Cornell University, Ithaca, N.Y., is overhauling the investment options offered in its two defined contribution plans, according to a transition guide on the plans’ website.
The changes are effective Oct. 16 and affect participants that had Fidelity Investments as record keeper — one of the plans’ two record keepers, along with TIAA-CREF — and “are designed to simplify your investment choices for retirement savings, encourage better decision-making and help lower overall costs,” according to the transition guide.
The changes affect investment options in Tier III of the plans’ investment lineup, which currently consists of about 170 non-core investment options. Tier I, which consists of target-date funds managed by Fidelity Investments, and Tier II, which consists of 19 equity and bond investment options, will be unaffected. No information was available on any changes to TIAA’s investment lineup.
Among the new investment options are the American Funds EuroPacific Growth Fund, Cohen & Steers Capital Management’s Institutional Realty Fund, Eagle Asset Management’s Mid Cap Growth Fund, Federated Investments’ Short-Term Income Fund, Goldman Sachs Asset Management’s Small Cap Value Fund, MFS Investment Management’s Value Fund and International Value Fund, and PGIM Fixed Income’s Total Return Bond Fund. The final number of investment options was not provided. Participants who are invested in dozens of funds managed by Fidelity Investments will be automatically mapped to Fidelity target-date funds.
Cornell University is one of several U.S. universities that were targeted in 2016 by law firm Schlichter, Bogard & Denton over alleged mismanagement of their defined contribution plans. The lawsuit charged Cornell with breaching its fiduciary duty by charging participants excessive fees and investing their assets in high-cost and poor-performing funds. The status of the lawsuit could not be immediately learned.
The fees listed in the plans’ automatic mapping chart show significant reductions of fees, as high as 77 basis points.
As of Dec. 31, 2016, the Cornell University Retirement Plan for the Employees of the Endowed Colleges at Ithaca had $2 billion in assets — $1.5 billion with TIAA and $482 million with Fidelity — and the Cornell University Tax Deferred Annuity Plan had $1.3 billion in assets — $905 million with TIAA and $427 million with Fidelity — according to the university’s most recent Form 5500 filings.
Gordon Barger, senior director of benefit services and administration, could not be immediately reached to provide further information.