VRS COV 457 Plan Overview - VBgov.com...Jul 14, 2017 · VRS COV 457 Plan Overview Kelly L. Hiers, VRS DC Plans Administrator July 14, 2017. 2 Agenda ... 16 Plan Highlights ... Virginia

VRS COV 457 Plan Overview

Kelly L. Hiers, VRS DC Plans AdministratorJuly 14, 2017

2

Agenda

• Agency and Plan Structure• Assets, Accounts and Adoptions• Plan Highlights• Investment Options• Employer Services• Participant Services• Appendix – Highlights from 2016 Perspectives in Practice Survey

(National Association of Government Defined Contribution Administrators - NAGDCA)

Agency and Plan Structure

4

VRS Agency Structure

VRSBoard of Trustees

DirectorTrish Bishop

DC Plans Administration

Chief Investment Officer

Ron Schmitz

DC Plans Investment Oversight

Internal Audit Director

Jennifer Schreck

Defined Contribution Plans

Advisory Committee (DCPAC)

5

Defined Contribution Plans Administration

Record keeper oversight Contract monitoring/performance standards Participant/employer education and support Plan analysis Compliance (plan corrections) Employee Plan Overviews and Regional

Education Meetings In partnership with VRS Public Relations and

third-party administrators:o Communications/campaign developmento Employer websites o Participant websites o Focus newsletterso Various publications

6

VRS Investment Department

Team Approach with Portfolio Manager and Senior Investment Analyst Oversight of DC investments Investment Department liaison

for VRS administration staff, third-party administrator, ORPHE bundled provider companies and other interested parties

7

Third-Party Record Keeper• Record keeping • Communications• Education• Record-keeping fees

Unbundled Services: Investment management and record keeping/administrative services covered under separate contracts

Plan Structure –Unbundled vs. Bundled

Plan Sponsor

Investment A(investment fee)

Investment B(investment fee)

Investment C(investment fee)

8

Provider Record keepingCommunicationsInvestmentEducationRecord-keeping and Investment Fees

Bundled Services: Investment Management and record-keeping and administrative services covered under one contract

Plan Structure –Unbundled vs. Bundled

Plan Sponsor

Assets, Accounts, and Adoptions

10

Assets and Accounts – All PlansNote: Unbundled plans only and includes forfeiture accounts

10* Includes reserve account. Reserve account balance may at times be $0.00.

Plan Name Balances - 03/31/2017 % of Plan Assets Number of AccountsSupplemental Retirement $117,321.85 0.00% 2401(a) Cash Match Beneficiary Plan $142,807.93 0.00% 26ORP School Superintendents $357,385.34 0.01% 3ORP Higher Education $442,218.75 0.01% 10457 Deferred Compensation Beneficiary Plan $2,280,434.02 0.08% 39ORP Political Appointees $14,287,502.11 0.48% 333Hybrid 457 Deferred Compensation Plan $38,370,941.19 1.30% 54,794Hybrid 401(a) $110,219,139.56 3.74% 83,111401(a) Cash Match $410,589,271.44 13.92% 70,165457 Deferred Compensation* $2,373,666,052.41 80.45% 77,508Total All VRS Plans $2,950,473,074.60 100.00% 285,991

0.00%0.00%

0.01% 0.01%

0.08%0.48%

1.30%

3.74%

13.92%

80.45%

Supplemental Retirement

401(a) Cash Match Beneficiary Plan

ORP School Superintendents

ORP Higher Education

457 Deferred Compensation Beneficiary Plan

ORP Political Appointees

Hybrid 457 Deferred Compensation Plan

Hybrid 401(a)

401(a) Cash Match

457 Deferred Compensation*

11

COV 457 Employer Adoptions - Summary

• 57 political subdivisions• 14 school divisions• 8 special authorities

• 2 asset transitions – 2014• 3 upcoming transitions - 2017

0

1

2

3

4

5

6

7

8

9

10

1980 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Employer Adoptions by Year – COV 457

COV 457 Assets Transitioned or in Process of Transitioning to 457

12

COV 457 Plan – Assets by Employer Type

State$2,355,544,068 (97%)74,963 Accounts (97%)

Political Subdivisions$33,178,129 (1%)

1,669 Accounts (2%)

School Divisions$39,655,888 (2%)870 Accounts (1%)

Total Assets $2,428,546,241

Total Accounts77,502

Data as of 6/30/2017

13

COV 457 Plan – Participation

• Overall participation rate 34%– Varies greatly among

employers, particularly local employers and school divisions

0%

10%

20%

30%

40%

50%

60%

70%

457 Participation Rates

Overall Participation Rate State Only

Higher Ed Only Local Employers Only

NAGDCA 2016 Perspectives in Practice SurveyData as of 12/31/2015

14

COV 457 – City of Virginia Beach

• Adopted in 2014, for Hybrid Retirement Plan members only

Fund Name % of AssetsBond Fund 0.40%Global Real Estate Fund 0.70%High-Yield Bond Fund 1.30%International Stock Fund 1.60%Money Market Fund 0.50%Retirement Portfolio 0.00%Small/Mid-Cap Stock Fund 23.20%Stable Value Fund 0.50%Stock Fund 14.80%Target Date 2020 Portfolio 0.10%Target Date 2025 Portfolio 4.80%Target Date 2030 Portfolio 13.90%Target Date 2035 Portfolio 0.60%Target Date 2040 Portfolio 0.60%Target Date 2045 Portfolio 27.70%Target Date 2050 Portfolio 5.10%Target Date 2055 Portfolio 1.50%TD Ameritrade 2.70%

Accounts - 46Assets - $424,527

Data as of 6/30/17

Plan Highlights

16

Plan Highlights

Administrative and record-keeping fees are separate from investment fees •Investment expense ratios include only fees related to the management of the fund•Use of explicit flat dollar administrative/record-keeping fees • Improves transparency•Provides for fee leveling across participant base

Roth 457 option available

Unforeseen Emergency Withdrawals available (based on eligibility)

Monthly investment performance reports and annual fee disclosure•Consistent with ERISA standards

White-labeled, passively managed, tiered investment menu

Custom communications and websites provide plan-specific education

Integration with myVRS Planner and Member Benefit Profile•Provides holistic picture of retirement benefits

17

myVRS

18

myVRS – Retirement Income Planner

19

DCP Account Access

• Custom communications and targeted messaging• Retirement Income Projections

– Suggestions for increasing outcomes

20

Understanding Plan Fees

Fees may be implicit or explicit, variable (asset-based) or fixedInvestment Related

Investment management and other investment-related expenses – Implicit and variableAcquired fund fees and expenses – Implicit and variable (Stable Value Fund only) Mortality and expense risk feesLiquidity guarantee fees12-b-1 distribution feesShort-term Trading Redemption fees

Recordkeeping/Administration RelatedRecord-keeping/Administration fees – Explicit and fixed at $30.50/year per unique participant in VRS DC Plans Value-added fees

Indicates types of fees that may be present in investment options within the COV 457 Plan.

21

Investor A Contribute $6,000/year

beginning at age 25 6% annual return on

investment 0.50% annual fee Account value at age 65:

$858,068

Investor B Contribute $6,000/year

beginning at age 25 6% annual return on

investment 1.50% annual fee Account value at age 65:

$656,195

1.00% increase in fees equals $201,873 less in account at age 65.

Examples provided by Mercer for illustrative purposes only.

Why Fees Matter - Fee Example

22

Publications & Resources - Samples

Coming Soon: DCP Mobile App

23

Publications - Investments and Fees

o Investment Guide• Do-It-For-Me Path

• Target Date Portfolios (Default)

• Help-Me-Do-It Path• Do-It-Myself Path

o Fund Profiles and videoso Monthly Investment Option

Performance Reportso Annual Fee Disclosure

Investment Options

25

DCP Investment Paths

• Investment options organized into three pathways• Designed to make it easier for participants to implement investment

decisions

• Mix and match investment options within each path

• Helps participants meet objectives, risk tolerance and overall investing style

Do-It-For-Me Path

Help-Me-Do-It Path

Do-It-Myself Path

26

Do-It-For-Me Path

• Includes target-date portfolios for participants who would like a portfolio that's already diversified.

• Select funds based on your projected retirement date and individual needs.

FundExpense Ratio Fund

Expense Ratio

Retirement Portfolio 0.08% Target Date 2040 Portfolio 0.08%

Target Date 2020 Portfolio 0.08% Target Date 2045 Portfolio 0.08%




Expense ratios as of 5/31/2017. May change periodically.

27

Help-Me-Do-It Path

Offers a carefully selected menu of funds for those who prefer to take a slightly more active role in investing by assembling their own portfolio of funds.

FundExpense Ratio Fund

Expense Ratio

Money Market Fund 0.08% Stock Fund 0.02%

Stable Value Fund 0.29% Small/Mid-Cap Stock Fund 0.04%

Bond Fund 0.04% International Stock Fund 0.10%

Inflation-Protected Bond Fund

0.03% Global Real Estate Fund 0.11%

High-Yield Bond Fund 0.40% Virginia Retirement System Investment Portfolio (VRSIP)

0.58%

Expense ratios as of 5/31/2017. May change periodically.

28

Do-It-Myself Path

• For knowledgeable investors who wish to manage their investments directly

• Thousands of publicly traded mutual funds, exchange traded funds (ETFs) and individual securities are available

• Additional fees may apply

Self-Directed Brokerage Account

29

All Plans - Plan Assets by Fund

29

Fund Name Fund Balance 03/31/2017 % of Plan AssetsTarget Date 2060 Portfolio $6,272,286.48 0.21%VRS Investment Portfolio $31,459,899.23 1.07%High-Yield Bond Fund $32,566,184.93 1.10%Inflation-Protected Bond Fund $35,127,358.12 1.19%TD Ameritrade $36,843,272.06 1.25%Target Date 2050 Portfolio $47,760,443.96 1.62%Target Date 2055 Portfolio $48,397,195.54 1.64%Money Market Fund $53,134,129.74 1.80%Target Date 2045 Portfolio $55,661,512.37 1.89%Target Date 2040 Portfolio $68,748,451.39 2.33%Target Date 2035 Portfolio $85,252,647.73 2.89%Target Date 2030 Portfolio $96,122,472.50 3.26%Global Real Estate Fund $96,404,829.23 3.27%Bond Fund $119,375,034.49 4.05%Target Date 2025 Portfolio $124,222,382.43 4.21%International Stock Fund $137,729,851.28 4.67%Target Date 2020 Portfolio $149,247,144.83 5.06%Retirement Portfolio $158,879,308.40 5.38%Small/Mid-Cap Stock Fund $261,720,475.22 8.87%Stable Value Fund $491,603,589.30 16.66%Stock Fund $813,944,605.37 27.59%

Total $2,950,473,074.60 100.00%

0.21%1.07%

1.10% 1.19%

1.25%

1.62%

1.64% 1.80%1.89%

2.33%2.89%

3.26%3.27%

4.05%

4.21%

4.67%

5.06%5.38%

8.87%

16.66%

27.59%

Target Date 2060 Portfolio VRS Investment PortfolioHigh-Yield Bond Fund Inflation-Protected Bond FundTD Ameritrade Target Date 2050 PortfolioTarget Date 2055 Portfolio Money Market FundTarget Date 2045 Portfolio Target Date 2040 PortfolioTarget Date 2035 Portfolio Target Date 2030 PortfolioGlobal Real Estate Fund Bond FundTarget Date 2025 Portfolio International Stock FundTarget Date 2020 Portfolio Retirement PortfolioSmall/Mid-Cap Stock Fund Stable Value FundStock Fund

Employer Services

31

Employer Services

• Indicative data updates streamlined through myVRS Navigator• Distribution processing is automatic and based on employment status in

myVRS Navigator• Enrollment is electronic through website• Non-VRS covered employees also eligible to participate

– Requires paper enrollment form

• Dedicated ICMA-RC Employer Support Team

• Dedicated Employer Resource Website

• Reporting available in EZLink

32

Employer Resources/Services

EZLink Reports Available• Deferral Changes• Contribution Limits/Overage/Catch-up Provision• Asset Allocation (plan assets allocated to investment funds or fund classes)• Plan Activity Reports (Enrollments, Rollins/Rollouts, RMDs, etc.)• Contribution Transactions (in aggregate and by participant)• Participant Website Statistics• Plan Usage:

• Average Account Balance, by age• Average Contributions, by age• Use of Default Fund• Most Popular Investments• Participation Rate circle graph

Participant Services

34


Questions

Meetings, Seminars, and One-on-One Counseling

Phone & E-mail Support

Publications• Investment Guide

Online Tools• Interactive calculators• Text Access


Engage, Build and Realize

35

Meetings, Seminars and One-on-One Counseling

36

Meeting Topics

Current • Plan Overview• Understanding Plan Investments• Distribution Strategies• Managing Your Money

Coming Soon!• Women and Money• Save Like There Is A

Tomorrow! (with workbook)• Advanced Investments

37

Participant Education Highlights

• 2016 Service Review for Field Services– Each DC Plans Specialist averaged more than 300 group meetings– Each DC Plans Specialist met with more than 1,300 individuals

• Participant satisfaction survey following interaction with DC Plans Specialists– May 2017 – 100% Strongly Agree or Agree

• Presenter met my expectations, kept me actively engaged• Seminar provided me with a clear understanding of the content, was of value

to me

38

Participant Contact Quality SurveyThrough May 2017

3.78 3.783.91 3.87 3.84

3.00

3.20

3.40

3.60

3.80

4.00

Satisfaction Informative Helpful Knowledgeable Professional

After Call Electronic Responses

YTD 2017 (n= 369)

38.19%

11.26%4.67% 9.07% 11.26% 4.40% 3.02%

18.13%

0.00%10.00%20.00%30.00%40.00%50.00%

Reason for Call

YTD 2017 (n=364)

92.4%

0.0%

100.0%

Yes

Recommendation Rate

YTD 2017 (n=236)

Notes: (1) Scores are on a 4-point scale where 4 denotes the highest level of satisfaction and 1 denotes the lowest level of satisfaction.(2) n = Number of Survey Responses.

Questions!

40

Appendix

41

NAGDCA 2016Perspectives in Practice

• Total respondents – 62– All public sector plans– Total plan assets $116B – 2.4M individual participants

• Plan Designation– 23% Primary – 77% Supplemental

• Asset Size – 24% Greater than $2.5 Billion

• Plan Participants– 24% Greater than 60,000

• Plan Structure– 66% Unbundled (administrative and investment providers are separately chosen)

– 34% Bundled (single provider of services and investment products)

457(b)65%

403(b)3%

401(k)14%

401(a)18%

Plan Type

Responses based on 12/31/2015 data.

42

NAGDCA 2016Perspectives in Practice - Investments

Mutualfunds

Collectivetrust funds

Separateaccounts

Other (ETF,etc.)

COV 457 0% 80.8% 18.2% 1.0%All Plans 46.2% 22.7% 25.5% 5.7%Assets > $500M < $2.5B 47.1% 20.4% 24.2% 8.3%Plan Participants > 60K 20.2% 32.0% 46.7% 1.1%

0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Percentage of total plan assets(Excludes Brokerage Window)

12

22 22.519

0

5

10

15

20

25

Number of Investments

Number of investment options plan currently offers

(Excludes brokerage window)

COV 457*

All Plans

Assets > $500 and $2.5B

Plan Participants > 60,000


*Suite of target date portfolios are counted as one investment option

43

NAGDCA 2016Perspectives in Practice - Fees

$28.

40

$30.

50 $69.

50$115

.30

$76.

50

$178

.30

$109

.30

$59.

20

$159

.60

$84.

40

$39.

20

$145

.40

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

$200.00

Investment Fees* Administrative Fees* Total Annual Cost

Average Annual Cost Per Participant

COV 457** All Plans Assets > $500M < $2.5B Plan Participants > 60K


*Investment fees: Factors contributing to fee variability include the plan sponsors’ use of passively and actively managed investment options and type of investment vehicle used. Administrative fees: Only direct participant costs are reflected in this comparison. **COVA 457 investment fees are based on the average investment costs at the plan level and are not reflective of actual individual participant costs. COV 457 plan participants pay only the annual recordkeeping fee for ICMA-RC, which is $30.50 per unique participant.

44

NAGDCA 2016Perspectives in Practice - Services

COV 457 All Plans(% that provide)

Assets > $500M and < $2.5B(% that provide)

Plan Participants > 60,000(% that provide)

Call Center Yes 97% 90% 93%

On-Site Services (enrollment, account reviews, education)

Yes 98% 100% 100%

Managed Accounts No 66% 55% 60%

Hardship/Emergency Withdrawals

Yes 82% 75% 100%

Loans No 61% 55% 71%

Financial Planning Services No 57% 65% 57%

Investment Advice – in-person

No 43% *8%

45%*0%

43%*0%

Investment Advice – online No 61%*24%

60%*16.7%

60%*11.1%

Investment Advice -telephone

No 54%*18.8%

50%*0%

53%*12.5%

* Plans that charge participants separately for use of service. Responses based on 12/31/2015 data.

45

NAGDCA 2016Perspectives in Practice – COV 457

$0.00$500.00

$1,000.00$1,500.00$2,000.00$2,500.00$3,000.00$3,500.00$4,000.00

Average Median

Annual Contributions

COV 457 All Plans

Multi-Employer Assets > $500M < $2.5B

Supplemental Plan Participants > 60K

0%10%20%30%40%50%60%70%

457 Participation Rates

Overall Participation Rate State Only

Higher Ed Only Local Employers Only


VRS COV 457 Plan Overview - VBgov.com...Jul 14, 2017 · VRS COV 457 Plan Overview Kelly L. Hiers, VRS DC Plans Administrator July 14, 2017. 2 Agenda ... 16 Plan Highlights ... Virginia

Documents