cary L. Wellington Professor and Acting Dean, Lally , Cary L. Wellington Professor and Acting Dean, Lally School of Management and TechnologySchool of Management and Technology


Rensselaer’s retirement plans are governed by the Employee Retirement Income Security Act (ERISA) .

Rensselaer’s Retirement Committee members fiduciary responsibilities are to:

•Administer Rensselaer’s qualified pension plans in accordance with the plan document

•Establish funding options for participants to direct their 1% and 8% contributions

•Monitor fund options based on Rensselaer’s Investment Policy Statement

•Review reasonableness of plan fees, expenses, and administrative cost to participants

•Conduct quarterly meetings to review and to administer the plan in accordance with Department of Labor and Internal Revenue Service regulatory and legal requirements

Retirement Committee Roles & Responsibilities



Fiduciary Duties and Responsibilities

Duty to be Prudent

…”Fiduciary liability is not determined by investment performance, but rather on whether prudent investment practices were followed.”…

Duty of Loyalty and Impartiality

…”Fiduciaries must ensure that all decisions are made based solely and exclusively on the interests of plan participants and beneficiaries.”…

Duty to Diversify

…”Fiduciaries are required to diversify plan investments so as to minimize risk of large losses; Each plan option should be considered as part of the whole plan portfolio.”…

Retirement Committee Roles & Responsibilities con’t

Note: Excerpts from the Department of Labor


Fiduciary Duties and Responsibilities

Duty to Monitor and Supervise

…”Evaluate investment managers at least quarterly against appropriate benchmarks, relative to their peer group, and to determine if there were any significant changes to their style or the organization; Evaluation of service providers every few years is also important.”…

Duty to Ensure Reasonable Plan Costs

…“Analyze and document total plan costs; compare to the market for similar size plans every 3 – 5 years; and evaluate revenue sharing arrangements to determine if they are fair and reasonable .”…

Duty to Avoid - Prohibited Transactions

…“A fiduciary has a responsibility to act in the sole interest of plan participants and should avoid any decision or transaction that directly or indirectly benefits the Plan Sponsor.”…

Retirement Committee Roles & Responsibilities con’t

Note: Excerpts from the Department of Labor

Purpose of the Fund Line-Up Purpose of the Fund Line-Up Enhancements Enhancements


New Internal Revenue Service (IRS) - Pension Protection Act of 2006 - that took effect in 2008, now place much more responsibility on the employer to monitor plan investment options, and to ensure reasonable fees and administrative costs.

Pension Protection Act


Regulations place more responsibility on Rensselaer to proactively

monitor the plan investment options, manage administrative costs

and offer a diversified investment menu.

In the Fall 2008, Rensselaer retained CAPTRUST as a third-party

investment consultant to assist in the review of the current fund

options offered to participants by Fidelity and TIAA-CREF.

Pension Protection Act Employer Requirements


The strategy of Rensselaer is to provide a simplified, highly valued

and

competitive retirement plans for faculty and staff . The retirement

plans are to

be robust, diversified and includes a menu of diverse money

managers and

fund options that will assist our participants in meeting their

retirement

savings goals in the most cost efficient manner.

The Strategy for our Participants


Fund Evaluation ProcessFund Evaluation Process


Process of Review – Evaluative Criteria


CAPTRUST conducted an independent analysis of Rensselaer’s retirement plan funds.

Results: CAPTRUST recommended the enhancements to our fund options by either adding , eliminating, and combining asset classes and funds.

The following five evaluative factors were used to review funds:

1. Fees

• All investments must charge “reasonable” fees to investors.

2. Style Consistency

• Investment managers should have demonstrated a consistency in investment style and performance.

3. Volatility and Diversification

• Investment managers will be expected to maintain a broadly diversified portfolio, avoiding unreasonable overweighting in a given investment, industry or sector.

Process of Review – Evaluative Criteria


4. Performance

• Investments should rank in the top 50% of their given peer group for the three or five year annualized period at the time of their selection.

5. Management & Organization

• Manager tenure, industry experience and the strength and expertise of the fund’s sponsoring organization.

Fidelity

Rensselaer’s current assets with Fidelity is $28 Million

Fund Asset Breakdown as of June 30, 2010:

554 Participants in 28 Funds• 68% in 14 Funds• 14% in Target Date Funds• 18% 13 Funds


TIAA-CREF

Rensselaer’s current assets with TIAA- CREF is $59 Million Fund Asset Breakdown as of June 30, 2010

676 Participants in 20 Funds• 92% of Assets in 11 Funds• 2% of Assets in Target Date Funds• 6% of Assets in 17 Funds



Plan Contributions:Plan Contributions:

NO CHANGENO CHANGE Employee Contribution: 1% pre taxEmployee Contribution: 1% pre tax Rensselaer Contribution: 8% Rensselaer Contribution: 8%

Investment Fund Options:Investment Fund Options:

CHANGECHANGEEnhanced lineup effective November 19, 2010 (close of Enhanced lineup effective November 19, 2010 (close of market)market)

Plan Impact

Rensselaer ‘s annual contribution for plan year ending June 30, 2010

was… $7.3 million

How will the enhancements How will the enhancements affect YOU?affect YOU?


Scott WertheimScott Wertheim, Vice President, Financial Advisor, Vice President, Financial Advisor


LEGAL DISCLAIMER

Individual investors have particular needs in planning for retirement. No single solution fits every investor. This

presentation is intended as a visual component to a broad educational program presented by CAPTRUST Financial

Advisors. This presentation is not individual investment advice. If you have questions or concerns regarding your own

individual retirement needs, please contact a CAPTRUST representative for further assistance. CAPTRUST does not

render legal, accounting, or tax advice. This material has been prepared solely for information purposes and is not a

solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Any performance

data quoted represents past performance. Investment return and principal value of an investment will fluctuate so

that an investor's shares, when redeemed, may be worth more or less than their original cost. Past performance is

no guarantee of future results.

What happens to the money I already have in the What happens to the money I already have in the Investment Options Investment Options that are being that are being replacedreplaced or or frozenfrozen from Fidelity or TIAA-CREF platforms? from Fidelity or TIAA-CREF platforms?

The money invested in funds being replaced will be mapped to The money invested in funds being replaced will be mapped to thethe corresponding replacement fund within the current platform corresponding replacement fund within the current platform you you are using. are using.

The following TIAA-CREF investment options will not be available The following TIAA-CREF investment options will not be available for for future contributions effective November 19, 2010 :future contributions effective November 19, 2010 :

•CREF Bond MarketCREF Bond Market•CREF GrowthCREF Growth• CREF Global EquitiesCREF Global Equities

Balances in those funds will remain until you transfer them in the Balances in those funds will remain until you transfer them in the future to the new investment optionsfuture to the new investment options


How will the enhancements affect me?How will the enhancements affect me?

What if I am currently invested in an investment option that will no What if I am currently invested in an investment option that will no longer be offered after November 19, 2010?longer be offered after November 19, 2010?

Example: If current contributions are going to a bond fund that will no Example: If current contributions are going to a bond fund that will no longer be an option, then future contributions will begin to go to its longer be an option, then future contributions will begin to go to its replacement effective after close of business on November 19, 2010replacement effective after close of business on November 19, 2010

• Fidelity Ginnie Mae Fidelity Ginnie Mae PIMCO Total Return Admn PIMCO Total Return Admn• CREF Bond Market CREF Bond Market PIMCO Total Return A PIMCO Total Return A

Example: If current contributions are going to a fund that is being Example: If current contributions are going to a fund that is being replaced by two new investment options, then future money will replaced by two new investment options, then future money will

be be split 50/50split 50/50

• CREF Global Equities CREF Global Equities Thornburg International (50%) Thornburg International (50%)

American Funds Europacific (50%)American Funds Europacific (50%)

NOTE: No fees will be associated with these changesNOTE: No fees will be associated with these changes



Do I have to make a change by November 19, 2010?Do I have to make a change by November 19, 2010?

You can make changes within your account at any timeYou can make changes within your account at any time

You do not need to make You do not need to make anyany changes changes if you are satisfied with how if you are satisfied with how

youryour

money is invested or will be invested in the new options. money is invested or will be invested in the new options.

These changes will occur automaticallyThese changes will occur automatically



Do I have to make a change by November 19, 2010?Do I have to make a change by November 19, 2010?

If you wish to create a new investment mix, you can contact TIAA-If you wish to create a new investment mix, you can contact TIAA-

CREF or Fidelity directly. CREF or Fidelity directly.

NOTE: No fees will be associated with these changes*NOTE: No fees will be associated with these changes*

*Within the Fidelity platform there are short-term trading fees associated *Within the Fidelity platform there are short-term trading fees associated

with certain funds (which were detailed in the Fidelity with certain funds (which were detailed in the Fidelity

announcement you received in the mail) for not holding them for the announcement you received in the mail) for not holding them for the

required time frame (30, 60 or 90 days depending on the fund). required time frame (30, 60 or 90 days depending on the fund).

These fees will be paid by Rensselaer and will not be These fees will be paid by Rensselaer and will not be

deducted from your accounts.deducted from your accounts.



What happens if I do nothing?What happens if I do nothing?

Your future contributions, effective with contributions following Your future contributions, effective with contributions following November 19, will be automatically mapped to the “new” November 19, will be automatically mapped to the “new” investment optionsinvestment options

Under Fidelity and TIAA-CREF your current monies invested in Under Fidelity and TIAA-CREF your current monies invested in investment options scheduled for replacement will automatically investment options scheduled for replacement will automatically transfer to the new fund that has a similar investment approach and transfer to the new fund that has a similar investment approach and stylestyle

Under TIAA-CREF your current monies invested in the “frozen” Under TIAA-CREF your current monies invested in the “frozen” investment options, will remain there until you transfer them in the investment options, will remain there until you transfer them in the future to the new investment optionsfuture to the new investment options



What should I do next?

Review your retirement plan goals & objectives See your handout for dates for one on one sessions with the Fidelity and TIAA-CREF representatives.

Evaluate your current investment strategy

Making any necessary changes or updates


How will the enhancements affect me?

How do I make changes to my current account?How do I make changes to my current account?

Check your account balance:Check your account balance:

• Call a TIAA or Fidelity representativeCall a TIAA or Fidelity representative

• Visit TIAA’s or Fidelity’s websiteVisit TIAA’s or Fidelity’s website

• See your handout for contact information See your handout for contact information

Increase or decrease your contribution amount to Increase or decrease your contribution amount to the salary reduction plan: the salary reduction plan:

• Call Louis A. Padula, Director, Benefits, Retirement Call Louis A. Padula, Director, Benefits, Retirement & HRIS at & HRIS at

518-276-6164518-276-6164

• Complete the necessary HR paperwork Complete the necessary HR paperwork



How do I make changes to my current account?How do I make changes to my current account?

For help with understanding your investment options, or For help with understanding your investment options, or creating a balanced, diversified portfolio:creating a balanced, diversified portfolio:

Meet with a representative from TIAA-CREF or Fidelity Meet with a representative from TIAA-CREF or Fidelity representative to discuss and revise your retirement representative to discuss and revise your retirement

plan strategy.plan strategy.

Representatives on campus twice per month in Division of Representatives on campus twice per month in Division of HumanHuman Resources Office. Resources Office.

Visit TIAA’s or Fidelity’s website to research and revise your Visit TIAA’s or Fidelity’s website to research and revise your retirementretirementplan strategyplan strategy


How will the enhancements affect me?

Fund Line-Up Review by Fund Line-Up Review by Retirement Vendors Retirement Vendors


Fidelity InvestmentsFidelity Investments

Darren J. LopesDarren J. Lopes, , Senior Managing DirectorSenior Managing Director


Retirement ProvidersRetirement Providers

Fidelity New Investment Fund Lineup November 19, Fidelity New Investment Fund Lineup November 19, 20102010


TIAA-CREFTIAA-CREF

Ewart A. McKayEwart A. McKay, , Managing ConsultantManaging Consultant


Retirement ProvidersRetirement Providers

TIAA-CREF New Investment Fund Lineup November TIAA-CREF New Investment Fund Lineup November 19, 201019, 2010


Important Contact Information Important Contact Information


Change Your Contribution Amount General Plan Questions

Louis A. Padula, Director, Benefits, Retirement & HRIS: 518-276-6164

Check Your Plan Balance Change Your Investments Rollovers 800-343-0860rk www.fidelity.com/atwork

Check Your Plan Balance Change Your Investments Rollovers 800-842-2252 www.tiaa-cref.org


Questions and Answer Session Questions and Answer Session

rensselaer defined contribution retirement plan fund option enhancements november 2010 curtis...

Documents

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plan participantsfidelity

plan document

plan portfolio

human resourcesvirginia

interests of plan participants

enhanced fund options