Defined Contribution Plans Advisory Committee - 02 September 2021
Meeting MaterialsDefined Contribution Plans Advisory Committee
(DCPAC) Meeting 1111 E. Main Street, Pavilion Building
Richmond, VA 23219 Thursday, 9/2/2021 1:00 - 3:00 PM ET
I. Welcome II. Meeting Minutes
Adoption of the Minutes from the June 24, 2021 Meeting DCPAC
Minutes 06-24-2021 - Page 2
III. DCPAC Appointments Appointment to fill unexpired
term ending June 20, 2022 RBA for DCPAC Appointment
Motion to approve recommendation for appointment
RBA_AppointDCPAC_Member - Page 8
IV. Investments DC Investment Belief Statements
RBA for DC Investment Belief Statements RBA Revised DC Plan
Investment Belief Statements - Page 9 Annual
Investments Review Final DC Investments 9-2-21 slide deck -
Page 10
V. Administration
Administrative Reports & Communications DC Plans and
Hybrid Plan Update ORPHE 2021Q2 Administrative Summary -
Page 36
VI. Discussion of New Ideas VII. 2021 Meetings
2021 Meetings
December 2, 2021 at 1:00 p.m. ORPHE Annual Employer
Update
(not a meeting of the DCPAC)--September 30, 2021 Upcoming
poll for 2022 meetings
VIII. Adjournment IX. Appendix
For informational purposes only; will not be reviewed in detail
during the meeting, November 12, 2015 VRS DC Investment Beliefs -
Page 62 Annual DC Investment Review - FY 2021 -
Page 65 2021Q2 Administrative Summary [Appendix Slides]
- Page 101 Q2 2021 Quarterly Review - VRS Copy - FINAL_LORES -
Page 112 GOA July 2021 - Many Participants Do Not Understand
Fee Information - Page 195
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Defined Contribution Plans Advisory Committee Meeting Minutes
June 24, 2021 Page 1 of 6
Minutes
An electronic meeting, held in accordance with §2.2-3708.2(A)(3) of
the Code of Virginia and Chapter 56 of the 2020 Special Session I
Acts of Assembly, of the Defined Contribution Plans Advisory
Committee (DCPAC) of the VRS Board of Trustees convened
electronically on June 24, 2021, with the following members
present:
Committee Members:
Hon. J. Brandon Bell, Chair Dr. Susan Gooden Shannon Irvin Rick
Larson Brenda Madden David Winter
Members of the Board of Trustees: O’Kelly McWilliams, III John
Bennett Michael Disharoon William Garrett
VRS staff members in attendance: Trish Bishop, Steve Cerreto,
Jeanne Chenault, Michael Cooper, Jon Farmer, Josh Fox, Kelly Hiers,
KC Howell, Robert Irving, Ciara Lawson, Rebecca Nicholas, Joyce
Monroe, Laura Pugliese, Kristy Scott, Michael Scott, Jillian
Sherman, Jennifer Schreck, Peter Thompson, Rachel Webb and Cindy
Wilkinson.
Also in attendance were Lauren Albanese, Financial Investment News;
Adam Rosatelli, Virginia Senate Finance & Appropriations
Committee Staff; Kimberly Sarte, Joint Legislative Audit and Review
Commission Staff; Latosha Johnson, Virginia Department of Planning
and Budget Staff; and Denise Fortune, Voya The meeting convened at
1:00 p.m.
Ms. Sherman served as facilitator and walked participants through
the logistics of an electronic meeting. Ms. Sherman turned the
meeting over to Mr. Bell to call the meeting to order.
Chairman Bell welcomed committee members, board members, VRS staff,
representatives from other stakeholder groups and members of the
public. Mr. Bell noted that given the current circumstances related
to COVID-19, the DCPAC was unable to meet in person. However,
utilizing electronic means, the DCPAC could hold this meeting in
accordance with §2.2-3708.2(A)(3) of the Code of Virginia and
Chapter 56 of the 2020 Special Session I Acts of Assembly as it
relates to conducting business during the pandemic.
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Defined Contribution Plans Advisory Committee Meeting Minutes
June 24, 2021 Page 2 of 6
Mr. Bell took a roll call of each DCPAC member for attendance
purposes:
Dr. Gooden – Present Ms. Irvin – Present Mr. Larson – Present Ms.
Madden – Present Mr. Winter – Present Mr. Bell – Present
There was no public comment.
APPROVAL OF MINUTES
Upon a motion by Mr. Bell, with a second by Mr. Larson, the minutes
of the April 15, 2021 meeting were approved.
Mr. Bell asked for each Committee member to vote on the
motion:
Dr. Gooden - Aye Ms. Irvin – Aye Mr. Larson – Aye Ms. Madden – Aye
Mr. Winter – Aye Mr. Bell – Aye Trish Bishop, VRS Director,
informed the Committee that due to the nature of electronic
meetings, a change was made to the format of the presentation
materials to help facilitate discussion and focus attention on the
most important items .
DC PLANS INVESTMENTS UPDATE
Laura Pugliese, Portfolio Manager, Defined Contribution Plans,
shared with the Committee a new performance table that provided an
overview of the number of investment options that met or exceeded
their benchmarks based on the 1-, 3-, 5-, and 10-year periods in
the Unbundled DC Plan Structure and Bundled TIAA ORPHE Structure
for the period ending April 30, 2021. She informed the Committee
that the investment options in the Unbundled DC Plan Structure,
including the Target Date Portfolios and individual investment
options, as well as the investment options in the Bundled TIAA
ORPHE Structure are performing as expected.
The Committee found the new format helpful. Ms. Irvin inquired if
the information would be presented differently when investment
options did not meet or exceed the benchmark performance and noted
her preference for more information. Ms. Pugliese informed the
Committee that additional information could be provided to address
any underperforming funds.
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Defined Contribution Plans Advisory Committee Meeting Minutes
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Ms. Pugliese noted the difference in the number of total options
measured over a specific period can differ across the 1-, 3-, 5-
and 10-year periods because the total number of options are based
on investment options’ inception dates. She stated for example an
investment option may not have a 10- year performance history based
on its inception date resulting in the total number of investment
options within the 10-year category differing from the total number
of investment options in other periods. She also noted that
additional detailed information would be provided to the Committee
in those instances when investment options did not meet or exceed
the benchmark performance.
Ms. Pugliese shared with the Committee that the performance reports
for the Unbundled DC Plans and TIAA ORPHE for the period ending
April 30, 2021, were included the appendix.
Ms. Pugliese also thanked the Committee for their feedback and
suggested edits to the VRS DC Investment Belief Statements. She
noted an opportunity was provided to receive additional comments
during the June 24th meeting from the DCPAC prior to the September
21st meeting of the VRS Board of Trustees. There being no
additional comments at this time, Ms. Pugliese suggested an
extension to the deadline for additional comments up until July
16th and informed the Committee that a red lined version with any
additiona edits, a final clean document and request for board
action would be provided to the DCPAC at the September 2nd
meeting.
Following Ms. Pugliese’s report, the Committee took a five-minute
recess.
The meeting reconvened upon the following roll call vote:
Dr. Gooden – Present Ms. Irvin – Present Mr. Larson – Present Ms.
Madden – Present Mr. Winter – Present Mr. Bell - Present
ADMINISTRATIVE REPORTS AND COMMUNICATIONS UPDATE
Kelly Hiers, DC Plans Administrator, provided an update of the VRS
Defined Contribution Plans for the first quarter ending March 31,
2021. Ms. Hiers shared the total assets and accounts under
management across all DC plans as of March 31, 2021. Ms. Hiers
informed the Committee of recent initiatives, including the ICMA-RC
name change to MissionSquare Retirement. She noted that phase out
of the ICMA-RC name is expected to be completed in September 2021.
Ms. Hiers also provided an update regarding financial planning
services with MissionSquare, highlighting preliminary results since
the launch of the service. Ms. Hiers shared that VRS DC Plans was
the recipient of the 2021 Communicator Award of Distinction for its
COVID-19 Response Campaign. Ms. Hiers also provided an overview of
the COV 457 Splash Screen initiative to encourage eligible
employees to increase deferral elections and participation in the
plan. She noted the new feature utilizes enhanced active choice and
is presented to eligible employees behind the account login.
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Defined Contribution Plans Advisory Committee Meeting Minutes
June 24, 2021 Page 4 of 6
DC Plans and Hybrid Plan Update
Ms. Hiers provided an update on total assets and accounts in the
COV 457 and Virginia Cash Match plans through March 31, 2021. She
also provided a review of total assets and accounts in the Hybrid
Retirement Plan for the first quarter of 2021. Ms. Hiers provided
an overview of Hybrid Retirement Plan participation highlights,
noting the overall participation in Hybrid 457 voluntary
contributions and the number of hybrid plan members making
voluntary contributions. Ms. Hiers provided an overview of the
first quarter DC Plans goal focused on the Annual Review and
Benchmarking. The 2020 Annual Service Review with MissionSquare was
held electronically on April 21 and April 28, 2021. She shared with
the Committee that all 2020 performance standards were met and
highlighted several agenda topics addressed as well as current and
future initiatives, including a future initiative to increase
participation in the COV 457 Plan and an initiative designed to
allow employers to customize a pay increase campaign for their
employees. With respect to the COV 457 Participation initiative,
Dr. Gooden inquired if there was opportunity to further customize
the direct mail campaign communication materials to reach eligible
participants in underserved communities across the Commonwealth,
including employees in rural areas and people of color. Ms. Hiers
indicated that although information as it pertains to the race and
ethnicity of the DC Plans participant population was not available,
efforts could be made to target participants by gender and
potentially geographic region. Mr. Larson also shared efforts
underway in the higher education community to approach policies
through a diversity, equity, and inclusion (DEI) lens to ensure
information has a broad appeal, and inquired of measures taken by
staff to address diversity and inclusion in the absence of
information about race and ethnicity. Ms. Hiers informed the
Committee that efforts are made to ensure imagery used across
various communication channels is representative of diverse
populations and language content is crafted through a readability
and accessibility lens so the average person can read and
understand the information. Ms. Hiers provided an update of VRS DC
Plans’ participation with the Public Retirement Research Lab
(PRRL), a collaboration between the National Association of
Government Defined Contribution Administrators (NAGDCA) and the
Employee Benefit Research Institute (EBRI). Ms. Hiers shared with
the Committee some of the data analysis the joint venture has
produced, including a white paper published in February 2021 that
looks at the state of public sector plans based on PRRL research.
She also noted that a new benchmarking tool based on established
standards that are consistent across all participating record
keepers will allow for the plan to benchmark against public sector
peers that have a similar plan structure.
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ORPHE Update Ms. Hiers provided an overview by provider of total
ORPHE assets, participants and average balances for the first
quarter of 2021. She also gave an update on ORPHE provider
selections and provider initiatives for the first quarter of 2021.
Ms. Hiers informed the Committee of efforts underway to change and
streamline the Administrative Summary in order to share the most
relevant information with the DCPAC, including the use of
dashboards to measure changes and performance in cash flows,
contributions, deferral rates, distributions, participation rates,
and investment holdings. Ms. Hiers included in the meeting
materials the Q1 2021 Administrative Summary Appendix Supplement
for the Committee to review. The Committee thanked Ms. Hiers for
her presentation.
OTHER BUSINESS
Discussion of New Ideas
Mr. Larson discussed the opportunity for employers to assist DC
Plans with promoting strategic communication initiatives around key
objectives such as increasing contributions or participation rates.
Given the role the Committee plays, Mr. Larson also expressed
interest in being added to the email distribution for the monthly
Employer Update.
Staff welcomed the opportunity to leverage assistance from
employers to help promote and encourage employees to save more for
retirement and indicated that DCPAC members would be included on
the Employer Update email distribution.
Mr. Larson indicated that he would be willing to share and discuss
the findings from his organization’s exercise in reviewing
materials through a DEI lens. Staff indicated they would be
interested in receiving information and discussing their
findings.
UPCOMING DEFINED CONTRIBUTION PLANS ADVISORY COMMITTEE
MEETINGS
Mr. Bell confirmed the following DCPAC meeting dates for 2021: The
next meeting of the DCPAC will take place on September 2, 2021,
from 1:00 p.m. to 4:00 p.m., with a remaining meeting on December
2, 2021 from 1:00 p.m. to 4:00 p.m. The ORPHE Annual Employer
Update is scheduled for September 30th, as required by the DCPAC
Charter. This is not a DCPAC Committee meeting, however members may
attend if interested.
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June 24, 2021 Page 6 of 6
ADJOURNMENT Mr. Bell made a motion to adjourn the meeting. Ms.
Irvin seconded the motion. There being no further business, Mr.
Bell adjourned the meeting at 2:29 p.m. J. Brandon Bell, Chair
Defined Contribution Plans Advisory Committee
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Request for Board Action RBA 2021-09-____
Appointment of DCPAC member.
Requested Action
The Board appoints Meghan F. Coates to fill the unexpired term of
Kathleen T. Seay, which ends June 20, 2022.
Rationale for Requested Action
Ms. Seay informed the Defined Contribution Plans Advisory Committee
(DCPAC) that she would step down from the committee due to her
retirement. Ms. Seay’s term expires on June 20, 2022.
Meghan F. Coates has been director of the Henrico County Department
of Finance since August 1, 2020. She joined the Henrico County
staff in 2019 as deputy director of Finance and also served as
acting director of the department.
Prior to her service at Henrico County, Ms. Coates held several
positions with Chesterfield County, including budget analyst,
budget manager and director of budget and management. She earned a
bachelor’s degree from Roanoke College and a Master of Science from
Virginia Commonwealth University.
Ms. Coates is highly qualified and willing to be appointed to the
DCPAC, and it is the Board’s pleasure to appoint her to the
Committee.
Authority for Requested Action
Code of Virginia § 51.1-124.26 authorizes the Board to appoint such
other advisory committees as it deems necessary. Each member
appointment requires a two-thirds vote of the Board, and advisory
committee members serve at the pleasure of the Board.
The above action is approved.
_________________________________________________
________________________________ O’Kelly E. McWilliams, III, Chair
Date VRS Board of Trustees
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Request for Board Action RBA 2021-09-____
Approve Revisions to VRS Defined Contribution Plans Investment
Belief Statements.
Page 1 of 1 September 21, 2021
Requested Action
The VRS Board of Trustees approves revisions to the VRS Defined
Contribution Plans Investment Belief Statements.
Description/Background
In 2015 the Defined Contribution Plans Advisory Committee (DCPAC)
along with senior investment staff completed a rigorous process
with an outside consultant, Pension Consulting Alliance (PCA), to
codify into a legacy document the VRS Defined Contribution Plans
Investment Belief Statements. PCA surveyed all DCPAC members, and
key senior investment staff members regarding forty-six belief
statements under ten topical headings. Each survey participant
scored the statements and provided comments. PCA reviewed the
statement scores and looked for areas of agreement and areas of
disagreement. PCA then discussed the survey results with the
participants. The product of the discussions resulted in twelve
Defined Contribution Plans Investment Belief Statements that were
approved by the Board at its November 12, 2015 meeting.
The attached document reflects clarifications to the Defined
Contribution Plans Investment Belief Statements and the document
remains consistent with the Statements approved by the Board in
November 2015. The DCPAC has reviewed and discussed the changes and
supports their approval.
Rationale for Requested Action
The VRS Defined Contribution Plans Investment Belief Statements are
intended to help guide the strategic management of the VRS DC Plans
investment program. These Investment Belief Statements represent a
high-level framework for making decisions that often require
balancing multiple, often competing, factors and issues. The
Defined Contribution Plans Investment Belief Statements provide
context for VRS actions and reflect VRS values, with a focus on VRS
maintaining its long-term commitment to provide benefits to its
participants.
Authority for Requested Action
The Board adopts these Investment Belief Statements pursuant to its
duty to oversee investments under the standard set forth in Code of
Virginia § 51.1-124.30. Moreover, Code of Virginia § 51.1-124.22
authorizes the Board to promulgate regulations and procedures and
make determinations necessary to carry out the provisions of Title
51.1.
The above action is approved.
_________________________________________________
________________________________ O’Kelly E. McWilliams, III, Chair
Date VRS Board of Trustees
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DC Plans Investments September 2, 2021
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DC Plans Investment Belief Statements
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DC Plans Investment Belief Statements
• April 2021: The Committee and staff began a comprehensive review
of the November 12, 2015 investment belief statements
• June 2021: Initial edits discussed and incorporated into the
document with any additional edits to be included during the DCPAC
September 2021 meeting
• September 2021: Finalize additional edits; DCPAC vote to approve
revisions and recommend revisions to the Board • Additional edits
provide further clarification and
improve sentence structure
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Approved by the Board of Trustees: September 21, 2021
____________________________________________________________________
I. Introduction
The Virginia Retirement System (VRS) strives to be consistent
withfulfills the fiduciary obligations outlined in the Code of
Virginia, which require the VRS Board of Trustees (Board) to
discharge its duties with respect to the defined contribution (DC)
plans solely in the interest of the beneficiaries thereof and
affords the Board the opportunity to contract with private
corporations or institutions subject to the standards set forth in
§51.1-124.30 to provide investment products and services. The
Board, therefore, developed these DCDefined Contribution Plans
Investment Beliefs to guide the strategic management of the VRS DC
Plans investment program. These DC Investment Beliefsstatements
represent a high-level framework for making decisions that require
balancing multiple, often competing, factors and issues. In
addition, the DCDefined Contribution Plans Investment Beliefs
provide context for VRS actions and reflect VRS values, with a
focus on maintaining the long-term commitment to provide benefits
to participants.
II. VRS DC Investment Belief Statements
The Board developed the following DC Defined Contribution Plans
Investment Belief Statements to guide its decisions and provide an
anchor to the stated goals and objectives.
Goals and Objectives
A defined contribution plan provides participants is an individual
account program whereby participantsto exercise discretion over
their retirement assets in their accountsusing investment options
selected by VRS or selected by the participant through the
brokerage window. Each participant has his or her ownan individual
risk tolerance, time horizon, and investment objectives.
1. The primary objective of the VRS DC Plans is to provide
participants with an array of investment choices across a range of
asset classes, risk levels and investment strategies so
participants have the opportunity to develop a stream of retirement
income stream that complements the VRS Defined Benefit (DB) Plan or
other retirement income.
2. Given the vital role of the DC Plans in VRS’ primary retirement
plan offerings, appropriate governance of the DC Plans is
critical.
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a. The VRS Board of Trustees has overall fiduciary authority over
the DC investment program. To assist the Board in fulfilling its
duty the Board has appointed a Defined Contribution Plans Advisory
Committee to provide the Board with objective DC plan design and
investment advice.
b. Governing documents such as the Charter for the DC Plans
Advisory Committee,
DC Investment Policy Statements, Master Trusts and Plan Documents
delineate various roles and responsibilities amongof the Board, the
Committee, VRS Investment Sstaff and other interested
parties.
3. VRS is responsible for offering a reasonable range of
diversified portfolios to serve as the
Plans’ default investment option and for participants thatwho do
not have the time, desire, or expertise to design and manage a
diversified portfolio.
4. To the best extent possible, VRS will explore and implement
capabilities, controls, and
procedures that are transferrable from VRS’ DB plan activities to
VRS’ DC plans activities, particularly with respect to
investments.
a. Well-structured alternative investments can enhance an
individual participant’s portfolio risk/reward profile. VRS will
examine methods for providing qualifying alternative investment
options into its menu of pre-mixed diversified investment options,
where feasible.
5. VRS will monitor and evaluate DC plans industry best practices
and incorporate
them where feasible to seek to enhance plan outcomes as
demonstrated by qualitative and quantitative measures.
6. Controlling and managing costs is critical to a successful DC
plan investment program.
a. Investment options should provide competitive net-of-cost risk
adjusted returns.
b. The DC Plans’ costs should be transparent to the individual
participant.
c. Given VRS’ large-scale presence in the institutional
marketplace, it is beneficial
for the individual participant to access VRS’ expertise and
capabilities.
d. Unbundling of DC administration and investment activities should
lead to improved cost management.
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7. Investment option offerings mustshould present be wide-ranging
options to accommodate participants’ varying investment knowledge
and/or interest in managing their investments andwhile addressing
the differences betweenamong participants at varying career
stages.who are early on or in the midst of their careers and those
who are nearing or in retirement.
a. Individuals mustshould be educated to recognize that their
specific
programsinvestment plans require a long-term, multi-decade
planning/investment horizon.
b. Investment horizons are unique to eachthe individual participant
and may extend
beyond the accumulation phase into the retirement (decumulation)
phase.
c. In keeping with industry best practice, the Aadministrative and
investment aspects of the individual’s overall programinvestment
plan need toshould be unbundled/disaggregated to allow for maximum
design flexibility.
d. VRS will make a concerted effortshould continue efforts to
contact eligible to
reach out to employees who are eligible but not participating in
the VRS DC plans to provide anbuild awareness of theplan benefits.
available through the plans.
8. To provide investment flexibility to individual participants, a
self-directed brokerage window can be an effective feature of the
VRS DC Plans. The self-
directed brokerage window that VRS provides in the VRS DC Plans can
serve as an effective investment tool for individual
participants.
9. Managing the decumulation of retirement assets is critical. VRS
will
explore viable solutions to assist participants in managing this
area.VRS should continue to explore viable solutions to assist
participants in managing the critically important task of
decumulation of retirement assets.
10. Participant investment education is a valuable to participants
and necessary for a successful programresource to participants and
can enhance a successful program.
a. Participant investment education Minimum education should cover
certain key topics consistent with industry best practices
including:
i. Identifying keyprincipal retirement planning risks (see Belief
Statement 11).
ii. Understanding the accumulation phase vs.versus the decumulation
phase.
Formatted: Indent: Left: 0.25", First line: 0.33"
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iv. Considering the impact of non-plan (outside) assets.
v. Considering other potential sources of retirement income.
b. VRS should also exploreconsider making available various
investment advice and financial planning solutions/products
available to participants.
11. The VRS should seek to inform DC plan participants about
keyfundamental retirement planning risks.
a. Shortfall risk – Tthe probability or potential that an
individual may not meet his/her long-term retirement savings
goal.
b. Longevity risk – Tthe potential that an individual may outlive
his/her retirement assets. c. Drawdown risk – Tthe impact that
short-term declines in a portfolio values can have on long-term
valuessuccess.
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Approved by the Board of Trustees: September 21, 2021
____________________________________________________________________
I. Introduction
The Virginia Retirement System (VRS) fulfills the fiduciary
obligations outlined in the Code of Virginia, which require the VRS
Board of Trustees (Board) to discharge its duties with respect to
the defined contribution (DC) plans solely in the interest of the
beneficiaries thereof and affords the Board the opportunity to
contract with private corporations or institutions subject to the
standards set forth in §51.1-124.30 to provide investment products
and services. The Board, therefore, developed these Defined
Contribution Plans Investment Beliefs to guide the strategic
management of the VRS DC Plans investment program. These statements
represent a high-level framework for making decisions that require
balancing multiple, often competing, factors and issues. In
addition, the Defined Contribution Plans Investment Beliefs provide
context for VRS actions and reflect VRS values, with a focus on
maintaining the long-term commitment to provide benefits to
participants.
II. VRS DC Investment Belief Statements
The Board developed the following Defined Contribution Plans
Investment Belief Statements to guide decisions and provide an
anchor to the stated goals and objectives.
Goals and Objectives
A defined contribution plan provides participants an individual
account to exercise discretion over their retirement assets using
investment options selected by VRS or selected by the participant
through the brokerage window. Each participant has an individual
risk tolerance, time horizon, and investment objectives.
1. The primary objective of the VRS DC Plans is to provide
participants with an array of investment choices across a range of
asset classes, risk levels and investment strategies so
participants have the opportunity to develop a retirement income
stream that complements the VRS Defined Benefit (DB) Plan or other
retirement income.
2. Given the vital role of the DC Plans in VRS’ primary retirement
plan offerings, appropriate governance of the DC Plans is
critical.
a. The VRS Board of Trustees has overall fiduciary authority over
the DC investment program. To assist the Board in fulfilling its
duty the Board has
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appointed a Defined Contribution Plans Advisory Committee to
provide the Board with objective DC plan design and investment
advice.
b. Governing documents such as the Charter for the DC Plans
Advisory Committee,
DC Investment Policy Statements, Master Trusts and Plan Documents
delineate various roles and responsibilities of the Board, the
Committee, VRS staff and other interested parties.
3. VRS is responsible for offering a reasonable range of
diversified portfolios to serve as the
Plans’ default investment option and for participants who do not
have the time, desire, or expertise to design and manage a
diversified portfolio.
4. To the extent possible, VRS will explore and implement
capabilities, controls, and
procedures that are transferrable from VRS’ DB plan activities to
VRS’ DC plans activities, particularly with respect to
investments.
a. Well-structured alternative investments can enhance an
individual participant’s portfolio risk/reward profile. VRS will
examine methods for providing qualifying alternative investment
options into its menu of pre-mixed diversified investment options,
where feasible.
5. VRS will monitor and evaluate DC plans industry best practices
and incorporate
them where feasible to seek to enhance plan outcomes as
demonstrated by qualitative and quantitative measures.
6. Controlling and managing costs is critical to a successful DC
plan investment program.
a. Investment options should provide competitive net-of-cost risk
adjusted returns.
b. The DC Plans’ costs should be transparent to the individual
participant.
c. Given VRS’ large-scale presence in the institutional
marketplace, it is beneficial
for the individual participant to access VRS’ expertise and
capabilities.
d. Unbundling of DC administration and investment activities should
lead to improved cost management.
7. Investment offerings should present wide-ranging options to
accommodate participants’
varying investment knowledge and/or interest in managing their
investments while addressing the differences among participants at
varying career stages.
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a. Individuals should be educated to recognize that their specific
investment plans
require a long-term, multi-decade planning/investment
horizon.
b. Investment horizons are unique to the individual participant and
may extend beyond the accumulation phase into the retirement
(decumulation) phase.
c. In keeping with industry best practice, the administrative and
investment aspects
of the individual’s overall investment plan should be
unbundled/disaggregated to allow for maximum design
flexibility.
d. VRS should continue efforts to contact eligible employees who
are not
participating in the VRS DC plans to build awareness of plan
benefits.
8. The self-directed brokerage window that VRS provides in the VRS
DC Plans can serve as an effective investment tool for individual
participants.
9. VRS should continue to explore viable solutions to assist
participants in managing the critically important task of
decumulation of retirement assets.
10. Participant investment education is a valuable resource to
participants and can enhance a successful program.
a. Participant investment education should cover certain key topics
consistent
with industry best practices including:
i. Identifying principal retirement planning risks (see Belief
Statement 11).
ii. Understanding the accumulation phase versus the decumulation
phase.
iii. Analyzing the costs associated with various investment
options.
iv. Considering the impact of non-plan (outside) assets.
v. Considering other potential sources of retirement income.
b. VRS should also consider making various investment advice and
financial planning solutions/products available to
participants.
11. VRS should seek to inform DC plan participants about
fundamental retirement planning risks.
a. Shortfall risk – The probability or potential that an individual
may not meet his/her
Master Page # 19 of 318 - Defined Contribution Plans Advisory
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4
long-term retirement savings goal.
b. Longevity risk – The potential that an individual may outlive
his/her retirement assets. c. Drawdown risk – The impact that
short-term declines in a portfolio can have on long-term
values.
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Annual Investments Review Highlights
Master Page # 21 of 318 - Defined Contribution Plans Advisory
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DCPAC Investment Duties and Responsibilities
• Review trends and identify best practices
• Assist staff in identifying potential asset classes and
investment strategies
• Perform annual comprehensive review of investment program with
emphasis on three-year and five-year periods
• Review VRS Defined Contribution Plans Investment Belief
Statements
• Review DC Plans Investment Policy Statements
• Provide recommendations to the Board as needed
Master Page # 22 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Annual Investments Review Highlights
• The complete annual investments review package is found in the
Appendix
• Recommended changes to the VRS Defined Contribution Plans
Investment Belief Statements
• Staff does not have any recommended changes to the two DC
investment policy statements (unbundled & bundled)
• As of June 30, 2021 DC plans assets overseen by investment staff
totaled $6.6 billion ($6.3 billion unbundled DC plans; $333.4
million TIAA ORPHE
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Annual Investments Review Highlights
• An unbundled DC plan structure provides investment staff with
maximum flexibility whereas a bundled plan structure does not
provide the same flexibility • TIAA operates as a bundled plan
provider for the ORPHE
• No changes were made to the unbundled DC plans investment
platform
• No changes were made to the bundled TIAA ORPHE investment
platform
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Unbundled DC Plans
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Unbundled DC Plans Data for period ending June 30, 2021
Returns 3 Year Statistics 5 Year Statistics
Fund Type
Standard Deviation
Sharpe Ratio
Tracking Error
Information Ratio
Standard Deviation
Sharpe Ratio
Tracking Error
Information Ratio
% % % % % % % % Money Market Fund Capital 0.08 0.18 1.44 1.36 n/a
n/a n/a n/a n/a n/a n/a n/a FTSE 3 Month Treasury Bill Index
Preservation 0.08 1.31 1.14 n/a n/a n/a n/a n/a n/a Excess Return
0.10 0.13 0.22 Stable Value Fund1 Capital 0.24 1.89 2.23 2.09 n/a
n/a n/a n/a n/a n/a n/a n/a Custom Benchmark Preservation 0.45 1.54
1.66 n/a n/a n/a n/a n/a n/a Excess Return (Book Value) 1.44 0.69
0.43 eVestment Alliance Stable Value Fixed Income Universe 2 1.89
2.28 2.14 Bond Fund Passive 0.03 -0.30 5.39 3.07 3.50 1.17 0.04 n/a
3.27 0.59 0.03 n/a Bloomberg Barclays U.S. Aggregate Bond Index
-0.33 5.34 3.03 3.49 1.16 3.25 0.58 Excess Return 0.03 0.05 0.04
MSTAR Ave: IntermediateTerm Bond 0.77 5.26 3.02 Inflation-Protected
Bond Fund Passive 0.03 6.61 6.63 4.31 3.98 1.34 0.07 n/a 3.56 0.89
0.06 n/a Bloomberg Barclays U.S. TIPS Index 6.51 6.53 4.17 3.94
1.33 3.54 0.86 Excess Return 0.10 0.10 0.14 MSTAR Ave:
Inflation-Protected Bond 7.04 5.93 3.88 High-Yield Bond Fund Active
0.40 17.45 7.77 7.50 9.13 0.71 1.42 0.27 7.26 0.88 1.19 0.43 ICE
BofA U.S. HY BB-B Constrained Index 13.44 7.39 6.99 8.84 0.69 7.04
0.83 Excess Return 4.01 0.38 0.51 MSTAR Ave: High-Yield Bond 14.69
6.16 6.21 Stock Fund Passive 0.01 40.84 18.73 17.69 18.53 0.94 0.03
n/a 14.99 1.10 0.03 n/a S&P 500 Index 40.79 18.67 17.65 18.52
0.94 14.99 1.10 Excess Return 0.05 0.06 0.04 MSTAR Ave: Large Blend
40.47 16.77 16.15 Small/Mid-Cap Stock Fund Passive 0.02 57.81 15.26
16.40 24.51 0.57 0.09 n/a 19.79 0.77 0.08 n/a Russell 2500 Index
57.79 15.24 16.35 24.50 0.57 19.78 0.77 Excess Return 0.02 0.02
0.05 MSTAR Ave: Mid-Cap Blend 50.44 13.15 13.75 International Stock
Fund Passive 0.06 37.37 9.69 11.44 17.97 0.47 0.95 n/a 14.85 0.69
0.94 n/a MSCI ACWI ex-U.S. IMI Index (linked to MSCI World ex-U.S.
Index July 2012 - July 2016 and prior to July 2012 the MSCI EAFE
Index)
37.18 9.42 11.17
18.00 0.45 14.86 0.68 Excess Return 0.19 0.27 0.27 MSTAR Ave:
Foreign Large Blend 33.76 8.50 10.08 Global Real Estate Fund
Passive 0.08 34.51 7.32 5.87 19.55 0.31 0.32 n/a 16.15 0.29 0.41
n/a FTSE EPRA/NAREIT Developed Index 33.55 6.39 4.98 19.69 0.26
16.26 0.24 Excess Return 0.96 0.93 0.89 MSTAR Ave: Global Real
Estate 32.33 7.75 6.57
*Annualized. 1 Stable value funds typically track the general
movements of interest rates with a lag. It is expected that when
interest rates are falling stable value yields do not fall as
quickly and when interest rates are rising stable value yields do
not rise as quickly. 2 eVestment Alliance universe returns are
gross of investment management fees and net of wrap fees. The
Stable Value Fund returns are net of all fees.
Data provided by BlackRock, Galliard, MissionSquare and Zephyr
StyleADVISOR.
Page 1 of 2
Master Page # 26 of 318 - Defined Contribution Plans Advisory
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Unbundled DC Plans Data for period ending June 30, 2021
Returns 3 Year Statistics 5 Year Statistics
Fund Type
Standard Deviation
Sharpe Ratio
Tracking Error
Information Ratio
Standard Deviation
Sharpe Ratio
Tracking Error
Information Ratio
% % % % % % % % Retirement Portfolio Passive 0.08 15.80 9.42 7.82
7.81 1.04 0.14 n/a 6.33 1.06 0.13 n/a Custom Benchmark 15.77 9.36
7.77 7.81 1.03 6.33 1.05 Excess Return 0.03 0.06 0.05 Target Date
2025 Portfolio Passive 0.08 20.20 10.32 9.46 10.17 0.88 0.19 n/a
8.26 1.01 0.18 n/a Custom Benchmark 20.17 10.25 9.38 10.18 0.88
8.26 1.00 Excess Return 0.03 0.07 0.08 Target Date 2030 Portfolio
Passive 0.08 25.05 11.42 10.68 12.19 0.83 0.24 n/a 9.86 0.97 0.23
n/a Custom Benchmark 25.01 11.34 10.57 12.20 0.82 9.87 0.96 Excess
Return 0.04 0.08 0.11 Target Date 2035 Portfolio Passive 0.08 29.86
12.49 11.85 14.11 0.79 0.29 n/a 11.39 0.94 0.27 n/a Custom
Benchmark 29.81 12.39 11.72 14.14 0.78 11.40 0.93 Excess Return
0.05 0.10 0.13 Target Date 2040 Portfolio Passive 0.08 34.35 13.42
12.88 15.89 0.76 0.33 n/a 12.81 0.92 0.31 n/a Custom Benchmark
34.26 13.30 12.74 15.92 0.75 12.82 0.91 Excess Return 0.09 0.12
0.14 Target Date 2045 Portfolio Passive 0.08 37.97 14.18 13.63
17.20 0.75 0.37 n/a 13.84 0.90 0.34 n/a Custom Benchmark 37.85
14.04 13.47 17.24 0.74 13.86 0.89 Excess Return 0.12 0.14 0.16
Target Date 2050 Portfolio Passive 0.08 39.86 14.59 13.97 17.82
0.75 0.38 n/a 14.32 0.90 0.35 n/a Custom Benchmark 39.73 14.44
13.81 17.85 0.74 14.34 0.88 Excess Return 0.13 0.15 0.16 Target
Date 2055 Portfolio Passive 0.08 40.14 14.67 14.01 17.88 0.75 0.39
n/a 14.37 0.90 0.35 n/a Custom Benchmark 40.07 14.53 13.86 17.94
0.74 14.41 0.88 Excess Return 0.07 0.14 0.15 Target Date 2060
Portfolio Passive 0.08 40.11 14.66 14.00 17.89 0.75 0.39 n/a 14.37
0.90 0.36 n/a Custom Benchmark 40.07 14.53 13.86 17.94 0.74 14.41
0.88 Excess Return 0.04 0.13 0.14 Target Date 2065 Portfolio
Passive 0.08 40.02 N/A N/A n/a n/a n/a n/a n/a n/a n/a n/a Custom
Benchmark 40.06 N/A N/A n/a n/a n/a n/a Excess Return -0.04 N/A
N/A
*Annualized.
Data provided by BlackRock, Galliard, MIssionSquare and Zephyr
StyleADVISOR.
________________________________________________________________________________
Unbundled DC Plans - Fund Annual Operating Expenses Information as
of June 30, 2021
Investment Option1 Investment Manager Type
Investment Management Costs
Wrap & Acquired Fund2
Total Annual Expense Ratio
Expense Ratio YOY Change
Money Market Fund BlackRock Capital Preservation 0.080000% n/a
0.000500% n/a 0.08% 0.00%
Stable Value Fund Galliard Capital Preservation (Book Value)
0.066000% 0.176000% n/a n/a 0.24% -0.01%
Bond Fund BlackRock Passive 0.030000% n/a 0.003500% n/a 0.03% 0.00%
Inflation-Protected Bond Fund BlackRock Passive 0.020000% n/a
0.007200% n/a 0.03% 0.00% High-Yield Bond Fund JPMorgan Active
0.380000% n/a 0.010000% 0.005001% 0.40% 0.00% Stock Fund BlackRock
Passive 0.007500% n/a 0.001200% 0.004686% 0.01% 0.00% Small/Mid-Cap
Stock Fund BlackRock Passive 0.015000% n/a 0.004000% 0.004380%
0.02% 0.00% International Stock Fund BlackRock Passive 0.040000%
n/a 0.017800% 0.004507% 0.06% 0.00% Global Real Estate Fund
BlackRock Passive 0.070000% n/a 0.009500% 0.004284% 0.08% -0.01%
Retirement Portfolio BlackRock Passive 0.070000% n/a 0.005200% n/a
0.08% 0.00% Target Date 2025 Portfolio BlackRock Passive 0.070000%
n/a 0.006200% n/a 0.08% 0.00% Target Date 2030 Portfolio BlackRock
Passive 0.070000% n/a 0.006900% n/a 0.08% 0.00% Target Date 2035
Portfolio BlackRock Passive 0.070000% n/a 0.007700% n/a 0.08% 0.00%
Target Date 2040 Portfolio BlackRock Passive 0.070000% n/a
0.008400% n/a 0.08% 0.00% Target Date 2045 Portfolio BlackRock
Passive 0.070000% n/a 0.009100% n/a 0.08% 0.00% Target Date 2050
Portfolio BlackRock Passive 0.070000% n/a 0.009400% n/a 0.08% 0.00%
Target Date 2055 Portfolio BlackRock Passive 0.070000% n/a
0.009400% n/a 0.08% 0.00% Target Date 2060 Portfolio BlackRock
Passive 0.070000% n/a 0.009600% n/a 0.08% 0.00% Target Date 2065
Portfolio BlackRock Passive 0.070000% n/a 0.009600% n/a 0.08% 0.00%
VRSIP VRS Active n/a n/a n/a n/a 0.60% 0.01%
1 There are no short-term trading redemption costs associated with
any of the investment options. 2 Includes custody, audit and other
specific investment option related administrative costs.
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Defined Contribution Plans Advisory Committee Report Unbundled
Plans Investment Performance
Below are the totals for the period ending June 30, 2021. Returns
greater than one year are annualized.
Investment Options 1 Month 3 Months YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs /
Since
Inception1
Value 27
Option 28
Do-It-For-Me: Target Date Portfolios3,4 % % % % % % % % $ % %
Retirement Portfolio 0.98 4.16 4.53 15.80 9.42 7.82 6.32 0.08
8/1/05 437,429,436 7.0 5.7 Custom Benchmark 0.96 4.14 4.52 15.77
9.36 7.77 6.27 Target Date 2025 Portfolio 1.02 4.73 6.00 20.20
10.32 9.46 7.52 0.08 7/5/06 339,487,336 5.4 6.4 Custom Benchmark
1.00 4.70 6.00 20.17 10.25 9.38 7.46 Target Date 2030 Portfolio
1.07 5.39 7.69 25.05 11.42 10.68 8.25 0.08 8/1/05 326,388,428 5.2
8.0 Custom Benchmark 1.04 5.37 7.69 25.01 11.34 10.57 8.16 Target
Date 2035 Portfolio 1.12 6.02 9.34 29.86 12.49 11.85 8.94 0.08
7/5/06 330,664,77524 5.3 9.2 Custom Benchmark 1.08 6.00 9.32 29.81
12.39 11.72 8.82 Target Date 2040 Portfolio 1.16 6.58 10.83 34.35
13.42 12.88 9.52 0.08 8/1/05 283,042,371 4.5 9.2 Custom Benchmark
1.11 6.57 10.80 34.26 13.30 12.74 9.40 Target Date 2045 Portfolio
1.19 7.05 12.05 37.97 14.18 13.63 9.98 0.08 7/5/06 268,746,971 4.3
10.4 Custom Benchmark 1.14 7.03 12.00 37.85 14.04 13.47 9.84 Target
Date 2050 Portfolio 1.21 7.30 12.71 39.86 14.59 13.97 10.23 0.08
9/30/07 265,900,700 4.2 12.0 Custom Benchmark 1.15 7.27 12.63 39.73
14.44 13.81 10.10 Target Date 2055 Portfolio 1.21 7.34 12.82 40.14
14.67 14.01 10.40 0.08 5/19/10 315,250,980 5.0 16.2 Custom
Benchmark 1.16 7.32 12.76 40.07 14.53 13.86 10.25 Target Date 2060
Portfolio 1.21 7.34 12.80 40.11 14.66 14.00 10.61 0.08 11/17/14
136,786,705 2.2 11.9 Custom Benchmark 1.16 7.31 12.75 40.07 14.53
13.86 10.46 Target Date 2065 Portfolio 1.21 7.34 12.77 40.02 n/a
n/a 21.01 0.08 9/23/19 6,704,824 0.1 1.5 Custom Benchmark 1.16 7.31
12.75 40.06 n/a n/a 21.08
Help-Me-Do-It: Individual Options Money Market Fund5,6 0.01 0.04
0.08 0.18 1.44 1.36 0.72 0.08 11/1/99 92,914,908 1.5 2.0 FTSE 3
Month Treasury Bill Index 0.00 0.01 0.03 0.08 1.31 1.14 0.60 Yield
as of 06/30/21: 0.15%7
Stable Value Fund8,9 0.13 0.40 0.83 1.89 2.23 2.09 1.98 0.24 2/1/95
631,966,531 10.1 7.7 Custom Benchmark10 0.05 0.13 0.24 0.45 1.54
1.66 1.44 Yield as of 06/30/21: 1.55%11
Bond Fund12 0.71 1.84 -1.62 -0.30 5.39 3.07 3.45 0.03 11/1/99
178,239,006 2.8 3.7 Bloomberg Barclays U.S. Aggregate Bond Index
0.70 1.83 -1.60 -0.33 5.34 3.03 3.39 Inflation-Protected Bond
Fund13 0.60 3.26 1.75 6.61 6.63 4.31 3.50 0.03 7/30/02 54,574,447
0.9 1.5 Bloomberg Barclays U.S. TIPS Index 0.61 3.25 1.73 6.51 6.53
4.17 3.40 High-Yield Bond Fund14 1.58 3.45 6.12 17.45 7.77 7.50
6.84 0.40 5/31/04 51,466,274 0.8 1.8 ICE BofA U.S. High-Yield BB-B
Constrained Index 1.27 2.57 2.88 13.44 7.39 6.99 6.43 Stock Fund15
2.33 8.56 15.27 40.84 18.73 17.69 14.88 0.01 11/1/99 1,565,720,012
25.0 10.7 S&P 500 Index 2.33 8.55 15.25 40.79 18.67 17.65 14.84
Small/Mid-Cap Stock Fund16 1.17 5.43 16.96 57.81 15.26 16.40 12.90
0.02 11/1/99 488,286,015 7.8 6.1 Russell 2500 Index17 1.18 5.44
16.97 57.79 15.24 16.35 12.81 International Stock Fund18 -0.50 5.68
9.69 37.37 9.69 11.44 6.44 0.06 11/1/99 233,358,779 3.7 5.0 MSCI
ACWI ex-U.S. IMI Index19 -0.64 5.60 9.58 37.18 9.42 11.17 6.12
Global Real Estate Fund20 0.83 9.39 16.06 34.51 7.32 5.87 8.23 0.08
10/1/02 109,784,855 1.8 3.2 FTSE EPRA/NAREIT Developed Index21 0.78
9.17 15.50 33.55 6.39 4.98 7.54 VRSIP22 0.89 6.40 7.95 23.46 10.41
10.23 8.47 0.60 7/1/08 49,753,30725 0.8 0.5 VRS Custom Benchmark23
1.21 4.99 7.41 23.33 10.04 10.12 8.06
________________________________________________________________________________
1 If the fund was not in existence for 10 years, fund and
corresponding benchmark returns shown represent performance from
the since inception date. 2 Fund investment advisers may
voluntarily agree to waive expenses. Expense waivers may be
terminated at any time. 3 The Target Date Portfolios invest in
units of BlackRock's LifePath Index Funds O. The LifePath Index
Funds O invest in the master LifePath Index Funds F. The inception
dates shown reflect the inception dates of the master LifePath
Funds F.
The inception dates for most LifePath Funds O were 12/9/11. The
2055 Fund's O inception data was 12/12/11, the 2060 Fund's O
inception date was 1/2/15, and the 2065 Fund's O inception date was
9/23/2019. Returns prior to Funds' O inception dates are those of
the Funds F with deductions taken for Funds O investment management
fees.
4 Benchmarks are calculated using blended returns of third-party
indices that proportionately reflect the respective weightings of
the Portfolios' asset classes. Weightings are adjusted quarterly to
reflect the Portfolios' asset allocation shifts over time. Indices
currently used to calculate the custom benchmarks are: Russell 1000
Index, Russell 2000 Index, MSCI ACWI Ex-U.S. IMI Index, Bloomberg
Barclays U.S. Aggregate Bond Index, Bloomberg Barclays U.S. TIPS
Index, FTSE EPRA/NAREIT Developed Index and the Bloomberg Commodity
Index Total Return.
5 The Money Market Fund invests in units of BlackRock's Short-Term
Investment Fund W. The inception data shown reflects the VRS
Defined Contribution Plan's investment strategy inception date.
Returns of the Fund from July 2012 through July 2016 represent
performance of other BlackRock funds. Returns prior to July 2012
represent performance by the previous investment manager, State
Street Global Advisors. All performance returns are linked.
6 An investment in a money market fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of
your investment it is possible to lose money by investing in the
Fund.
7 The current yield more closely reflects the earnings of the Fund
than the total net return information. 8 The inception date shown
reflects the VRS Defined Contribution Plans investment strategy
inception date. 9 Direct transfers from the Stable Value Fund to
the Money Market Fund (considered a "competing fund") are not
permitted. Before transferring to the Money Market Fund,
participants must first transfer to a "non-competing" fund for 90
days.
Optional Retirement Plan for Higher Education (ORPHE) participants
who want to make a direct exchange to another ORPHE provider, must
first exchange to a "non-competing" fund on the MissionSquare
Retirement investment platform for 90 days. 10 Effective August
2016, the benchmark represents a hypothetical return generated by
the monthly yields of actively traded U.S. Treasuries based on [50%
2- year maturity + 50% 3- year maturity] plus an annualized spread
of 0.25% and is
representative of the Fund's expected return profile, given how the
Fund is managed and book value accounting treatment. Prior to
August 2016 the custom benchmark was based on the monthly yield of
actively traded U.S Treasuries with a 3-year maturity plus an
annualized spread of 0.50%. The benchmark returns are linked.
11 The current yield more closely reflects the earnings of the Fund
than the total net return information. There is no guarantee that
the Fund will earn the current yield in the future. 12 The Bond
Fund invests in units of BlackRock's U.S. Debt Index Fund M. The
U.S. Debt Index Fund M invests in the master Fund F. The inception
date shown reflects the VRS Defined Contribution Plans
strategy
inception date. Performance returns are linked to the previous
investment manager. Returns prior to July 2012 represent
performance by State Street Global Advisors. 13 The
Inflation-Protected Bond Fund invests in units of BlackRock's U.S.
Treasury-Inflation Protected Securities Fund M. The U.S. Treasury
Inflation-Protected Securities Fund M invests in the master Fund F.
The inception
date shown reflects the inception date of the master Fund F. The
inception date of BlackRock's U.S. Treasury Inflation-Protected
Securities Fund M was July 20, 2012. Returns prior to Fund M's
inception date are those of Fund F with deductions taken for Fund
M's investment management fees.
14 The High-Yield Bond Fund invests in units of JPMorgan's
Corporate High-Yield Fund-Investment Class. The inception date
shown reflects the date the current investment team at JPMorgan
commenced management responsibility of the Fund. Performance
reflects the investment manager's returns for the aforementioned
Fund with deductions taken for investment management fees
negotiated by VRS and fund administrative expenses.
15 The Stock Fund invests in units of BlackRock's Equity Index Fund
F. Performance represents BlackRock's returns for the master Fund F
with deductions taken for management fees negotiated by VRS and
fund administrative expenses. The inception date shown reflects the
VRS Defined Contribution Plans investment strategy inception date.
Performance returns are linked to the previous investment manager.
Returns prior to July 2012 represent performance by State Street
Global Advisors.
16 The Small/Mid-Cap Stock Fund invests in units of BlackRock's
Russell 2500 Index Fund F. Performance represents BlackRock's
returns for the master Fund F with deductions taken for investment
management fees negotiated by VRS and fund administrative expenses.
The inception date shown reflects the VRS Defined Contribution
Plans strategy inception date. Performance returns are linked to
the previous investment manager. Returns prior to July 2012
represent performance by State Street Global Advisors.
17 Effective July 2012, the performance benchmark is the Russell
2500 Index. Prior to July 2012, the performance benchmark was the
Russell Small Cap Completeness Index. The benchmark returns are
linked. 18 The International Stock Fund invests in units of
BlackRock's MSCI ACWI ex-U.S. IMI Index Fund F. Performance
represents BlackRock's returns for the master Fund F with
deductions taken for investment management
fees negotiated by VRS and fund administrative expenses. The
inception date shown reflects the VRS Defined Contribution Plan's
investment strategy inception date. Returns from July 2012 through
July 2016 represent performance of another BlackRock Fund. Returns
prior to July 2012 represent performance by the previous manager,
State Street Global Advisors. All performance returns are
linked.
19 Effective August 2016, the performance benchmark is the MSCI
ACWI ex.-U.S. IMI Index. It was the MSCI World ex-U.S Index from
July 2012 through July 2016 and prior to July 2012 it was the MSCI
EAFE Index. The benchmark returns are linked. 20 The Global Real
Estate Fund invests in units of BlackRock's Developed Real Estate
Index Fund F. Performance represents BlackRock's returns for the
master Fund F with deductions taken for investment management
fees negotiated by VRS and fund administrative expenses. The
inception date shown reflects the VRS Defined Contribution Plans
investment strategy inception date. The Fund transitioned from a
U.S. domestic REIT fund to a global real estate fund during July
2012. Performance returns are linked to the previous investment
manager. Returns prior to July 2012 represent performance by State
Street Global Advisors.
21 Effective July 2012, the performance benchmark is the FTSE
EPRA/NAREIT Developed Index. Prior to July 2012, the performance
benchmark was the Dow Jones U.S. Select REIT Index. The benchmark
returns are linked. 22 The inception date shown reflects the date
the VRS Investment Portfolio (VRSIP) was unitized. 23 The VRS
Custom Benchmark is a blend of the asset class benchmarks at policy
weights. 24 Includes Pending Account VRSIP amount of $0. 25
Includes Preliminary Investment Portfolio Account - PIP amount of
$1,050,031. 26 Includes $4,204,572 held in the administrative
Special Accounts. 27 May not equal 100% due to rounding. 28 The
data reflects the percentage of participants who selected a
particular investment option as of June 30, 2021. There were
463,230 participant accounts as of June 30, 2021 across all
unbundled DC plans.
All fund performance returns shown reflect all fund management fees
and expenses, but do not reflect the Plan administrative fee
charged by MissionSquare Retirement which would further reduce the
returns shown. All calculations assume reinvestment of dividends
and capital gains. All returns are calculated in U.S. dollars.
Performance returns are provided by BlackRock, Galliard Capital
Management, JPMorgan, Bank of New York Mellon, and MissionSquare
Retirement. Benchmark returns are provided by BlackRock,
Russell/Mellon Analytical Services, Galliard, and MissionSquare
Retirement. Although data is gathered from sources believed to be
reliable, we cannot guarantee completeness or accuracy. Plan
Administrative Fee: An annual record keeping and communication
services fee of $30.50 is deducted from participant accounts on a
monthly basis (approximately $2.54 per month). Only one annual fee
of $30.50 is deducted from participant accounts for those
participants participating in more than one Commonwealth of
Virginia defined contribution plan.
Page 2
Master Page # 30 of 318 - Defined Contribution Plans Advisory
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Bundled TIAA ORPHE
Master Page # 31 of 318 - Defined Contribution Plans Advisory
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Bundled ORP for Higher Education - TIAA RC Contract1
Data for period ending June 30, 2021
Returns 3 Year Statistics 5 Year Statistics
Fund Type
Standard Deviation (%)
Sharpe Ratio
Tracking Error
Information Ratio
Standard Deviation (%)
Sharpe Ratio
Tracking Error
Information Ratio
% % % % % % % % BlackRock Equity Index Fund J Passive 0.01 40.84
18.73 17.69 18.53 0.94 0.03 n/a 14.99 1.10 0.03 n/a S&P 500
Index 40.79 18.67 17.65 18.52 0.94 14.99 1.10 Excess Return 0.05
0.06 0.04 MSTAR Ave: Large Blend 40.47 16.77 16.15 BlackRock
Russell 2500 Index Fund M Passive 0.04 57.79 15.24 16.39 24.51 0.57
0.08 n/a 19.79 0.77 0.07 n/a Russell 2500 Index 57.79 15.24 16.35
24.50 0.57 19.78 0.77 Excess Return 0.00 0.00 0.04 MSTAR Ave:
Mid-Cap Blend 50.44 13.15 13.75 BlackRock MSCI AWCI ex-U.S. IMI
Index Fund M Passive 0.11 37.31 9.64 11.43 17.97 0.46 0.95 n/a
14.86 0.69 0.93 n/a MSCI ACWI ex-U.S. IMI Index 37.18 9.42 11.20
18.00 0.45 14.87 0.68 Excess Return 0.13 0.22 0.23 MSTAR Ave:
Foreign Large Blend 33.76 8.50 10.08 BlackRock MSCI ACWI IMI Index
Non-Lendable Fund M Passive 0.05 41.17 14.57 14.93 18.43 0.72 0.45
n/a 14.85 0.93 0.44 n/a MSCI ACWI IMI Index 40.94 14.24 14.55 18.47
0.70 14.88 0.90 Excess Return 0.23 0.33 0.38 MSTAR Ave: World Stock
38.01 12.74 12.82 TIAA Real Estate Account Active 0.87 6.72 4.30
4.37 2.59 1.14 2.02 -0.10 2.00 1.60 1.59 -0.28 Custom Composite
Benchmark 8.65 4.49 4.82 3.13 1.01 2.46 1.57 Excess Return -1.93
-0.19 -0.45
*Annualized. 1 Refer to the unbunded DC plans for information
regarding BlackRock's LifePath Index Funds O, Short-Term Investment
Fund W, U.S. Debt Index Fund M and U.S. TIPs Fund M. Although the
unbundled DC plans use white lable fund names and TIAA does not
these funds are the same exact funds. Fund with TIAA plan services
expense offset. Underperformance.
Data provided by TIAA, BlackRock, MissionSquare, VRS and Zephyr
StyleADVISOR.
Master Page # 32 of 318 - Defined Contribution Plans Advisory
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Bundled ORP for Higher Education - TIAA RC Contract Fund Annual
Operating Expenses1,2
Information as of June 30, 2021
Investment Option Investment Manager Type
Investment Management Costs
Total Annual Expense Ratio
Expense Ratio YOY Change
TIAA Traditional Annuity TIAA Fixed Annuity n/a 0.150000% n/a n/a
0.300000% 0.45% -0.04% TIAA Real Estate Account TIAA Active
0.250000% 0.190000% 0.100000% 0.005000% 0.320000% 0.87% 0.09%
BlackRock Equity Index Fund J BlackRock Passive 0.010000% n/a n/a
n/a 0.001400% 0.01% 0.00% BlackRock Russell 2500 Index Fund M
BlackRock Passive 0.030000% n/a n/a n/a 0.006000% 0.04% 0.00%
BlackRock MSCI ACWI ex-U.S. IMI Index Fund M BlackRock Passive
0.090000% n/a n/a n/a 0.019300% 0.11% 0.00% BlackRock MSCI ACWI IMI
Index Non-Lendable Fund M BlackRock Passive 0.040000% n/a n/a n/a
0.009700% 0.05% 0.00%
1 There are no short-term trading redemption costs associated with
any of the investment options. 2 Refer to the unbunded DC plans for
information regarding BlackRock's LifePath Index Funds O,
Short-Term Investment Fund W, U.S. Debt Index Fund M and U.S. TIPs
Fund M. The unbundled DC plans use white label fund names for the
aforementioned funds. However, TIAA does not have the capability to
use white label fund names.
Funds with plan services expense offsets within the TIAA RC
contract.
Percentage of Embedded Record-Keeping and Plan Administration
Costs
Investment Option Type
Total Annual Expense Ratio
% of Record- Keeping & Plan Administration Costs
TIAA Traditional Annuity Fixed Annuity 0.150000% 0.45% 33% TIAA
Real Estate Account Active 0.190000% 0.87% 22%
Master Page # 33 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Defined Contribution Plans Advisory Committee Report TIAA RC
Contract Investment Performance Below are the totals for the period
ending June 30, 2021. Returns greater than one year are
annualized.
Investment Options 1 Month 3 Months YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs /
Since
Inception1
Value 19
Option 20
Target Date Portfolios 3,4 % % % % % % % % $ % % BlackRock LifePath
Index Retirement Fund O 0.98 4.16 4.53 15.80 9.42 7.82 6.32 0.08
8/1/05 29,637,469 8.9 9.8 Custom Benchmark 0.96 4.14 4.52 15.77
9.36 7.77 6.27 BlackRock LifePath Index 2025 Fund O 1.02 4.73 6.00
20.20 10.32 9.46 7.52 0.08 7/5/06 21,322,361 6.4 7.0 Custom
Benchmark 1.00 4.70 6.00 20.17 10.25 9.38 7.46 BlackRock LifePath
Index 2030 Fund O 1.07 5.39 7.69 25.05 11.42 10.68 8.25 0.08 8/1/05
29,973,623 9.0 8.8 Custom Benchmark 1.04 5.37 7.69 25.01 11.34
10.57 8.16 BlackRock LifePath Index 2035 Fund O 1.12 6.02 9.34
29.86 12.49 11.85 8.94 0.08 7/5/06 23,049,346 6.9 9.0 Custom
Benchmark 1.08 6.00 9.32 29.81 12.39 11.72 8.82 BlackRock LifePath
Index 2040 Fund O 1.16 6.58 10.83 34.35 13.42 12.88 9.52 0.08
8/1/05 25,505,620 7.7 9.6 Custom Benchmark 1.11 6.57 10.80 34.26
13.30 12.74 9.40 BlackRock LifePath Index 2045 Fund O 1.19 7.05
12.05 37.97 14.18 13.63 9.98 0.08 7/5/06 22,185,118 6.7 10.2 Custom
Benchmark 1.14 7.03 12.00 37.85 14.04 13.47 9.84 BlackRock LifePath
Index 2050 Fund O 1.21 7.30 12.71 39.86 14.59 13.97 10.23 0.08
9/30/07 12,538,705 3.8 7.8 Custom Benchmark 1.15 7.27 12.63 39.73
14.44 13.81 10.10 BlackRock LifePath Index 2055 Fund O 1.21 7.34
12.82 40.14 14.67 14.01 10.40 0.08 5/19/10 5,386,192 1.6 5.2 Custom
Benchmark 1.16 7.32 12.76 40.07 14.53 13.86 10.25 BlackRock
LifePath Index 2060 Fund O 1.21 7.34 12.80 40.11 14.66 14.00 10.61
0.08 11/17/14 1,107,630 0.3 2.1 Custom Benchmark 1.16 7.31 12.75
40.07 14.53 13.86 10.46 BlackRock LifePath Index 2065 Fund O 1.21
7.34 12.77 40.02 n/a n/a 21.01 0.08 9/23/19 853,885 0.3 0.6 Custom
Benchmark 1.16 7.31 12.75 40.06 n/a n/a 21.08
Individual Options BlackRock Short-Term Investment Fund W 5 0.01
0.04 0.08 0.18 1.44 1.36 0.79 0.08 7/1/03 6,170,835 1.9 8.1 FTSE 3
Month Treasury Bill Index 0.00 0.01 0.03 0.08 1.31 1.14 0.60 Yield
as of 06/30/21: 0.15%6
BlackRock U.S. Debt Index Fund M 7 0.71 1.84 -1.62 -0.30 5.39 3.07
3.46 0.03 6/6/96 9,118,919 2.7 19.4 Bloomberg Barclays U.S.
Aggregate Bond Index 0.70 1.83 -1.60 -0.33 5.34 3.03 3.39 BlackRock
U.S. TIPS Fund M 8 0.60 3.26 1.75 6.61 6.63 4.31 3.50 0.03 7/30/02
5,079,960 1.5 13.1 Bloomberg Barclays U.S. TIPS Index 0.61 3.25
1.73 6.51 6.53 4.17 3.40 BlackRock Equity Index Fund J 9 2.33 8.56
15.27 40.84 18.73 17.69 14.88 0.01 3/5/97 34,982,684 10.5 25.4
S&P 500 Index 2.33 8.55 15.25 40.79 18.67 17.65 14.84 BlackRock
Russell 2500 Index Fund M 10 1.17 5.42 16.95 57.79 15.24 16.39
12.96 0.04 9/30/08 9,345,673 2.8 4.3 Russell 2500 Index 1.18 5.44
16.97 57.79 15.24 16.35 12.86 BlackRock MSCI ACWI ex-U.S. IMI Index
Fund M 11 -0.50 5.67 9.66 37.31 9.64 11.43 5.85 0.11 2/28/11
18,070,956 5.4 19.4 MSCI ACWI ex-U.S. IMI Index -0.64 5.60 9.58
37.18 9.42 11.20 5.65 BlackRock MSCI ACWI IMI Index Non-Lendable
Fund M 12 1.19 7.13 12.75 41.17 14.57 14.93 11.17 0.05 4/12/13
44,537,786 13.4 34.3 MSCI ACWI IMI Index 1.21 7.18 12.68 40.94
14.24 14.55 10.79 TIAA Real Estate Account 13 1.69 3.84 6.16 6.72
4.30 4.37 6.99 0.87 10/2/95 8,724,387 2.6 27.8 Custom Composite
Benchmark 14 1.08 3.74 6.14 8.65 4.49 4.82 7.09
TIAA Traditional Annuity RC 15,16,17,18 0.28 0.86 1.79 3.81 3.97
4.04 4.21 0.45 8/1/05 20,940,382 6.3 29.4 Self-Directed Brokerage
Account TIAA - Self-Directed Account n/a n/a n/a n/a n/a n/a n/a
n/a n/a 4,840,831 1.5 0.7 Total $333,372,362
Footnotes >
Page 1
Master Page # 34 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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1 If the fund was not in existence for 10 years, fund and
corresponding benchmark returns shown represent performance from
the since inception date. 2 Fund investment advisers may
voluntarily agree to waive expenses. Expense waivers may be
terminated at any time. 3 The BlackRock LifePath Index Funds O
invest in the master LifePath Index Funds F. The inception dates
shown reflect the inception date of the master LifePath Funds F.
The inception dates for most LifePath Funds O were 12/9/11. The
2055 Fund's O
inception date was 12/12/11, the 2060 Fund's O inception date was
1/2/15 and the 2065 Fund's O inception date was 9/23/19. Returns
prior to Funds' O inception dates are those of Funds F with
deductions taken for Funds O investment management fees. 4
Benchmarks are calculated using blended returns of third-party
indices that proportionately reflect the respective weightings of
the Funds' asset classes. Weightings are adjusted quarterly to
reflect the Funds' asset
allocation shifts over time. Indices currently used to calculate
the custom benchmarks are: Russell 1000 Index, Russell 2000 Index,
MSCI ACWI Ex-U.S. IMI Index, Bloomberg Barclays U.S. Aggregate Bond
Index, Bloomberg Barclays U.S. TIPS Index, FTSE EPRA/NAREIT
Developed Index and the Bloomberg Commodity Index Total
Return.
5 An investment in a money market fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of
your investment it is possible to lose money by investing in the
Fund.
6 The current yield more closely reflects the earnings of the Fund
than the total net return information. 7 The BlackRock U.S. Debt
Fund M invests in the master Fund F. The inception date shown
reflects the inception of the master Fund F. The inception date of
Fund M was 7/20/12. Returns prior to Fund M's inception date are
those of
Fund F with deductions taken for Fund M's investment management
fees. 8 The BlackRock U.S. Treasury Inflation-Protected Securities
Fund M invests in the master Fund F. The inception date shown
reflects the inception of the master Fund F. The inception date of
Fund M was 7/20/12.
Returns prior to Fund M's inception date are those of Fund F with
deductions taken for Fund M' investment management fees. 9 The
BlackRock Equity Index Fund J invests in the master Fund F. The
inception date shown reflects the inception of the master Fund F.
The inception date of Fund J was 3/20/17. Returns prior to Fund J's
inception date are those of Fund F
with deductions taken for Fund J's investment management fees. 10
The BlackRock Russell 2500 Fund M invests in the master Fund F.The
inception date shown reflects the inception of the master Fund F.
The inception date of Fund M was 1/30/13. Returns prior to Fund M's
inception date are those
of Fund F with deductions taken for Fund M's investment management
fees. 11 The BlackRock MSCI ACWI ex-U.S. IMI Index Fund M invests
in the master Fund F.The inception date shown reflects the
inception of the master Fund F. The inception date of Fund M was
12/31/12. Returns prior to Fund M's inception date are those
of Fund F with deductions taken for Fund M's investment management
fees. 12 The BlackRock MSCI ACWI IMI Index Fund M invests in the
master Fund F. Inception dates for the master Fund F and Fund M are
both 4/12/13. 13 Transfers out of the TIAA Real Estate Account
(REA) are limited to one per quarter. Currently, these transfers do
not require a minimum transaction amount; however, in the future
TIAA reserves the right, in its sole discretion,
to impose minimum transaction levels, which levels will generally
be at least $1,000 (except for systematic transfers, which must be
at least $100) or your entire accumulation, if less. Participants
may not make a lump-sum transfer into the REA if their aggregated
balances across all contracts is greater than $150,000. Systematic
transfers and recurring contributions are not subject to this
limitation.
14 Effective January 2014, the Custom Composite Index is 70% NCREIF
Open End Diversified Core Equity (ODCE) Net Index, 20% Bloomberg
Barclays 3-Month Treasury Bill Index, and 10% Dow Jones U.S. Select
REIT Index. Prior periods include other representative indices.
TIAA's investment management team does not manage its real estate
portfolio to a specific published index benchmark. The Custom
Composite Index represents a reasonable proxy of how TIAA allocates
assets among real property, short-term investments, and REITs over
time. The Virginia Retirement System anticipates that Fund returns
may vary greatly from those of the Custom Composite Index.
Benchmark returns are not available for months that do not end on a
calendar quarter due to the fact that NCREIF ODCE Index returns are
only published each calendar quarter.
15 Upon separation from service or retirement participants can
convert their TIAA Traditional accumulation dollars amount to a
lifetime income option or withdraw funds through a fixed period
annuity ranging from five to 30 years or a Transfer Payout Annuity,
which enables participants to move funds out of the TIAA
Traditional Annuity in 7 annual installments for the Retirement
Choice (RC) contract. Each installment includes a portion of
principal and interest, based on the rate in effect when transfer
or withdrawal funds are made. However, there are two exceptions to
the payout installment. First, if the TIAA Traditional account
balance is less than $5,000, participants can transfer the total
amount at any time following termination of employment, but only
once during the life of the contract. Second, TIAA Traditional can
be withdrawn or transferred to another company up to the full
balance within 120 days following termination of employment,
subject to 2.5% surrender charge. After the 120-day period,
participants can withdraw funds only through a fixed period annuity
ranging from five to 30 years or the Transfer Payout Annuity.
16 The TIAA Traditional Annuity RC contract has minimum guaranteed
rate during the accumulation phase of 1% to 3% . The current
minimum rate for the RC contract is 1%. Further, the TIAA
Traditional Annuity RC contract applies to premiums deposited
during the applicable calendar year and is guaranteed for 10 years,
at which point the minimum rate for these premiums will be
reset.
17 TIAA's annual credited rate on new money for the RC contract for
the month of June was 3.00%. 18 The TIAA Traditional Annuity is not
an investment for purposes of federal securities laws; it is a
guaranteed insurance contract. Therefore, unlike a variable annuity
or mutual fund, the TIAA Traditional Annuity does not include an
identifiable
expense ratio. The 45 basis points (0.45%) approximates the expense
provision in the formula for determining TIAA Traditional Annuity
returns inclusive of administrative and investment expenses. This
expense provision is not guaranteed, it is subject to change.
19 May not equal 100% due to rounding 20 The data reflects the
percentage of participants who selected a particular investment
option as of June 30, 2021. There were 5,125 (RC contract)
participants as of June 30, 2021.
Performance returns shown reflect all fund management fees and
other investment related expenses, but do not reflect the TIAA
annual administrative fee of $66 (deducted at $16.50 per quarter)
which would further reduce the returns shown. Performance returns
do not reflect redemption fees and/or surrender charges, if
applicable. All calculations assume reinvestment of dividends and
capital gains. All returns are calculated in U.S dollars. Fund and
benchmark returns are provided by TIAA and BlackRock. Although data
is gathered from sources to be reliable, the Virginia Retirement
System cannot guarantee completeness or accuracy.
Page 2
Master Page # 35 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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VRS Defined Contribution Plans
2nd Quarter 2021 (April - June)
Administrative Summary September 2, 2021
Master Page # 36 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Agenda
2
Topic Slide Number(s)
Total Assets & Accounts 3 Unbundled Plans Overview &
Updates 4-5 COV 457 & Cash Match Plans 6 Hybrid Retirement Plan
7-10 Focus: Asset Retention 11-18 ORPHE 19-21 Moving Forward
22-25
Master Page # 37 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Total Assets and Accounts Over Time
3 Note: Data reflects totals as of calendar year end and includes
ORPHE selected providers and MissionSquare participant,
beneficiary, forfeiture & reserve accounts. 2021 data is
through June 30, 2021. *Does not indicate unique
participants.
Totals as of 6/30/2021 Assets Accounts
$7,335,487,090 471,440
AccountsAs se
ORPSS Assets VSRP Assets Hybrid 401(a) Assets
Hybrid 457 Assets ORPHE Assets Total Accounts*
Assets ↑ 7% Accounts ↑ 1%
since March 31, 2021
Master Page # 38 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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New Contract Effective Implementation
• Current record keeper contract expires December 31, 2024
• 18 to 24-month implementation period needed to onboard a new
record keeper, if necessary
• Consultant will be hired to assist • Development of RFP •
Evaluation of responses • Implementation
4 Master Page # 39 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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NAGDCA Leadership Awards
• COVID-19 Virtual Pandemic Response
• Highlighted key strategic initiatives created by VRS and
MissionSquare for participants and employers.
• Technology and Interactive Multimedia for VRS Interactive Virtual
Tools
Virtual Award Presentation will take place September 16
Master Page # 40 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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6
Cash Match $615,244,384 72,512
-
2014 2015 2016 2017 2018 2019 2020 2021
COV 457 Assets Cash Match Assets COV 457 Accounts Cash Match
Accounts Note: Data reflects totals as of calendar year end and
includes MissionSquare participant, beneficiary, & reserve
accounts. 2021 data is through June 30, 2021.
Master Page # 41 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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7
Hybrid 401(a) $873,848,447 184,071
Hybrid 457 $426,805,685 116,336
-
2014 2015 2016 2017 2018 2019 2020 2021
Hybrid 401(a) Assets Hybrid 457 Assets Hybrid 401(a) Accounts
Hybrid 457 Accounts Note: Data reflects totals as of calendar year
end and includes MissionSquare participant, beneficiary &
forfeiture accounts. 2021 data is through June 30, 2021.
Assets 13% Accounts 1%
since March 31, 2021
Master Page # 42 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Hybrid Retirement Plan Participation Highlights
Active Election Participation – 33%
Contributions – 73%
38% are maximizing at 4% 56% are at 1% or less
Of members making voluntary
contributions
8 Data is as of July 1, 2021.Master Page # 43 of 318 - Defined
Contribution Plans Advisory Committee (DCPAC) Meeting 9/2/2021
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Hybrid/COV 457 Plan Crossover
Quarterly analysis to identify trends for hybrid plan members also
eligible for the COV 457 Plan • Evaluate
opportunities to improve/enhance communications
9
VC at all.
4,614 participate in the COV 457 Plan
*Voluntary contributions
126,386 Active Hybrid Plan Members
Master Page # 44 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Hybrid/COV 457 Plan Crossover
• Review contributions to both 457 plans to ensure contributions
continue throughout the year
Members who contribute to both and maximize
contributions prior to the end of the year may lose
out on the employer match when contributions stop.
• 415 members identified for outreach via phone and email
• Review contributions and provide education regarding benefits of
contributing to the Hybrid plan first
Members who contribute to the COV 457 prior to
maximizing Hybrid contributions may lose out on employer
contributions.
Master Page # 45 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Asset Retention
Q1 Q2 Q3 Q4
11 Master Page # 46 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Asset Retention Metrics (unbundled plans only)
Data calculated at the end of each calendar year
12
COV 457 Plan Assets Hybrid 401(a) & Hybrid 457 Assets
COV 457 Plan Accounts Hybrid 401(a) & Hybrid 457 Accounts
Data as of December 31, 2020Master Page # 47 of 318 - Defined
Contribution Plans Advisory Committee (DCPAC) Meeting 9/2/2021
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Assets by Employment Status
Assets
Assets Across All Unbundled Plans By Age and Employment
Status
Active Terminated
Participants who terminate employment are most likely to withdraw
assets from the plan.
Master Page # 48 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Asset Retention Distribution Types – COV 457 Plan
14 Note: Data for 2021 is through June 30, 2021. All other data for
the full calendar year.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Rollover (IRA) Service Purchase
or annually.
participants with larger balances.
Master Page # 49 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Asset Retention Distribution Types – Hybrid 401(a) Plan
Note: Data for 2021 is through June 30, 2021. All other data for
the full calendar year.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Rollover (IRA)
N um
2020 Average Amount $3,330
2020 Average Amount $3,804
Lump sum payouts are a payout of the participant’s full
balance.
Hybrid plan members generally have only a few years of
participation in the
plan and smaller balances.
15 Master Page # 50 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Asset Retention – Incoming and Outgoing Rollovers
16
Outgoing Rollovers Total
Note: Data reflects transactions processed in 2020
Since 2015, 70% of COV 457 outgoing
rollovers have gone to an Individual
Retirement Account.
Master Page # 51 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Unforeseeable Emergency Withdrawals
17 Note: Data for 2021 is through June 30, 2021. All other data for
the full calendar year.
1, 35
0
200
400
600
800
1,000
1,200
1,400
1,600
2014 2015 2016 2017 2018 2019 2020 Q1 2021 Q2 2021
Received Approved Denied
68% decrease in UEWs approved and paid from 2019 to 2020 primarily
due to the availability of coronavirus-related distributions. •
Eviction/foreclosure category had the largest decrease at 76% due
to a
________________________________________________________________________________
and older • Invitation to relevant
webinar • Contact information for
local field representative
Outbound calls to participants that have rolled amounts greater
than $100,000 out of the plan • Primary themes:
• Consolidating assets • Working with an advisor
Monitor participant status and define metrics for asset
retention
Gather information
Create relevant
Asset Retention Efforts
18 Master Page # 53 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Administrative Summary ORPHE
Assets $1,158,931,857 $1,222,066,549 5% Participants 10,506 10,566
1% Average Balance $110,311 $115,660 5%
*Excludes deselected providers. Fidelity became a deselected
provider effective 1/1/2020. **Includes assets in GRA/RA and RC
contracts.
DCP 6/30/2021
TIAA** 6/30/2021
Assets $1,068,717,533
Participants 8,210
Average Balance $130,173
38% of new hires YTD have elected DCP as their provider.
62% of new hires YTD have elected TIAA as their provider.
Master Page # 54 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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• Processing timelines • Call center operations • Field services
outreach
Implements multiple performance standards
• Pricing reduction from $66/year for participants in RC contract
to $28/year for all participants in all contracts
Pricing
Minor updates
TIAA Contract Amendment No. 5
20 Master Page # 55 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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TIAA Contract Amendment
21
Pricing Update - Contributing Factors
Current Structure RC Contracts - $66/year • Participants receive a
credit to their
accounts based on TIAA’s Plan Services Expense Offsets*
GRA/RA Contracts – • Participant pays embedded fees • No
credit
New Structure All Contracts - $28/year • Participants receive a
credit to their
accounts based on TIAA’s Plan Services Expense Offsets*
________________________________________________________________________________
Retire the existing Quarterly Service Review provided by
MissionSquare
• Current version is large and consists almost entirely of charts
and graphs
• Included in the Appendix each quarter
22
Replace with three high-level dashboards that focus on primary plan
metrics
• Allows more focus on most relevant metrics • More visual and
easier to identify trends
Master Page # 57 of 318 - Defined Contribution Plans Advisory
Committee (DCPAC) Meeting 9/2/2021
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Data as of June 30, 2021 VRS Defined Contribution Plans
Unique Participants • All plans • 5-year lookback • Format = Line
chart
Account Access • Logins during the prior 4
years and the current YTD • Format = Bar chart
Account Access • Registration since
inception (Will need to start over with SS&C transition)
• Format = Bar chart
depend on available space)
• Format = list
Particip