Executives of TIAA-CREF are moving to delete the hyphen from the financial services organization's name by eliminating CREF as a corporate entity and making it a separate account within the restructured TIAA.
By making CREF an "insulated" separate account, "CREF and its assets will remain entirely separate from the TIAA general account and its assets," spokesman Chad Peterson said in an interview.
"This regulatory structure is consistent with the separate account structure used by other insurance companies that offer variable annuity products," Mr. Peterson said. "The proposed integration would not change the fundamental nature, investment objectives or foundational features of CREF."
The organizations are companion companies whose formal names are Teachers Insurance and Annuity Association of America and College Retirement Equities Fund. Since 2016, they have been marketed as TIAA.
"We expect the combination to provide a number of client benefits, including reduced expenses, while also allowing TIAA to streamline its business operations," Mr. Peterson said. TIAA-CREF has about $1.2 trillion in assets under management, of which CREF contributes $202 billion, he said.
However, the restructuring will take several years — Mr. Peterson didn't provide a timetable or details — due to certain legal requirements.
The first step is getting a law signed in New York state.
"The legislation is required because CREF — a retirement system formed under the New York Not-for-Profit Corporation Law — is not permitted to merge into TIAA — a New York insurance company — under current New York state law," Mr. Peterson said. CREF was established in 1952. TIAA was formed in 1918.
One restructuring bill was introduced in January in the state Senate. It was approved by the Insurance Committee but has remained in the Rules Committee since June.
A companion bill was introduced in February in the General Assembly. It remains in the Insurance Committee.
"Introducing legislation is the first of many steps," Mr. Peterson said. "Details could change over time, so it is premature to provide further details until matters are approved."
