To help participants in the University System of Georgia's defined contribution program understand a dramatic restructuring, Lisa Joe and Jason Culp drove more than 3,900 miles throughout the state in a little more than two months.
There are 26 institutions within the Georgia system and 42 campuses. Ms. Joe and Mr. Culp visited each one, making more than 80 retirement plan presentations to explain the system's overhaul. Both are staff members of the board of regents of the University System of Georgia, Atlanta. She is director of retirement programs and services and he is retirement plan manager.
The key changes were consolidating record keepers, simplifying investment lineups and creating a single online portal for the system's multiple DC plans, which have aggregate assets of about $6 billion. The restructuring took place in May; the online portal went live in July.
The goal was "efficiency and ease of administration," Ms. Joe said.
The restructuring will reduce the total cost of plan fees for participants by $7 million annually, representing a 31% overall savings in plan cost, Mr. Culp said.
Of course, the university conducted an extensive information campaign via print and email, with targeted messages to employees in different plans, retired employees and those who had left the university system. However, Ms. Joe and Mr. Culp said they believed the personal touch was important. "We went to see every small school (in the university system) and every satellite office," Mr. Culp recalled. The smallest had eight employees.
The extensive restructuring of the DC plans earned Ms. Joe and Mr. Culp an Excellence Award.
"They should be commended for the personal level of attention they put into this project," one judge wrote. "It's clear from the time this project took that they put a lot of their personal effort into it."
Most of the restructuring affected the university's 403(b) plan and 457(b) plan, which serve 19,000 participants. The university's 401(a) plan has 56,000 participants.
Creating an online portal reduced paperwork significantly. "There were stacks and stacks of paper for HR doing manual inputs" of participant information, Mr. Culp said. "This put the power back in the participants' hands. It improved the timing for their putting money into their accounts."
The board of regents in 2000 had given the various institutions in the university system greater autonomy to develop and administer their own defined contribution plans. "Over the years, they didn't keep up with their responsibilities," Ms. Joe said. "Plans weren't well managed."
For example, she noted that one institution had 10 to 12 record keepers. Over time, there were more than 200 investment options spread among the various institutions' DC plans. "We realized the system wasn't working," she said.
The university system hired an outside auditor in 2014 to evaluate the management of a sprawling collection of DC plans. It found, among other things, "inconsistent or non-existent plan documents," "little or no oversight of investments" in the 403(b) and 457(b) plans, and "inaccuracies in plan information" provided to participants, Ms. Joe and Mr. Culp wrote in their application for the Excellence and Innovation Awards.
In addition, there was "no monitoring of vendors who are on campus" and "no system in place to monitor contribution limits, loan activity and hardship withdrawals," they added.
After establishing a retirement plan advisory committee in late 2014, university officials decided to merge the separate 403(b) and 457(b) plans at the 26 institutions into a single system with a single plan document and a single plan lineup.
They cut the number of record keepers to three from 13, choosing Fidelity Investments, TIAA-CREF and VALIC, which is now known as AIG ReTIAA-CREFvestments, TIAA-VALICand VALIC, which is now known as AIG Retirement Services.
(The 401(a) plan had previously consolidated its record keeping to these three firms.)
The restructuring also created a four-tier investment lineup for each of the plans, including the 401(a) plan. They offer a target-date fund, a core lineup of passively managed funds, a core lineup of actively managed funds and a self-directed brokerage account. The types and numbers of funds vary by record keeper, but each has no more than 24 investment options in their core accounts.
Reviewing the many changes, one judge wrote: "Their work will make it easier for other large systems to do the same."