Wednesday, March 26, 2014

New Fee Structure with Transamerica

We've received several comments regarding the health system's new retirement plan fee structure at Transamerica. This new fee structure was carefully considered by North Shore-LIJ for the benefit of all employees.

To Clarify
With Transamerica, you will pay one flat record-keeping fee. At MetLife, you paid a flat record-keeping fee and an additional fee that was a percentage of your total account balance. In other words, with MetLife, the more you saved, the more fees you had to pay. We hope that by removing this percentage-of-savings fee you will save more and not feel penalized by the higher fee.

Building your retirement savings is a healthy goal that should be supported by fees that do not increase along with your savings.

With MetLife, the annual and percentage fees resulted in an average total fee of $77 per year. At Transamerica, the annual record-keeping fee will be $60 for the 403(b) and 401(k) plans, and $90 for the 457(b). You'll see this fee billed in quarterly installments on your account statements (in addition to any fees charged by the companies that manage your investments).

One flat fee also means employees pay an equal and fair share of costs for administering the plan. Since a person with a low balance receives the same plan administrative benefits and resources as a person with a high balance, the health system and the Investment Committee believe this fee should be shared equally as well.

We hope this helps you better understand the changes to the retirement plans' fee structure. For more information, visit the Transition Portal on nslijtrs.retire.com.

Thanks very much for your feedback and support.

5 comments:

Anonymous said...

Being someone that regularly updates their knowledge of the retirement plans I'm participating in, I'm curious about some of the management fees within our 403b plan. In specific to the classification of the retail & institutional shares of the mutual funds in our 403b.

Are our funds (say Vanguard Total Stock Market Index Fund where the fees goes from 0.17% (retail) to 0.05% (institutional)) the institutional shares or retail shares sort? Because the savings in fees between the two are considerable, especially when compounded over time. I'd like more info on that and educate myself some more. Where can I find that?

Northwell Health People Communications said...

Hi. Thank you for your comment regarding the retirement funds. The health system's goal, with the assistance of a third party investment consultant, is to review and select funds for the 403(b), 401(k) and 457(b) plans that meet specific criteria, including appropriate fund expenses. Visit nslij.trsretire.com to read the transition documents and to review the fund line-up's past performance and expense ratios. Thanks again for your feedback, we hope we answered your question.

Anonymous said...

Your fees are calculated base on account balance of $100,000. Is this the average account balance? What about a person who is only able to put $100 a month to the account? How these new fees are benefiting them? What about someone with only an account balance of $10,000? Would there be savings? This is assuming there is no loan or the need for express distribution. How will the new fees benefit someone with a low balance and a conservative fund? Should a person with a lower income expect a lower return going forth?

Anonymous said...

5/27/14
I asked this question a ways back, I guess it fell thru the cracks. But when our 403B's were still with Metlife, I thought NS moved us out of Dodge & Cox because it wasn't doing so well. If that is the case, why is Transamerica using them againg?

Northwell Health People Communications said...

Wow- thanks for your patience while I did some research. According our Investment Committee:
The Dodge & Cox Stock fund was an available plan investment option prior to March 28, 2014 and on April 4, 2014 was removed as a standalone fund. It was used to create a new blended option (the 50% Diamond Hill/50% Dodge & Cox Large Cap Value Option) which is comprised of the Diamond Hill Large Cap A and Dodge & Cox Stock funds. One benefit of blending the funds is that the single manager risk is reduced. Both fund managers have had strong and complementary performance track records.
North Shore-LIJ Health System monitors the performance of funds available to investors and will make updates as determined necessary. To review current fund performance, visit nslij.trsretire.com and look under "Fund and Fee Information".