Why were these changes made?
UK proactively monitors and manages its retirement plans in the overall best interests of UK and its employees. This enables UK to have excellent retirement plans. The Retirement Plan Oversight Committee is authorized in Administrative Regulation 3.1 to monitor and recommend improvements to UK retirement plans. This group of faculty, staff and administrators serve UK in a fiduciary role with the goal of providing a quality investment line-up at reasonable fees.
What do I need to do?
If you are satisfied with the new fund lineup, and the mapping of your current investments into the new lineup, you do not need to do anything. These changes will take place automatically.
What are the new funds and investment choices?
The new investment lineup and self-directed brokerage option in our retirement program will provide a variety of investment choices. You can develop and customize a diversified investment portfolio from the following:
Target Date Funds. The Fidelity Freedom Index Funds or the TIAA Lifecycle Index Fund – Institutional Premium Class continue to be the Plan’s Tier 1 funds. These funds are designed for investors expecting to retire around the year indicated in each fund's name. A Target Date Fund is invested in a portfolio of mutual funds that automatically becomes more conservative as the fund approaches its target retirement date and beyond. Principal invested is not guaranteed. These funds are chosen and monitored by UK’s Retirement Plan Oversight Committee.
Core Funds. UK’s retirement committee, with the assistance of an investment advisory firm, carefully selected the core investment options, which include some existing funds as well as new funds, that reflect all major asset classes and includes short-term investments, bonds and stocks. Each available fund is priced at the lowest share price available for the particular fund. The new investment lineup allows you to customize and build a portfolio your way.
A list of the funds in the core lineup are available from Fidelity and TIAA:
Managed Account. A managed account is designed for people who prefer to have the vendor manage their money for them, so they can focus on other aspects of their life. This is an option from our vendors for those who want extra help with their investments.
Self-Directed Brokerage Account. Both TIAA and Fidelity provide a self-directed brokerage option. Fidelity calls it “BrokerageLink.” This account gives you access to additional mutual funds for your retirement savings beyond the target date funds and core funds available in Tiers 1 and 2. The self-directed brokerage option combines the convenience of your workplace retirement plan with the additional flexibility of a brokerage account. Note, though, that the UK Retirement Oversight Committee neither evaluates nor monitors the mutual funds available through the self-directed brokerage option. It is your responsibility to ensure the investments you select are suitable for your situation, including your goals, time horizon and risk tolerance.
What happens to my existing investment options?
Many of your existing investment options will remain available. Depending on which funds you currently invest in, some of your investments may change. Some investments will be liquidated and reinvested in new investment options. Others will transfer to the same investment option (called a reregistration, or in-kind transfer). All assets will remain fully invested during the change.
How does the level 0.06% fee compare to what I was paying before? Your current fee was built into the fund and was paid based on the asset balance in that fund. Depending on the fund, that fee was typically more than the new level 0.06% administration fee.
After the fee change, what specific fees will I pay on my account? Currently, plan recordkeeping costs are not deducted directly from your account. They are paid through fund company arrangements associated with investment options in the plans. Payment of recordkeeping costs through investment option fees is often referred to as “revenue sharing” and is a common approach. The payment of the plans’ recordkeeping costs through revenue sharing is not reflected on your quarterly account statement as a separate line item.
As a result of streamlining the investment lineup, UK is able to move to the lowest-cost share class currently available among all funds in the plans. This allows for a lower investing cost for all participants. There are costs associated with each mutual fund in which you choose to invest. These costs are expressed in the form of an expense ratio.
The annual 0.06% fee is assessed on your total account balance. This annual fee is prorated over 12 months. So, it will be listed on your monthly statement. The fee is assessed to help cover the cost of Fidelity and TIAA recordkeeping, trustee, legal, accounting, and other administrative fees and expenses. It is also used to cover the cost of UK Retirement Program legal fees, consulting, and other non-vendor administrative fees and expenses. Fees are subject to change. What educational resources are available? Your dedicated Fidelity and TIAA Retirement Planners will be available to answer any questions you may have regarding the plan revisions. Visit www.myfidelitysite.com/uk and click the Attend an Educational Session tab or www.TIAA.org/uk to learn more and to register for an event.
How can I get a copy of the Retirement Change brochure?View Fidelity’s guide here
View TIAA’s guide here
What happens if an investment I want to keep is being removed?
By enrolling in the self-directed brokerage option, you can continue to invest in some of the investment options being removed from the plans on March 31, 2021, through a one-time "in-kind" transfer.
In order to take advantage of the “in-kind” transfer to the self-directed brokerage option with TIAA, you must already have an account or enroll by 4 p.m. Eastern time on March 12, 2021. To take advnatage of the brokerage option with Fidelity, you must have an account or enroll by 4 p.m. Eastern time on March 15, 2021. Otherwise, you may still access the same investments after April 1, 2021.
What is a self-directed brokerage option account?
It is essentially a do-it-yourself option that is designed for investors who desire more choice of investments. When you direct contributions to a self-directed brokerage account, your investments are allocated in mutual funds apart from those available in the plan. This option offers participants a broad range of mutual fund options, but it may require more time and expertise to assess, monitor and manage your chosen funds.
The UK Retirement Oversight Committee neither evaluates nor monitors the investments available through self-directed brokerage option. It is your responsibility to ensure the investments you select are suitable for your situation, including your goals, time horizon and risk tolerance.
Will the self-directed brokerage option have extra costs?
There is no annual account service fee. Some funds may have transaction fees or sales loads. You can search for funds that do not have these fees associated with them. You can avoid these charges by using funds in the core lineup, many of which will have low institutional expense ratios.
What if I have legacy funds, such as Fidelity Blue Chip Growth or Magellan fund?
To keep those funds, you will need to move to BrokerageLink. If you make no decision and do not open a BrokerageLink account with Fidelity by March 15, the funds will be mapped to the Contrafund on March 30. You will still be able to access these same funds after April 1.
What if I open a self-directed brokerage option? Will my core funds transfer to the brokerage option as well?
No, only the legacy funds will transfer to the self-directed brokerage option if you open it prior to March 12 with TIAA or prior to March 15 with Fidelity. If you do nothing before your vendor's deadline, you will still have access to the same funds in the self-directed brokerage option after April 1.
If I move money to self-directed brokerage option, can I move back at any time?
Yes, as long as you meet the investment requirement of either 30 or 60 days.
Will my future automatic contributions after the initial change move to the self-directed brokerage option?
You must direct the future investments in your self-directed brokerage option.
Fidelity: Go to www.netbenefits.com/uk and change future contributions.
TIAA: Contact TIAA at www.TIAA.org/uk
Is there a transaction fee for moving money in and out of the self-directed brokerage option?
There is no transaction fee for moving money into and out of the brokerage link.
If I choose the brokerage option in my Matching Retirement Plan, will the match continue?
Yes, you will continue to receive the UK Match scheduled to return to 10% on July 1, 2021, barring any unforeseen circumstances.
What is the difference between the 457(b) and all other plans’ investment options in the self-directed brokerage option?
Brokerage accounts provide participants in most of the plans with the opportunity to invest in a broad range of mutual funds beyond those offered directly through the plans.
Participants in the UK 457(b) Deferred Compensation Plan have the ability to invest in mutual funds, stocks, corporate bonds, zero coupon bonds, U.S. Treasury securities, mortgage securities, U.S. government agency bonds and more.
What fees on investments am I paying in the self-directed brokerage option?
The fee class is retail compared to the lower UK fee class, which enjoys the economies of scale of a large plan.
What are the advantages and disadvantages of the self-directed brokerage option?
You have many more fund options, but the self-directed brokerage option funds are not monitored by the UK Retirement Oversight Committee for best-in-class share features. Also, they may carry higher fees.
If I choose to move all funds into the self-directed brokerage option, how much is moved?
If you use TIAA or Fidelity, 100% of your funds are eligible to move to the brokerage option.
How are the remaining 5% of funds invested with Fidelity?
They will be mapped to a similar plan as your current investments as detailed in your Fidelity brochure.
Is there a list of new funds available in the core lineup?
The new lineup is available in the TIAA and Fidelity enrollment guides:
If I am in the managed account service, Personalized Planning and Advice, do I need to open the brokerage account?
No, you do not.
Can I still withdraw money from my account?
Your withdrawal/rollover options remain the same.