SMU will develop single record-keeper system for retirement plans

In response to new governmental regulations, SMU will implement important modifications to the administration of its retirement plans, according to SMU’s Offices of the Provost and Business and Finance. In addition, a new core lineup of reviewed and approved funds that meet established performance standards will be available to employees after January 1, 2012.

The University has retained the national investment advisory firm Diversified Investment Advisors to serve as a single record keeper for retirement accounts with Fidelity, Vanguard and TIAA-CREF. Under new and expanding governmental regulations, funds made available by the University will be regularly reviewed by a qualified independent financial advisor as well as SMU’s Retirement Plans Advisory Council, according to an e-mail message from SMU Provost Paul Ludden and Vice President for Business and Finance Chris Casey dated May 2, 2011:


May 2, 2011

Dear Colleagues:

In response to new governmental regulations, SMU is implementing important modifications to the administration of SMU Retirement Plans. As described below, SMU has retained the national investment advisory firm Diversified Investment Advisors to serve as a single record keeper for retirement accounts with Fidelity, Vanguard and TIAA-CREF. The adoption of a single record keeper was by unanimous agreement of SMU’s Retirement Plans Advisory Council, which includes three faculty, three staff and several ex officio members of the administration.

Under new and expanding governmental regulations, universities will be required to review and monitor the performance of funds they offer. SMU currently provides employees with a menu of funds from a variety of providers and record keepers, and it is up to employees to monitor performance. Under the new rules, plan participants will receive the benefit of knowing that the funds made available by the University will be regularly reviewed by a qualified, independent financial advisor as well as SMU’s Retirement Plans Advisory Council.

Being in regulatory compliance is vitally important to the University and its employees, so that our retirement plan retains the advantage of tax sheltering. The additional regulatory duties placed on plan sponsors are quickly changing the landscape of plan administration in higher education from multiple providers to a single record keeper, as evidenced by recent changes at Stanford, Purdue, Pepperdine, Johns Hopkins and many other universities. Each of our current providers also has acknowledged the need for this shift in plan administration.

Diversified Investment Advisors was chosen to administer the University’s retirement plan after a thorough review of proposals from firms including Fidelity Investments and TIAA-CREF. Diversified specializes in administering 403(b) plans, has a proven performance record for more than 50 years and offers extensive one-on-one services to plan participants, including customized reporting and online services. The firm will act as a neutral plan administrator and not a fund provider; its investment guidance to employees will be nonproprietary. The firm will provide a full-time on-campus investment advisor. Because the funds in the retirement plan will flow through a single record keeper instead of three, plan expenses will be reduced for most plan participants.

After January 1, 2012, a new core lineup of reviewed and approved funds that meet established performance standards will be available to employees. Fidelity, TIAA-CREF, Vanguard and other companies will be eligible to compete to have their funds represented in the lineup. While not every TIAA-CREF annuity product will remain available for future contributions, participants’ flexibility and investment choices generally will not be materially restricted. In fact, plan participants will have the option to invest in a broad array of mutual funds not in the SMU core lineup through an “open brokerage window.” More information about these options will be available when the Retirement Plans Advisory Council and the independent investment advisor conclude their review. In order to ensure the best performance of participants’ retirement accounts, the core lineup may change over time, based on the ongoing monitoring of fund performance.

Diversified Investment Advisors will make available to participants new tools to help manage accounts more effectively. These tools include the ability to execute transactions, change contribution levels and request an on-demand statement. Instead of having to go to multiple websites of different providers, plan participants will be able to “one-stop shop” their transactions.

Beginning January 1, 2012, accounts from Fidelity and Vanguard will automatically move to the new open architecture platform at Diversified. Participants with existing TIAA-CREF accounts will have a choice to keep their existing accounts at TIAA-CREF or transfer them to the new platform.

The University’s move to a single record keeper has been reviewed by the University Benefits Council, legal counsel, an independent investment advisor group, the President’s Council and the Board of Trustees. During the next eight months, Human Resources will provide opportunities for group and individual meetings to learn more about the changes, as well as additional information online.

In the meantime, your input is welcome as we continue to work with the Retirement Plans Advisory Council and Diversified Investment Advisors. Please send questions to benefitsu@smu.edu and a Benefits representative will contact you. Thank you.

Sincerely,

Paul W. Ludden
Provost and Vice President for Academic Affairs

Chris Casey
Vice President for Business and Finance


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