In a recent announcement to the campus community, I expressed that the Rensselaer Board of Trustees has approved discontinuing future benefit accruals for active participants in the Rensselaer Contributory Defined Benefit Pension Plan effective June 30, 2014. Since 1993, the Pension Plan has been frozen to all new employees.
Over 177 active participants in the Pension Plan will now participate in the Rensselaer Defined Contribution Retirement Plan, along with 90 percent of our active faculty and staff. Rest assured, this change will not impact retirees, as the goal of the Rensselaer Board of Trustees decision was focused on preserving the pension benefits earned by all participants in the Pension Plan.
Today, the pensions of millions of Americans are being threatened because of volatility in the financial markets, low interest rates, two big stock crashes, regulatory changes by IRS, an aging workforce, and increasing costs by the Pension Benefit Guaranty Corporation (PBGC), the federal insurer that pays benefits to people whose company pension plans fail.
After conducting a benchmark study of defined contribution plans, we determined that Rensselaer continues to have one of the best in the nation. Rensselaer employees only contribute 1 percent of their annual salary, while the Institute contributes 8 percent.
According to a recent study by Fidelity Investments, the average company contribution is about 5 percent. Furthermore, Rensselaer has partnered with two of the best financial services companies to assist our participants with providing investment choices and advice. Fidelity Investments is among the most diversified financial services companies in the world, offering a full range of product solutions for individual investors, employers, institutions, and intermediaries.
TIAA-CREF, as a financial services company, has a variety of investment products with impressive track records over the past 100 years. Having invented variable annuities in 1952, TIAA-CREF has long pioneered their use in funding retirement investing and generating income in retirement for the needs of participants and their families who serve the greater good through work in the academic, medical, cultural, and research fields.
Offering a suite of financial and investment services, both Fidelity and TIAA-CREF have expert consultants to assist our participants in developing a personalized analysis in understanding and meeting their retirement goals.
Overall, participants enrolled in the Rensselaer Defined Contribution Retirement Plan enjoy many benefits, including a great employer match, two of the best financial services companies focused on helping you to invest your hard-earned money, the portability of your money, and expert financial consultants to assist you with meeting your retirement goal.
Curtis Powell, SPHR
Vice President for Human Resources