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Some faculty concerned as UMN changes retirement plan

Fidelity Investments will provide the mandatory retirement plan, as well as other voluntary plans starting in April 2020.
Hailee Schievelbein
Hailee Schievelbein

After a yearlong process of reevaluating its plans and practices, the University of Minnesota will transfer its faculty retirement plans to a sole service provider this spring. 

Fidelity Investments will be the provider for voluntary investment plans and the mandatory retirement plan, which applies to faculty, professional, academic and administrative employees. The mandatory plan is currently provided by Securian Financial, with optional plans from multiple other vendors. The transition process will span the next few months, with implementation next year. However, some faculty members have expressed that they do not feel adequately informed about the change.

Ken Horstman, the senior director of total compensation at the University, said having multiple vendors made investing less straightforward. 

“While this practice provided choice, it did so in a very complex way,” he said. “When things are complicated, they’re usually less accessible.”

Shifting to one provider will simplify investing for faculty, Horstman said. 

There will still be voluntary investment plan options available for all employees under Fidelity, he added, and two Securian funds, the Minnesota Life General Account and General Account Limited, will remain options.

This shift is in line with what many Big Ten universities are undergoing or considering, Horstman said, and Fidelity is well known in the higher education community.

The Retirement Plan Governance Committee, which has fiduciary responsibility for University faculty, chose Fidelity over several other companies in June 2018.

Brian Burnett, the senior vice president for finance and operations, sent an email informing faculty of this change last month, but some have expressed concern with the transition.

Nancy Luxon, a professor in the political science department, sent an email to the Faculty Consultative Committee and the Retirement Subcommittee outlining concerns. 

In a statement emailed to the Minnesota Daily, Luxon said she hopes to see more clear communication about the change in the coming weeks.

“This is a serious question that bears on faculty compensation,” the statement reads. “I was quite surprised that faculty had not been surveyed about their experiences with our current plan … that there had been no campus forum to either seek input or [vet] proposed changes; and that the most recent communication from Vice President Burnett was so confusingly presented.”

“I don’t think most faculty know what is being proposed or why,” she added in the statement. 

Sheri Breen, a professor on the Morris campus and member of the FCC, said she felt there was not broad knowledge about the transition among faculty.

“Sending out notice is not the same as being informed,” she said. 

Not having all the information could lead to faculty being stressed, she said, because this could change how they think about their long-term plans. Breen said she wanted to make sure faculty on the Morris campus were informed of the change. 

Luxon also noted the lack of information available about the transition.

“The new plan with Fidelity might well be better, but it’s hard for me to compare the two because in a basic sense the plan hasn’t been presented and explained,” the emailed statement reads.

Horstman said the educational resources offered to participants were an important factor in choosing a vendor. Fidelity is able to provide robust educational resources, he said, and starting in April, the University will have a full-time Fidelity representative available as a resource on all University system campuses.

Horstman said multiple faculty committee chairs provided input during the decision-making process. 

He emphasized that communication will be important over the coming months to make sure participants feel informed and confident with the decisions they make. 

“While I don’t see any downside to what we’re doing … I am sensitive to the fact that people are digesting it for the first time,” Horstman said.

University faculty can expect to receive more information in a packet mailed to their homes before April, he said.

Next, a process called “mapping” will take place, said Greg Zandlo, a financial adviser for North East Asset Management, who works frequently with University employees. 

During this process, existing investments will be matched with the most similar Fidelity investment options and transferred over. This will happen automatically, but participants will have the opportunity to actively choose different plans. 

Faculty can expect a “blackout” period during the actual transition, Zandlo said, during which they will not be able to move their funds for a week or more. However, investments will stay in the market while this occurs, he emphasized. 

Zandlo noted that often people are not prepared to make decisions when it comes to investing money because of how complicated it can be. 

Fidelity will be responsible for providing adequate education on the options being provided, he said.

In-person informational sessions with Fidelity representatives are being planned for February and March, Horstman said. 

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