Changes to Univ California Retirement Plan

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CAMD
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Changes to Univ California Retirement Plan

Post by CAMD »

Woke up to an email with changes to the UC Retirement Plan options.

https://myucretirement.com/Managed/Asse ... ONLINE.pdf

Looks like some of the changes are simply nomenclature, while others may potentially be more substantial (changing and eliminating some fund options). But as overall trend, it looks like there are some substantial reductions in costs- so that's a good thing!

Curious what others think about these changes. Any downsides?
ofckrupke
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Re: Changes to Univ California Retirement Plan

Post by ofckrupke »

I would like to know how UC and Fidelity are talking their way around the IRC's limitation of investments under section 403(b) to mutual funds and annuity contracts, in order to use collective investment trusts for the international asset classes in the 403(b) plan specifically. Did I miss some liberalizing legislation?
student
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Re: Changes to Univ California Retirement Plan

Post by student »

I don't see any downside for you. Funds in category 1 are essentially just have a name change, Funds in category 2 now have lower expense so it is a plus, and funds in category 3 are redundant.
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sergeant
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Re: Changes to Univ California Retirement Plan

Post by sergeant »

A better thread title might be "Changes to University California Supplemental Retirement Plan", Your actual retirement plan hasn't changed since PEPRA was passed.
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mega317
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Re: Changes to Univ California Retirement Plan

Post by mega317 »

I'm with UC. I didn't read the whole thing and my thoughts are that I have total US stock, total international stock, and total bond so I couldn't care less. It looks like student is correct, and the automatic replacements for category 3 seem reasonable.
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CAMD
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Re: Changes to Univ California Retirement Plan

Post by CAMD »

I switched to the UC Pathway fund after their initial restructuring of the plan a few years back. Prior to that I had simply used Fidelity Spartan Index Funds.

Now that they have updated the expenses, it seems to be a better option to simply buy the individual components of the Pathway funds and then rebalance every year. You can cut expense ratio in half this way (approx. 0.1 for the Pathway vs 0.05% for the individual funds in the same ratios). Doing a yearly rebalance requires minimal work and saves a few bucks over the course of the plan.

Reminds me of the time about 20 years ago I figured out that I could save $0.15 by ordering the Grand Slam a la cart at our local IHOP knock off!
infotrader
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Re: Changes to Univ California Retirement Plan

Post by infotrader »

Since there are some UC folks here, I would like to share with you this:

I found a DC plan admin fee in my account dated 7/3 today, and then found the following statement in the Plan description. I did not see any public announcement for this. I called fidelity, I heard that the fee was previously absorbed by UC, and they stopped doing it. I think the repercussion is: people should rollover UC accounts to traditional IRA as soon as they retire. It is not much money, but you need to do it anyway at a point.

"Effective June 1, 2017, a quarterly fee ($8.75 for 2017) will be deducted from your account balance for administrative services. The administrative services fee covers expenses for recordkeeping services for your account(s), communications, financial education, internal UC staff support for the Plan, and other non-investment services. If you have more than one Retirement Savings Program account (for example, a 403(b) Plan account and a DC Plan account), you will be charged only one administrative services fee per quarter."

Also, there is a rebranding for fund under UC name soon, and it is a way for UC to save money.
stochastic
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Re: Changes to Univ California Retirement Plan

Post by stochastic »

infotrader wrote:Since there are some UC folks here, I would like to share with you this:

I found a DC plan admin fee in my account dated 7/3 today, and then found the following statement in the Plan description. I did not see any public announcement for this. I called fidelity, I heard that the fee was previously absorbed by UC, and they stopped doing it. I think the repercussion is: people should rollover UC accounts to traditional IRA as soon as they retire. It is not much money, but you need to do it anyway at a point.

"Effective June 1, 2017, a quarterly fee ($8.75 for 2017) will be deducted from your account balance for administrative services. The administrative services fee covers expenses for recordkeeping services for your account(s), communications, financial education, internal UC staff support for the Plan, and other non-investment services. If you have more than one Retirement Savings Program account (for example, a 403(b) Plan account and a DC Plan account), you will be charged only one administrative services fee per quarter."

Also, there is a rebranding for fund under UC name soon, and it is a way for UC to save money.
Not sure if it's a clear cut case to rollover, I left UC recently and won't be. The ER on UC domestic/international index funds are 0.005% and 0.01% respectively. If you have a portfolio of say 100k the quarterly fee is 0.035%. At vanguard/fidelity/ishares the ER would be something like 0.04/0.11 so you could come out ahead (and do even better for larger holdings). I'm staying for access to the DFA emerging markets fund and pleased that the ER has been cut in half.
sketchy9
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Re: Changes to Univ California Retirement Plan

Post by sketchy9 »

I also recently left employment, and I'm strongly leaning towards rolling over to an IRA. In the grand scheme, it doesn't make a huge amount of difference (the account maintenance fee will be $35/year, which isn't much), but it just seems to continue a trend of making life more difficult. I have a fair amount of the Vanguard REIT, so now instead of being able to just download quotes I'll have to manually enter them in. That's a pain. It was also a pain when, a few years ago, I had to open a BrokerageLink account to get the Spartan Index Funds I wanted. When I started employment there, in the dark ages, it was very flexible and had tons of funds available. It just seems more and more constrained nowadays, and I suspect it'll end up something like the TSP, which, while a great plan, isn't known for its wealth of choices. Add to that the maintenance fee, and I think it's time for me to move on.
sketchy9
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Re: Changes to Univ California Retirement Plan

Post by sketchy9 »

stochastic wrote:
infotrader wrote:Since there are some UC folks here, I would like to share with you this:

I found a DC plan admin fee in my account dated 7/3 today, and then found the following statement in the Plan description. I did not see any public announcement for this. I called fidelity, I heard that the fee was previously absorbed by UC, and they stopped doing it. I think the repercussion is: people should rollover UC accounts to traditional IRA as soon as they retire. It is not much money, but you need to do it anyway at a point.

"Effective June 1, 2017, a quarterly fee ($8.75 for 2017) will be deducted from your account balance for administrative services. The administrative services fee covers expenses for recordkeeping services for your account(s), communications, financial education, internal UC staff support for the Plan, and other non-investment services. If you have more than one Retirement Savings Program account (for example, a 403(b) Plan account and a DC Plan account), you will be charged only one administrative services fee per quarter."

Also, there is a rebranding for fund under UC name soon, and it is a way for UC to save money.
Not sure if it's a clear cut case to rollover, I left UC recently and won't be. The ER on UC domestic/international index funds are 0.005% and 0.01% respectively. If you have a portfolio of say 100k the quarterly fee is 0.035%. At vanguard/fidelity/ishares the ER would be something like 0.04/0.11 so you could come out ahead (and do even better for larger holdings). I'm staying for access to the DFA emerging markets fund and pleased that the ER has been cut in half.
Since all they did was separate out the maintenance fee from the ER, you really should add it back in to see your true ER. In the example above, the total ER would be 0.04% for the UC Domestic and 0.045% for the UC International funds on a $100k portfolio. Those percentages would obviously decrease as the portfolio value increased, but they could also raise the maintenance fee.

And, of course, if you're like me and don't use the UC funds it's just a straight fee increase with no benefit in the nominal ER.
playmisty
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Re: Changes to Univ California Retirement Plan

Post by playmisty »

sketchy9 wrote:
stochastic wrote:
infotrader wrote:Since there are some UC folks here, I would like to share with you this:

I found a DC plan admin fee in my account dated 7/3 today, and then found the following statement in the Plan description. I did not see any public announcement for this. I called fidelity, I heard that the fee was previously absorbed by UC, and they stopped doing it. I think the repercussion is: people should rollover UC accounts to traditional IRA as soon as they retire. It is not much money, but you need to do it anyway at a point.

"Effective June 1, 2017, a quarterly fee ($8.75 for 2017) will be deducted from your account balance for administrative services. The administrative services fee covers expenses for recordkeeping services for your account(s), communications, financial education, internal UC staff support for the Plan, and other non-investment services. If you have more than one Retirement Savings Program account (for example, a 403(b) Plan account and a DC Plan account), you will be charged only one administrative services fee per quarter."

Also, there is a rebranding for fund under UC name soon, and it is a way for UC to save money.
Not sure if it's a clear cut case to rollover, I left UC recently and won't be. The ER on UC domestic/international index funds are 0.005% and 0.01% respectively. If you have a portfolio of say 100k the quarterly fee is 0.035%. At vanguard/fidelity/ishares the ER would be something like 0.04/0.11 so you could come out ahead (and do even better for larger holdings). I'm staying for access to the DFA emerging markets fund and pleased that the ER has been cut in half.
Since all they did was separate out the maintenance fee from the ER, you really should add it back in to see your true ER. In the example above, the total ER would be 0.04% for the UC Domestic and 0.045% for the UC International funds on a $100k portfolio. Those percentages would obviously decrease as the portfolio value increased, but they could also raise the maintenance fee.

And, of course, if you're like me and don't use the UC funds it's just a straight fee increase with no benefit in the nominal ER.
Here's a link to the UC website where they mention the maintenance fee https://myucretirement.com/Resource/243

I had recently started to use the brokerage link option to access some of Fidelity's index funds, but this may cause me to switch back to the UC options.
08JanFreed
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Re: Changes to Univ California Retirement Plan

Post by 08JanFreed »

Re: Group 3 funds - The student is incorrect when stating "funds in category 3 are redundant."
The Balanced Growth Fund has a fixed asset mix unlike the Target funds where the asset allocation changes over time. I have invested 100% of my 403(b) money in the UC Balanced Growth Fund for over 10 years and I am delighted with the performance. As of March 31, 2017 the UC Balanced Growth fund had $2.6 Billion in assets so it is a popular fund. The brochure I received called "Fund Improvements Are on the Way" states that the group 3 funds are similar to other funds on the menu so I hope someone can tell me which funds they are referring to.

This is from UC Retirement Savings Program
Investment Performance and program Review as of March 31, 2017
http://www.ucop.edu/investment-office/_ ... _UCRSP.pdf

2017 lineup changes
Overview of Changes with Implementation Date
I. Eliminated Calvert Fund
– moved assets to Vanguard Social Fund 2/28/2017
II. Repackaging of Fidelity and DFA funds 9/30/2017
III. Renaming of 3 Vanguard funds 9/30/2017
I V. Eliminating the UC Balanced Growth and UC Global funds 9/30/2017
V. Hire 3rd party manager for Pathway 12/31/2017
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Re: Changes to Univ California Retirement Plan

Post by LadyGeek »

This thread is now in the Investing - Theory, News & General forum (general investing discussion - plan update).

08JanFreed, Welcome!
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student
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Re: Changes to Univ California Retirement Plan

Post by student »

08JanFreed wrote:Re: Group 3 funds - The student is incorrect when stating "funds in category 3 are redundant."
The Balanced Growth Fund has a fixed asset mix unlike the Target funds where the asset allocation changes over time. I have invested 100% of my 403(b) money in the UC Balanced Growth Fund for over 10 years and I am delighted with the performance.
When I said the "funds in category 3 are redundant," I simply meant one can obtain the desired asset allocation by using existing funds and rebalance annually.
08JanFreed
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Re: Changes to Univ California Retirement Plan

Post by 08JanFreed »

I learned something new from my Fidelity UC 403(b) representative today. The Department Of Labor Fiduciary Law took effect on June 9, 2017. UC picked the "education only" option so the Fidelity advisors who work in the "Employer Plan Department" can NOT give any investing advice to plan participants anymore. I asked about the "Brokerage link" option. He explained that I would need to liquidate my investments to all cash, move them to the "Brokerage Link" section and pick investments from a larger selection. I still would NOT be able to receive any investing advice from Fidelity advisors. I will probably do a rollover into an IRA at Fidelity, Vangaurd or somewhere else.
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