As benefits-eligible employees learned in a Feb. 14 email (PDF) from university leaders Sean Reeder (operations and finance) and Kristi Darr (university human resources), Iowa State is making three changes to its TIAA retirement plan in April. In addition to aligning with industry best practices, the enhancements respond to preferences employees have shared previously. The changes also are expected to save participants about $4.1 million in aggregate fees each year.
The basic design of the retirement program with TIAA will remain the same, and consultations with TIAA representatives will remain free. Likewise, contribution rates and eligibility requirements aren't changing. Benefits director Ed Holland said it's about making the retirement plan work better for participants.
"It comes down to senior leadership and EBAC (employee benefits advisory committee) looking at our plans and what we learned in the [2022] benefits survey and identifying what we can do to make our plan more attractive, not just for employees who are close to retirement, but also for people who are considering coming to Iowa State to work," he said.
The three enhancements will:
- Trim the menu of funds available to ISU participants from 45 funds to 28 funds, several of which will have lower fees. The menu still will include age-based options, which automatically adjust an individual's investments as they get closer to retirement. Forty-five fund options are well beyond industry best practice, Holland said, noting that too many choices can overwhelm participants in their decision-making.
- Introduce a self-directed brokerage account, an option not offered previously. This option lets employees select from thousands of mutual funds, including funds removed from the current menu they'd like to remain invested in. It responds to employee requests for access to more choices generally and to certain types of investment preferences.
- Move the plan's default option from lifecycle funds to a new option called Iowa State RetireOn Track, a portfolio that includes investments for guaranteed income in retirement. In a TIAA participant survey, 80% of respondents said they'd like some kind of guaranteed income in retirement that's not tied to the market. This new default option automatically manages investments, making it easier for employees to stay on track with their retirement goals.
What's next
More communication about the retirement plan enhancements will come directly from TIAA, including a packet of printed materials in March. Starting in early April, TIAA staff will lead four live webinars with plan participants as well as four on-campus seminars that include help desks staffed by TIAA representatives. In mid-April, employees will receive a confirmation email that they're enrolled in the university's new TIAA plan and then will have about a week to update their contribution choices.
