Beginning Nov. 8, the University of Nebraska System will move to a more streamlined, lower-cost investment menu for participants in the retirement plan. The proposed menu will be composed of a single best-in-class mutual fund for each broad asset class, as well as “Target Date Funds.”
With this simpler, more straightforward approach, an individual’s retirement investments will be allocated to target-date funds according to industry standards based on the year in which the individual turns 65. The target-date funds are invested for potential growth in early years, then gradually transition to more conservative investments as people get older. The target-date funds on the new investment platform will be Vanguard Target Retirement Funds.
If someone desires a different investment allocation, there will be an opportunity in September and October to redirect the investment allocation of retirement funds. The new core investment lineup will consist of:
- Vanguard Total U.S. Stock Market Index fund
- Vanguard Total International Stock Market Index fund
- Vanguard Total U.S. Bond Market Index fund
- Vanguard Federal Money Market fund
- TIAA Traditional Annuity (TIAA only)
This simpler, more straightforward menu will help less experienced investors from having to navigate a complex menu of options while also lowering fees.
More experienced investors who desire additional investment options beyond the proposed menu will be able to open a self-directed brokerage account to access more than 8,000 mutual funds available on TIAA’s or Fidelity’s platform. This feature provides significantly more options than the 200 currently available to plan participants.
Following a comprehensive review and competitive bidding process, the university decided to transition to a simple and transparent fixed-dollar recordkeeping fee. Recordkeeping fees are charged by TIAA and Fidelity for managing and assisting people’s participation in their retirement plan. The move to a fixed fee will provide significant savings in recordkeeping fees for most of plan participants and will ensure continued excellent service for faculty and staff.
If enrolled in Fidelity, the recordkeeping fee will be $29 per year. If a TIAA participant, the recordkeeping fee will be $38 per year. If someone has investment balances with both TIAA and Fidelity, the charge will be $67 per year for recordkeeping expenses ($29 Fidelity plus $38 TIAA).
The TIAA Traditional annuity investment option will be transitioning to a new contract beginning Nov. 1. The new TIAA Traditional annuity investment has improved liquidity and recently has produced better crediting rates.
Aug. 15 to Oct. 15 is the enrollment window for changes through Fidelity.
Additional useful resources can be found at these links on the Fidelity and TIAA websites. Another good reference is the document at this link titled “Retirement Plan Enhancements FAQ.“
I'm a little surprised we didn't switch to Vanguard if they have better deals. It costs extra to buy them through Fidelity.
Maybe put a link in the story so we know where to go to make changes?
Hi, Lisa. There are three useful links in the last paragraph of the story with a lot of information contained within those to guide people through the changes. Thank you.
Please explain how these changes affect persons already retired. Are there plans to have any forums to explain changes and allow Q&A’s?
Hi, Kathy. The changes for retirees as the same as for active employees. For more information, please see the links in the article. If you have specific questions, you're welcome to set up a meeting with the retirement company handling your investments. Thanks.