Carleton College is committed to providing competitive retirement benefits for our employees. The Retirement Plan Investment Review Committee (RPIRC) meets quarterly to review the retirement benefits and the performance of the investments available within the plan. This work resulted in a decision to make changes to the fund lineup and fee structure for the plan. These enhancements provide the following benefits:
- Introduction of a more equitable and transparent fee structure.
- Focus on providing ‘best in class’ investment options.
- Expanded availability of indexed investments within the plan.
- Expanded lifecycle investment suite to add new funds as they become available.
Administrative and recordkeeping fees are nothing new to individuals participating in the Carleton College retirement plans administered by TIAA. These administrative fees cover resources and services, including, but not limited to:
- On-site investment counseling
- Website and call center
- Account statements
- Plan audit support
- Fiduciary and legal advisory services
Beginning March 8, 2022 Carleton College will adopt a “flat fee” approach, an industry best practice, to create a more transparent and equitable way to account for these administrative expenses.
What is the Retirement Plan Investment Review Committee (RPIRC)?
The Retirement Plan Investment Review Committee (RPIRC) meets quarterly with our consultant, Multnomah Group, regarding our TIAA Retirement plan. The RPIRC committee has fiduciary responsibility for reviewing the investment menu performance, service providers and their fees, employee engagement, disclosures, and plan operations.
The committee members are Eric Runestad, VP and Treasurer; Kerstin Cardenas, HR Director; Austin Robinson Coolidge, Associate Registrar for Technology Operations; Kelsey Deshler, Chief Investment Officer; Linda Thornton, Comptroller; Kirsten Budin, Benefits Manager; Kathy Galotti, Faculty Member; Laura Chihara, Faculty Member; Brenda Hellen, SAC Member; Lanhao Yang, FORUM Member; Andrea Zunkel, Benefits Specialist (non-voting).
When and why did the RPIRC Committee make these decisions?
The 2021 Q1 meeting was held in two parts, on March 5 and 12, to review and vote on Multnomah Group’s recommendations regarding the service fee model and changes to the investment menu. And, following the 2021 Q2 meeting on June 23, 2021, Multnomah Group met with TIAA to renegotiate and reduce fees. Below is a summary of the information and voting decisions made by the committee during those meetings.
Retirement Plan Service Fee Change:
Participants in the Plans have always paid for three categories of Plan-related costs:
- Recordkeeping fees are paid to the Plans’ recordkeepers, such as TIAA.
- Administrative fees are paid to the Plans’ investment consultants, auditors, accountants, legal counsel, and other administrative resources.
- Investment expenses are taken out of individual investments by the managers of the funds in which participants are invested.
In the past, participants did not see separate charges for these Plan-related costs on their quarterly statements. These costs were based on participants’ investment balances in certain account. In the future, the recordkeeping and administrative fees will be assessed on a fixed per-participant basis and will be reported on the quarterly statements from TIAA.
In some cases, an investment provider may pay a portion of an investment’s expense ratio to TIAA, the recordkeeper, as a means of offsetting the cost of plan administration. This practice is called “revenue sharing.” TIAA Traditional, TIAA Real Estate Account, and all CREF Annuity accounts do not have revenue sharing. Instead, TIAA may provide a “plan services expense offset” that may be applied to the Plan’s administrative and recordkeeping costs. The Plan used this revenue sharing and plan services expense offset to satisfy recordkeeping fees in the past. In the future, all revenue sharing and offsets generated by investments will be credited back to the participant at the end of each quarter in the form of a “plan servicing credit,” except in certain circumstances if the participant’s account is invested in legacy contract(s).
Investment Menu Changes (Retirement Plan Investment Review Committee voted to approve these changes):
With an investment advisor, Multnomah Group, the committee reviews the investments available in the Plan at quarterly meetings. This includes monitoring the current investments as well as reviewing the overall investment offer. As a result of this review, the following changes have been recommended:
- TIAA-CREF Lifecycle Index 2065 Institutional – TIAA opened this fund to be included with the lifecycle series of investments within the Plan. Lifecycle series add new funds as younger workers join retirement plans.
- Vanguard Growth Index Admiral and Vanguard Value Index Admiral – Following a review of the asset classes covered in the Plan, the committee voted to expand the indexed investment opportunities. This will allow participants who create their own investment mix additional flexibility in creating a diversified portfolio.
- Hotchkis & Wiley Small Cap Diversified Value – Multnomah Group’s investment committee moved Nuveen Small Cap Value fund to ‘recommend for removal’ based on lagging returns and turnover of portfolio managers. They recommended replacing that fund with the Hotchkis & Wiley fund. The committee discussed the options and voted to make the recommended change.
How are fees changing and how will the fee change affect me?
Prior to March 8, 2022, the expense ratio for each investment fund include two types of expenses which 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 March 2022 the expense ratio will change and will only include the investment fees paid for fund management. The recordkeeping fees will change to a flat fee for each account.
The flat recordkeeping fees will be charged quarterly and shown as a line item on your statement. Therefore, the cost for recordkeeping and administration does not increase as your balance increases.
The fee will be:
- TIAA $31.50 per quarter.
The reason for making this change to a flat fee that’s the same for all participants is that all participants are eligible for the same recordkeeping services. Under the current expense ratio approach, participants with higher embedded recordkeeping fees in the expense ratio for their particular funds pay more for these services, and participants with higher balances in these funds pay significantly more.
Does Carleton College benefit from the retirement plan fees?
No, Carleton College does not benefit from the collection of retirement plan administrative fees.
What is the effective date of these changes?
March 8, 2022
Investment Menu: Which funds are added?
- Vangard Growth Index Fund
- Vangard Value Index Fund
- TIAA-CREF Lifecycle Index 2065
Investment Menu: Which funds are removed/restricted?
Current Funds to be Removed/Restricted
|What will be transferred to new funds?||New Funds to be Added||Date of Added Funds
|Nuveen Small Cap Value R6||Current Balance & Future Contributions||Hotchkis & Wiley Small Cap Diversified Value||03/08/2022|
|*Cref Bond Market R2||Future Contributions only||Vanguard Total Bond Market Index Adm||1/1/2020|
|*CREF Global Equities R2||Future Contributions only||Vanguard Total International Stock Index Adm||1/1/2020|
|*CREF Growth R2||Future Contributions only||Vanguard Total Stock Market Index Instl||1/1/2020|
|*CREF Inflation-Linked Bond R2||Future Contributions only||Vanguard Inflation Protected Sec Adm||1/1/2020|
|*CREF Equity Index R2||Future Contributions only||Vanguard Total Stock Market Index Instl||1/1/2020|
|*TIAA Real Estate||Future Contributions only||Cohen & Steers Institution Realty Shares||1/1/2020|
*Restricted fund from the 2020 Investment menu change, if you have funds in these accounts you can choose to map them to the new fund added in it’s place.
How do I know if I have investments in restricted funds?
- You can meet with a TIAA financial advisor.
- We already have some time scheduled with Mark Thompson, our individual TIAA consultant mid-February. View Mark’s availability and sign up for a time with him.
- If these dates/times do not work for you, you can contact TIAA directly to set up an alternative time.
- You can log into your TIAA account to view the funds you are investing in.
- You can download TIAA’s mobile app.
- You can call TIAA’s Customer Service #: 800-842-2252
With all the Vanguard Funds being added will we need to meet with a Vanguard Rep?
No, TIAA is the record keeper, and they offer Vanguard Funds as a part of their portfolio of fund options.
Am I required to take action on anything because of these changes?
You are not required to take any action as a result of the investment menu and other changes. However, this is a valuable opportunity for you to take a moment to understand and evaluate your retirement strategy.
How do I contact TIAA, and what resources are available to me?
Not sure where to begin? We can help you take the next step in your financial plan.
- Online: Visit TIAA.org/carleton and log in. If you’re new to TIAA, select Log in, then Register for Online Access. Follow the on-screen directions to access your account.
- Phone: Call TIAA at 800-842-2252, weekdays, 7 a.m. to 9 p.m. (CT).
- One-on-one: To schedule a virtual one-on-one session with TIAA, call 800-732-8353, weekdays, 7 a.m. to 7 p.m. (CT). You can also schedule a meeting online at TIAA.org/schedulenow. To protect the health and safety of you and our employees during the pandemic, TIAA is conducting individual one-on-one sessions by phone and online.