Retirement Plan Advisory Committee
August 16, 2011
A meeting of the Retirement Plan Advisory Committee (RPAC) was held on August 16, 2011 via video conference between the Las Vegas and Reno System Administration Offices.
Present: Michelle Kelley, Co-Chair; Hank Stone, Co-Chair; Kent Ervin; Pat LaPutt, Judy Stewart, Nasser Daneshvary, Irene Tucker, Patricia Hughes and Steven Streeper
Also Present: Michelle Meador and George Dombroski
The meeting was called to order at 1:05 pm.
Michelle Kelley welcomed new members and thanked them for their willingness to serve. She gave a brief overview of the charge of the Committee. Hank Stone explained that the Committee serves as a policy advisor to the Vice Chancellor Administrative & Legal Affairs, who has authority to make certain delegated management decisions relating to the plans.
MOTION: Pat LaPutt made a motion to approve the minutes from the May 19th meeting. Steven Streeper seconded. The minutes were approved unanimously.
Kent Ervin presented a report on the meeting of the Investment Management Subcommittee that had been held the previous 1 ½ days. A copy of his report is attached.
Michelle Kelley led a discussion about spousal consents in the retirement plans. Issues discussed included:
- Nevada being a community property state meaning that the NSHE retirement plans are considered community property. The question posed was should NSHE require spousal consent when employee’s take a distribution from their 401(a) or 403(b) Plans, and if not, why not?
- The RPA Manager shared the results of an informal survey of other community property states which found that about half of the other community property states do require spousal consents in their public employee retirement plans and that the other half do not.
- Nevada PERS requires spousal consent
- The Committee was reminded that any policy requiring spousal consent needs to include domestic partners.
Some Committee members raised concerns about implementing spousal consent and how to implement with the least disruption to the long-term retired who have not needed spousal consent in the past, solutions suggested included:
- Could a policy be implemented whereby spousal consents are only required if a certain pre-determined percentage of assets are being withdrawn.
- Or could spousal consent be implemented only for new retirees/termination and employees who have previously left the organization be grandfathered out of the requirement.
MOTION: Kent Ervin moved that the Committee allow the Committee Co-Chairs to explore whether or not the Plan should require spousal consent, or if there is a basis for leaving the policy as it is. If it is determined that spousal consent should be required, then the Co-Chairs should develop a process and timeframe for implementation. Judy Stewart seconded the motion. The motion passed unanimously.
The RPA Manager presented an update on the Request for Qualifications for an investment management consultant. He explained that the process is nearly concluded and that a recommendation to begin contract negotiations with AON had been presented and approved by Chancellor Klaich. Hank Stone explained that expectations are that the investment management consultant will 1) help create an investment policy statement and monitor the performance of plan investments against that policy, 2) help restructure the retirement plan investments into a more streamlined tiered structure, and 3) conduct a Request for Proposals for a master recordkeeper.
The Committee briefly discussed the VALIC Annuity platform and the slow rate of progress being made by VALIC to transition participants out of these funds and into more affordable mutual funds.
- The Committee was reminded that the VALIC annuity products include an expensive death benefit wrapper that will benefit very few participants.
- In order for the wrapper to provide any benefit a participants account balance has to equal less than the amount contributed over the participant’s life-time.
- Reports provided to the Co-Chairs and RPA Manager show that even in the current economic climate, few participants would derive a benefit from this wrapper if they passed on now.
VALIC had been encouraged for over 18 months to educate participants in the value of the death benefit associated with their account and to encourage movement to the mutual fund platform, however to date only about 30-35% of assets have been moved which the Committee feels is an unsatisfactory rate of progress.
It was decided that it was prudent not to take any action immediately to compel participants to switch to the mutual fund platform in-light of the significant plan changes that are contemplated in months to come. However this will be revisited if plan redesign takes longer than expected.
WITHDRAWN MOTION: Kent Ervin withdrew a motion made at the May 19, 2011 RPAC meeting to require that as of January 1, 2012 all new contributions from new and continuing participants be directed to the mutual fund platform and prohibit any further contributions to the annuity platform. He went on the say that he would consider reinstating his earlier motion if significant progress on plan restructuring had not been made over the next 6 months. Hank Stone, who seconded Kent Ervin’s motion on May 19, concurred with Mr. Ervin’s retraction.
A RPA History document was presented to the membership as an orientation tool. The RPA Manager was asked to maintain the document going forward.
The Committee discussed the timing of the next participant satisfaction survey, the means of distribution and analysis of the results.
- Mr. Ervin volunteered to assist the RPA Manager in the development of the 2012 survey.
- Timing of that survey is targeted for April 2012.
- The RPA Manager will distribute last year’s survey questions to the Committee for feedback.
- The RPA Manager was asked to explore a means of distributing the survey to employees, with Survey Monkey being specifically referenced.
The Retirement Program web page on the NSHE website was reviewed with the Committee. The webpage is still a work in progress and the RPA Manager was encouraged to add links to the NSHE retirement vendor’s microsites and the NSHE Employee Self Service site. Additionally it was suggested that a link to the Social Security website be added, specifically pointing to information on the Windfall Elimination Provision.
The RPA Manager reviewed the Committee’s progress to date against the goals that it set at the January meeting. A discussion about 2012 goals will be placed on the October 11 agenda.
Fidelity’s Advisor Fee Billing arrangements were revisited. Vice Chancellor Patterson has decided to allow for the continuation of these arrangements so long as the service is 1) not extended to the other vendors, 2) not advertised to participants by NSHE or Fidelity, and 3) subjected to an annual cap, if administratively feasible. Vice-Chancellor Patterson hopes that the service will naturally self-terminate over time.
The Committee was given an update on the implementation of retirement contributions on “summer salaries” that was discussed at the May 19 meeting. Vice Chancellor Patterson has rendered a formal opinion that pay for summer work and extra duty assignments for faculty on “B” contracts may be considered as eligible compensation for purposes of RPA contributions.
The Retirement Plan Advisory Committee next meeting will be October 12, 2011. The RPA Manager will make arrangements for the RPAC meetings for the next 12 months and distribute to the Committee via email..
MOTION: Hank Stone moved that absent an objection to a draft of the minutes within 10 days of their distribution, the minutes should be deemed approved and posted at the website. Nasser Daneshvary seconded. The motion carried unanimously.
the floor was opened to members wishing to discuss issues specific to their campuses. The RPA Manager was asked to include a roundtable discussion on issues at the various campuses as a recurring agenda item for Committee meetings.
The meeting was adjourned at 3:00 pm.
Prepared by: George Dombroski, Retirement Plan Alternative Manager