PLANSPONSOR - August/September 2020 - 22

2020 PLAN SPONSOR OF THE YEAR WINNERS
Nonprofit DC >$500mm
Yale University
New Haven, Connecticut
S
tephen J. Campbell, senior relationship manager,
at TIAA in Waltham, Massachusetts,
has been the relationship manager for the Yale
University 403(b) plan since 2007, working with
Hugh Penney, senior director of compensation
and benefits, and his team.
" I've worked with TIAA over 30 years but
never with an administrative team that's so
focused, " Campbell says of the plan sponsor.
" Hugh believes the program is only as successful
as participant engagement and that design
matters. With compliance in mind, he's always
thinking about how to improve the program. ...
He wants to have the best retirement program in
the country, not to say higher education. "
Making Saving Easy
Yale has adopted innovative plan features that
facilitate saving. Starting with a default rate of
5%, deferrals escalate 1% annually, up to 10%.
Yale matches 100% of each employee's 5% of
compensation, whether the person defers or
not, although everyone does, Penney stresses.
Anyone deferring less is re-enrolled back to 5%.
Unlike most 403(b)s, Yale's was never a
multi-annuity provider plan. " We were TIAA's
28th or 29th client in 1919, and it's the only
annuity provider we've had in our investment
lineup, " says Penney. As some participants had
a " vendor plan " mindset, Penney, in 2015, eliminated
one of its two recordkeepers, to better
foster a " Yale plan " mindset, Campbell recalls.
This allowed for a single source of communications
and advice, plus reduced costs.
Then Penney turned to improving plan
investments, Campbell says. Last year, the school
implemented a new lineup, composed of mutual
funds, variable annuities and a guaranteed
annuity, and used these to build a custom qualified
default investment alternative (QDIA).
This QDIA is " a managed account with
quarterly rebalancing of custom portfolios that
behaves like a target-date fund [TDF], " Penney
says. " We liked the concept of the product and
22 PLANSPONSOR.COM August - September 2020
the ability to have custom investments built for
participants, using institutionally priced funds
in our lineup, but we worked on enhancements. "
In these RetirePlus Pro Models, participants
are assigned their fund based on criteria
such as age, individual annuity savings and
any outside retirement account.
Penney says half of the plan's assets are
in legacy annuity contracts, and the QDIA
adjusts a participant's investments according
to his legacy annuity holdings. If that amount
is large, he is considered heavily invested in
fixed income, so the QDIA would place him in
a model fund that provides balance.
Instead of a bond fund, Penney says, " the
group guaranteed-annuity investment is akin to
a high-performing stable value investment with
an annuity option. An annuity, unlike a bond
fund, is guaranteed to go up every year. "
All participants were swept into the QDIA
a year ago February; 96% have remained, and
7% of that group personalized their investments
further. Some have contacted the call
center and expressed gratitude for the investment
product during this year's market volatility,
Campbell says. The portfolios use drift
rebalancing, correcting any deviations from the
worker's ideal allocation exceeding 3%-something
Penney requested.
Satisfied Participants
Future initiatives to improve participants' experience
will include greater personalization of portfolios
to reflect workers' holdings of additional
assets or changing risk tolerance. New retirees
will also be able to annuitize their TIAA traditional
annuity and replace the managed account
piece with equities.
Penney stresses the solid relationships the
sponsor forges with employees. " Employees stay
in the plan for the rest of their lives, and, often,
so do their spouses. It's the nature of the plan
design and the culture at Yale, " he says.
-Rebecca Moore
Hugh Penney, senior director
of compensation and benefits,
Yale University
" An annuity,
unlike a
bond fund, is
guaranteed to
go up every
year. "
Finalists
ARUP Laboratories
Salt Lake City, Utah
Lifespan
Providence, Rhode Island
More on PLANSPONSOR.com/
awards/2020-plan-sponsor-year
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PLANSPONSOR - August/September 2020

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