Reworking Retirement Plan Resources
New ERISA requirements prompted an overall review of the William Peace University retirement plan, resulting in increased communication and higher employee participation.
By Amber Kimball
William Peace University (WPU), Raleigh, North Carolina, has been undergoing a transformation that began in 2010, when Debra M. Townsley became president. Prompted by new ERISA (Employee Retirement Income Security Act) fee disclosure requirements, Townsley added review of the university's retirement plan to the change agenda.
What followed was a comprehensive review of the plan, with the assistance of Verity Asset Management, a Durham, North Carolina-based investment advisory services firm. The human resources department worked with the advisers to conduct the review, reform the university's defined contribution plan, and share in its fiduciary responsibilities. (Read more about evolving higher education retirement plans and practices in "On Track & On Time" and "Draw Them In" in April Business Officer.)
We took the following steps to meet new ERISA obligations:
Created a charter for establishing and educating a retirement plan investment committee.
Wrote an investment policy statement.
Adopted a new plan with open architecture, which means that we now offer the typical TIAA-CREF funds but also many other choices—more like those of a 401(k) plan. We thought that it would be quite positive if our faculty and employees could further diversify their portfolios.
Evaluated fund options available to participants, along with associated fees.
- Established effective management processes for decision making, documentation, and participant fee benchmarking.
Spreading the Word to Staff
We'd already worked with Verity in a different way, as fee-based consultants who provided advice as questions would arise. For example, the first year a 403(b) audit was mandated, the consultants advised us on the selection process for a CPA firm to complete the audit and file the Form 5500. The firm's advisers were also available to our employees to provide personal advice on their investments. This was a complimentary service to employees, unless the individual wished to pay an additional fee—worked out by the consultant—for work with the consultant on more customized plans.
With the university taking on more of a fiduciary role, the relationship with the consulting firm changed from adviser to cofiduciary with the university. We do not pay the same minimal fees as we did previously. Instead, because of the firm's new role as cofiduciary and plan adviser, the fees are rolled into the plan. Because of the final rule to improve transparency of fees and expenses for 401(k)–type retirement plan participants, we must now disclose the different fees on the participants' statements.
The university also pays a third-party administrator directly to complete the annual Form 5500. The great news is that TIAA-CREF, with direction from the university, does complete and send the statement of fees and expenses to plan participants on our behalf. And, while we do have open architecture, it's still "our" 403(b) plan.
At the same time, we wanted to strengthen the way we manage things and see how we might encourage employees to take a more active part in their own retirement plans. Rocky Yearwood, our CFO and vice president for administration, and I serve as plan administrators. To assist our small human resources staff in communicating plan changes and available sources of help and advice, we created a committee of faculty and staff volunteers who serve as a "go to" source of referrals for internal or external help.
We recruited committee members for their expertise, demonstrated personal interest, and/or finance background. We looked for a good mix of employees—both faculty and staff—that would represent the entire employee population and lend some background in investments, retirement accounts, and finance. The latter requirement did not necessarily call for someone with professional experience, but at least that of a person with above-average interest in the area. Once we compiled our list of possibilities, we decided on the individuals we wanted to approach and started making contacts.
The committee consists of three staff members and two faculty members. An elected chair (William Peace University's controller) will serve for four years, while other members have different terms such that they do not all rotate off the committee at the same time. Yearwood and I are nonvoting permanent members of the committee. While the group is relatively new, it's working well—and it's exciting to see our employees so involved.
Elements of Effective Communication
After being trained intensively and cautioned against giving personal advice (per ERISA and DOL regulations), the committee is both visible and accessible to the campus as one of the university's internal retirement-readiness resources.
To communicate about the new support, we conducted an all-campus workshop day (mandatory for all staff and faculty), during which we introduced employees to the committee and let them know that the group was available to answer questions. The office of human resources is the first stop for information, but we wanted to make sure employees knew that they could approach the committee directly should they want further details or have concerns they didn't feel comfortable sharing with the human resources department.
To keep their knowledge up to date, committee members attend regular workshops conducted by WPU's service partner. The office of human resources handles the regular or normal day-to-day communication about the 403(b) plan. The committee's role, with the help of our cofiduciary and its reporting on investment results, has more to do with monitoring the funds and responding to a quarterly monitoring report system that has potential to flag funds that may need further scrutiny or that may need to be dropped or replaced.
The biggest questions have been about fees, which now must be fully disclosed—and clearly visible on investment statements. Our cofiduciary was on campus for the workshop day to explain the details of the fees and answer related questions.
Other forms of communication continue the momentum. I personally have reviewed records to see who might be eligible for the retirement plan but is not yet participating. Our human resources generalist and I contact those people individually and provide enrollment forms, if they are interested in participating.
Our early results are encouraging: As of November 2012, 69 percent of eligible employees were participating in the WPU retirement plan, compared to 55 percent in September 2011. It's also exciting to see that nearly 68 percent of participants invest a percentage greater than the percentage eligible to receive the employer match.
Periodically, the human resources office sends mass communication to participants, reminding them of TIAA-CREF's online retirement tools, toll-free number for advice, and Verity's direct contact information for personal one-on-one sessions. Each year, the office of human resources reminds employees of annual limitations and catch-up amounts to ensure that employees are provided the knowledge they need to make informed decisions about their investments.
The new plan is certainly showing promise, and it is rewarding to witness the retirement investment committee monitoring and analyzing the plan's fund performances for the benefit of the overall staff participating in the William Peace retirement plan.
"As a small, private college that is aggressively pursuing increased student enrollment, we recognize the value of motivated and well-informed employees," notes Yearwood. "Having a retirement plan that is managed properly, with buy-in and involvement from all employee groups, and with plenty of communication regarding the plan, is an essential part of our strategy. Our partnership between the human resources department and an outside advisory firm has made a huge difference in getting us where we need to be in this regard, and we will continue to provide tools and opportunities for our employees to assist in their retirement planning."
AMBER M. KIMBALL is assistant vice president for human resources, William Peace University, Raleigh, North Carolina.
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