The DU human resources department (HR) implemented a new employee retirement plan on May 1 to more effectively comply with evolving IRS regulations, such as the passage of the 403(b), which requires more oversight responsibility for plan sponsors.
The college retirement plan will now use the company Teachers Insurance Annuity Association-College Retirement Equities Fund (TIAA-CREF)
“We chose TIAA-CREF to become the sole retirement plan vendor because of its investment capabilities, historical performance, low expense ratios, excellent customer service and cost-effective compliance services,” said Amy King, director of human resources.
According to King, the HR department also wanted to consolidate the plan to use only one company instead of the three which currently provide benefits to DU, including Fidelity Investments, American Century and MetLife.
King said the plan is expected to save employees about nine basis points, or .09 percent of the assets in the employee’s retirement plan. Actual savings will depend on the investment options selected by each participant.
“Our move to a one-provider system reduces plan costs for our employees,” said King.
According to the HR handbook, employees must work 20 hours per week for a minimum of six months to be eligible for benefits.King said 87 percent of DU employees were already enrolled with TIAA-CREFF when the change took place. The new plan will mostly affect any DU employees who currently have retirement plans with DU’s old providers.
The old providers are used by approximately 13 percent of DU employees.
According to King, these employee members were automatically enrolled with TIAA-CREF and all contributions made after May 1 are being directed to their new TIAA-CREF account.
“These employees were encouraged to review their account, the new fund mapping and make any adjustment they wished,” said King.
According to King, any employees who didn’t take action had their current assets placed in age-appropriate retirement funds, which allows participants to project their retirement date and invest in the corresponding fund. While the investments inherently come with a risk since they are subject to security markets, King said the plan makes a fixed income option and a money market fund available to help protect employees.
The department went through a long process to decide on the details of the new plan.
King said an extensive Request for Proposal (RFP) process took place, during which selected vendors were invited to campus to review and discuss their capabilities.
“After comprehensive review of vendor presentations and thorough consideration, TIAA-CREF was selected as the sole provider for the University of Denver Retirement Plan,” said King.
The department has been working on changing the plan since early 2011. The decision to go with TIAA-CREFF was made in December 2011.
DU’s Investment Policy Committee, which includes DU faculty and staff; the Fiduciary Delegation Committee, including the Provost and University Council; and DU’s independent plan advisor, The Multnomah Group, worked together to come up with the new plan.
While the new retirement plan does not change contribution rates or eligibility requirements, it will offer a new selection of investment opportunities for employees.
“For both existing TIAA-CREF members and the new members, a new investment menu reflects a more focused set of ‘best-in-class’ funds with a broad range of investment choices,” said King.
King also said DU has included a new self-directed Mutual Fund Brokerage Account for employees who wish to invest in funds that are not already included in the new system.
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