University Times

The University is streamlining its main retirement investment options, and with the updates come new opportunities for Pitt employees to increase their financial education.

Over the course of the next few months, employees both near to and far from retirement will be able to take advantage of new retirement plan services, said Vice Chancellor for Human Resources Cheryl Johnson. Included in the plan’s rollout is a comprehensive program for helping employees learn about the changes and improve their financial literacy.

The basics of Pitt’s retirement plan remain intact, Johnson emphasized, including the level of University matching contributions, as well as the rules for who is eligible to participate and when employees become vested.

Investment Fund Selections Refined; Transaction Fees Waived, Reduced

One of the most noticeable changes to the plan is that the number of available investment funds will be adjusted from 110 to 50 as a result of increasing oversight of retirement options, said John Kozar, assistant vice chancellor for benefits. It’s part of a trend among larger institutions to eliminate redundant or lower-performing funds and simplify employee decision-making, he said. That’s because an overwhelming number of choices can feel like no choice at all, and it’s tough for the University to properly vet many dozens of funds, he explained.

Pitt also will be offering a new online brokerage window beginning Feb. 14, 2018, for the more experienced investor who wishes to pick among more than 7,000 options, including most of the 60 funds bumped from the main investment menu.

Starting March 16, Pitt will make available the new 457(b) retirement savings account for increased pre- or post-tax savings possibilities, Kozar said.

Greater scrutiny of Pitt’s retirement options began in 2013, and shifted into high gear in fall 2016 with the creation of a retirement oversight committee, which includes representatives from the offices of human resources and finance, with Johnson as chair. Cammack Retirement Group, an independent financial investment adviser based on Wall Street, aided in the streamlining of available retirement funds and will continue to report on its performances quarterly to Pitt.

Said Johnson: “We took a very thoughtful approach in selecting the 50 options” for retirement investment funds, retaining both conservative funds and those that take a more aggressive investment approach. The most popular choices remain from the previous array of 110, noted Kozar.

“To allow for greater choice, we’re making the brokerage window available for the seasoned investors that feel comfortable independently selecting outside mutual funds,” he said.

To ease employees in the transition of available funds offered, funds chosen between Feb. 15 and June 15, 2018, will be free from transaction fees.

In fact, fees are being reduced generally for retirement transactions at Pitt. Already at a low .001 percent of every $1,000 in 2016, they were cut more than 50 percent in 2017 and will be reduced nearly in half again in 2019. Kozar credits this to the current fund streamlining efforts as well as Pitt’s 2015 move to consolidate recordkeeping for both TIAA and Vanguard investment options in its retirement savings program.

Additionally, current Pitt employees with the flexibility to put away more pre- or post-tax savings will also now be able to place up to $18,500 of their University income into new 457(b) plans, prior to age 50, and up to $24,500 after age 50. That’s in addition to those same amounts already allowed to be saved as tax-deferred income in 403(b) plans.

Although the University does not match 457(b) savings, there is no penalty for withdrawal prior to age 59 and a half, as there is with 403(b) plans. Money in 457(b) accounts may also be rolled over into another employer’s retirement plan if the employee leaves the University.

Education Efforts Begin Jan. 16

Starting Jan. 16, the benefits department will be sending out a guide to plan updates for employees participating in Pitt’s retirement program, scheduling a series of seminars and webinars and creating a help desk for those with questions about the retirement changes — or who simply wish to increase their financial literacy. The seminar opportunities will be available on all Pitt campuses as well as locations outside the main Oakland campus, such as Children’s Hospital and the University Child Development Center, and across hours covering union and shift workers.

TIAA field consultants also will be on campus and available for one-on-one appointments and presentations to campus groups.

The University is very aware that different generations will have different concerns and questions about retirement and how the plan changes may affect them, Johnson said. The plan therefore still offers “life-cycle funds,” she noted — investment packages geared toward employees who are at different stages of their career and life.

“We wanted to make sure we maximize the opportunity for the diversity of the workforce,” she said. “We’re going to make sure people understand their options and choices so they are financially literate and have wide stewardship over their own portfolio.”

Linda Tashbook, head of the University Senate’s benefits and welfare committee, praised the committee for its commitment to helping to educate Pitt employees on their retirement options and helping them to make the best decisions for their own circumstances.

“We each have different financial goals, different family obligations and different debts,” she added, “and to individual employees it is very valuable that we get to steer our own investment options, yet we can have confidence that all the investment options available to us … are high-quality funds. This is really good service from our benefits office.”

Human Resources has released the guide to the retirement plan updates online.

Contact:
Marty Levine, martyl@pitt.edu, 412-758-4859