LV Life Editor
Administrators’ recent decision to change the retirement plan for all University employees is expected to be reversed, in light of strong opposition by faculty, who objected to the fact that such a decision was made without their consultation.
University President Steve Morgan said Thursday that he would support the faculty and urge the Board of Trustees not to approve the change in retirement vendors from TIAA-CREF to Diversified.
The committee of administrators placed in charge of finding a new retirement plan vendor indicated that Diversified was likely be selected to replace current vendors TIAA-CREF, MetLife and Legend.
However, based on recent actions taken by faculty, including extensive research and continuing correspondence with the committee, the decision to select Diversified as the sole vendor is now under review.
“We have had many recent open forums in which the faculty and staff have had the opportunity to understand the committee’s reasoning,” Morgan said. “Based on the feedback I have received as a result of these forums, I think it would be best to have multiple vendors, including current vendor TIAA-CREF.”
In an email to the faculty regarding this issue, Hector Delgado, professor of sociology, wrote: “Hopefully the committee will take into consideration the issues we raised and the desire expressed by many of your colleagues to retain TIAA-CREF for future investments. … I trust that in the future, the administration will involve its employees in the process much earlier, especially on matters as important as these in a person’s life.”
The process of selecting a new retirement vendor apparently began in July 2007 when the IRS released new regulations regarding 403(b) retirement plans.
The changes required the University to be responsible for fiduciary oversight for selecting and monitoring plan investments, an annual plan audit, consolidated recordkeeping, and monitoring of loans, distributions and investments.
In January 2008 the Human Resources department established a retirement committee to assess what changes needed to be made to meet the new regulations.
According to Interim Chief Human Resources Officer Sue Henry, the committee decided to search for new vendors upon discovering issues with the current providers, which included poor service, outdated technology and failure to follow the plan provisions established by the University.
Throughout 2010, the committee reviewed proposals from eight vendors, allowed four firms to make presentations and selected 29 investment funds for faculty and staff to choose from. In March 2011, with the help of a consultant, the committee recommended Diversified to be the sole provider.
“The primary issue is not the likelihood that Diversified was going to be selected, but rather that it wants to be our only vendor,” Delgado said in a recent interview. “It is not my intent to recommend a vendor. What I am simply trying to say is that it seems prudent to have more than one vendor.”
Henry said that since Diversified is an independent company that does not own its own funds, the only money it makes is from administrative fees, which is its primary reason for wanting to be the sole vendor.
Morgan said that if Diversified insists on being the primary vendor, it will be taken out of consideration.
Many faculty members expressed the concern that the decision had been made based on misinformation, and that the benefits Diversified claims to offer are not better than what the current vendors offer.
“The retirement committee made this decision with virtually no consultation with faculty, change, and they failed to do their homework regarding the implications of the change,” Ernie Thomson, associate professor of sociology said. “Over the last couple of weeks they have given reasons for their decision, and none were based on accurate information.”
In his email to the faculty addressing this issue, Delgado wrote: “Diversified is a wholly-owned subsidiary of Aegon, a Dutch company that required a bailout of over $4.3 billion by the Dutch government in 2008.”
He said the Retirement Committee, and apparently the consultant, were not aware of this when it was brought to their attention.
“Because of lack of faculty involvement in the process, we agree with a growing number of our colleagues who believe we may need more time to study the issue,” he wrote.
Delgado also noted that Executive Vice President Phil Hawkey estimated that if the University kept it as a vendor, the cost of auditing TIAA-CREF would be approximately $40,000 and would require approximately 100 staff hours.
However, as long as ULV employees have funds in TIAA-CREF, it will still have to be to be audited even if Diversified becomes the vendor.
“At first, members of the retirement committee suggested that faculty raising questions didn’t understand making this change, which had apparently been recommended by a consultant who, they said, would answer all of our questions,” Thomson said.
“The ‘answers’ provided have contained misinformation and the information that is accurate tends to indicate to me that this would be an ill-advised change.”
Faculty members such as Delgado and Thomson presented their research to the committee during recent open forums.
The faculty came together to challenge a decision that would impact their lives and made their voices be heard.
“I suspect that the committee is more aware of the issues with the current decision and will agree with my recommendation to support the requests of the staff and faculty,” Morgan said.
Lauren Creiman can be reached at firstname.lastname@example.org.
- 13 May, 2011 @ 22:58 [Current Revision] by Lauren Creiman
- 13 May, 2011 @ 22:58 by Eric Borer