Retirement Program Changes

We are pleased to announce several updates to the Fordham University Retirement Plan and the Fordham University Tax Deferred Annuity (TDA) Plan (referred collectively as the Retirement Program).

Effective Date: December 11, 2015

 

Reasons for the Change

In 2007 the IRS issued final regulations that updated and consolidated more than 40 years of legislative and regulatory guidance, generally effective for taxable years beginning January 1, 2009.

The IRS regulations require the University to make several changes to the way the Retirement Program is operated, including having the plans in the Retirement Program audited each year by independent accountants.  The regulations also clarified the fiduciary rules that govern 403(b) plans including making it clear that a due diligence process must be in place to review and select investment options that will help participants reach their retirement objectives.

Consolidating Investment Options Means Improved Financial Management

Currently, there are over 200 investment options within both the Retirement Plan and TDA Plan. Many of these investments are either similar in asset class, maintain high operating and management fees, or demonstrate a below average fund performance. 

Studies have proven that when a large number of funds are available, participants tend to be overwhelmed and fail to act. Sheena Iyengar, professor of business at Columbia University conducted many studies on the effects of increasing the amount of choice available. Her research showed that choice overload leads to analysis paralysis thus reducing the primary objective of these funds which is to build retirement income.

After extensive research, we have decided to consolidate and streamline the investment options to approximately 40 funds offered to you by Fidelity or TIAA-CREF. 

Fordham University is not the first institution to have taken these steps.  Other schools such as Pace University, The New School, Hofstra University, University of San Francisco, Oklahoma State University, University of California at Berkley, Harvard University, Stanford University and Vanderbilt University  have already consolidated or streamlined their array of investment options.

Flexible, Customizable Fund Options

This new menu, customized for Fordham University Faculty and Staff, continues to offer a wide array of specially selected investment options to give you flexibility to create a retirement portfolio that’s tailored to your investment preferences and goals. Some of these funds will be among those currently offered to you; other funds will be managed by highly regarded well known investment providers, such as Vanguard, and may be offered by both Fidelity and TIAA-CREF.  They are a mixture of passive and actively managed funds with potentially significant cost savings and lower fees to plan participants.

We will continue to monitor the performances of these new funds to ensure they are meeting your needs as you pursue your retirement savings goals. 

This document shows the new funds, the investment performance for 1-, 3-, 5- and 10-year increments.  In addition, it also lists the Morningstar rating and the net expense ratios that apply to each fund. 

Personalized Guidance

As a participant in the retirement program, you can receive personalized investment advice/guidance on the plan's investment options from a TIAA-CREF or Fidelity Financial Consultant. This service is available as part of your Retirement Program at no additional cost to you. Investment advice/guidance is available at your convenience online, via phone, or during a one-on-one counseling session.

A Special Note for Former Employees, Alternate Payees, and Plan Beneficiaries

If you are a former employee, alternate payee, or beneficiary with an account balance in the Plan, you will be affected by the upcoming transition, so please be on the lookout for the Transition Guide that will be mailed in the coming weeks.

For More Information

Feel free to call Donald Perretti, Director of Benefits, at 718-817-4935 or email him at perretti@fordham.edu with any urgent questions.