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UNC: Help Ranges From General to Personal

Leaders at the University of North Carolina (UNC) System want to be at the forefront of best practices for enhancing the quality and value of participant-directed retirement savings programs. (As a public employer, UNC is not covered by ERISA.) UNC has approximately 55,000 employees eligible for its various retirement programs and 87 benefits staff across its 17-campus system.

To help participants with retirement goals, the UNC System in 2009 centralized administration of its 403(b) plan. Recognizing that the landscape for employee access to guidance and investment advice was changing, UNC leaders decided to facilitate employee access to investment advice not only from the financial institutions that service the retirement plan but also from the broader independent adviser community.

Sharing information. In 2012, UNC leaders continued retirement readiness initiatives by holding two workshops to update the system's benefits officers. Because the recent budget environment had limited the opportunity of benefits officers to attend professional meetings, UNC asked Verity Asset Management, a registered investment adviser active in higher education, and Teachers Insurance Annuity Association-College Retirement Equities Fund (TIAA-CREF), one of UNC's retirement providers, to conduct two workshops on the campus.

One session focused on the changing expectations regarding employers ad their expanding role in addressing employee access to retirement readiness help, emerging best practices, and potential fiduciary issues. The other described a tailored, targeted approach for employee communication, education, and advice based on distinctive sets of identified participant needs. At the conclusion of these workshops, UNC's benefits supervisors expressed interest in creating a framework to identify and provide access to various forms of needed help for university employees.

An education policy statement recognizes the varied needs of early-, mid-, and late-career retirement plan participants.

Creating a supportive framework. The chief benefits officer proposed the creation of an education policy statement—an emerging best practice—to guide an expanded series of strategies to support retirement planning and investment decisions. The statement recognizes the varied needs of early-, mid-, and late-career retirement plan participants and their different learning styles and preferences. It then describes a range of help offerings-from general to personalized-including:

  • Customary general information on the retirement benefit, including broad-based booklets and group presentations.
  • Training on basic personal finance.
  • Investment-related guidance using various online standardized tools such as Web site calculators and videos.
  • General investment advice offered by the retirement product provider.
  • Managed account services by a registered investment adviser who provides ongoing, proactive portfolio management for a fee.

The first four help services may be provided by UNC, or, alternatively, by its retirement product providers, independent experts, and other service providers, at no charge to employees. UNC uses all these sources, leaving it to individual participants to educate themselves and implement their own investment decisions.

Those employees electing the personalized service option can engage an independent third-party investment adviser of their own choosing, and UNC permits these employees to pay their fees each quarter directly from their TIAA-CREF and Fidelity accounts using pretax dollars. These fees adhere to ERISA standards and are calculated as a declining percentage of total assets under management. UNC does not make recommendations with regard to the choice of independent advisers and does not participate in or sign any agreements pertaining to the employee-adviser relationship.

Establishing a Governance Structure  

The university's education policy statement is a framework for oversight, program execution, and outcome-oriented measurements that:

  • Creates an explicit governance structure that assigns specific roles and responsibilities for managing retirement readiness to UNC's finance, human resources, and benefits professionals, stakeholder committees, and senior leadership.
  • Establishes partnerships to integrate relevant employee help options already available from service providers and governmental sources, such as the Social Security Administration. Examples include partner Web links and periodic on-site workshops that would otherwise require UNC to develop and manage these educational resources as a direct expense.
  • Incorporates regular benchmark studies, such as the comparison of UNC's retirement program to that of its peers, along with metrics such as employee participation rates and employee utilization of online tools and help programs, to evaluate program success. Regular review of these metrics—and others to be added over time—to measure outcomes will help ensure that retirement preparation remains a strategic leadership focus for each wave of future retirements and new employees.

Over time, more organized and focused governance along with a series of targeted help programs are expected to assist faculty and staff achieve retirement readiness in the following ways:

  • The education policy statement will formally articulate a commitment to providing access to various resources to assist faculty and staff in successfully reaching their retirement goals. A menu of choices from general to personalized help empowers individuals to make more prudent financial decisions.
  • Differentiated approaches for a multigenerational workforce will bemore effective than the traditional one-size-fits-all general information.
  • Faculty and staff will have greater clarity about where and how to access the most suitable help for their unique needs and preferences.
  • Over time, employees, faculty-staff advisory groups, and senior leaders will be able to regularly evaluate metrics, enabling them to take influential and strategic roles in formulating enhancements to UNC's communication, education, and investment advice offerings.
  • By integrating currently available help programs—especially those that outside experts and government agencies offer at little or no cost—benefits professionals will be able to refer employees to trusted, cost-effective sources of help without risking the perception of giving investment advice. By shifting their emphasis to providing faculty and staff access to external sources of help or expert advice, they can be confident they are responsibly delivering the retirement readiness services that are increasingly expected from employers nationwide.

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