Orange County California Selects TIAA-CREF as Sole Provider for New Defined Contribution Retirement Plan
Innovative Hybrid Plan is a Significant Step Toward a More Sustainable Public Pension Structure
NEW YORK, July 6, 2010
TIAA-CREF today announced it has been selected by Orange County, California as the sole provider for the defined contribution portion of a new hybrid defined benefit/defined contribution (DB/DC) retirement plan for County employees that will help with funding pension obligations while continuing to support retirement security.
“The Orange County hybrid DB/DC pension plan represents an innovative new approach to meeting both the county’s and our employees’ long-term financial objectives,” said Orange County Supervisor Bill Campbell. “The new plan will help reduce the funding risk for the county by establishing a stable, fixed employer contribution for participants in the new plan. Further, it will help improve the predictability of our retirement budget, while helping employees gather adequate retirement saving and providing lifetime income options.”
The new Plan became effective May 7, 2010 and will initially be available to new hires in the County. The County is working with the IRS to give the approximately 15,000 current employees the opportunity to select the new plan.
“We are pleased to work with Orange County to create a retirement plan that will continue to focus on providing adequate retirement income for their employees, while addressing critical pension finance issues,” said Richard Hiller, vice president, Government Markets for TIAA-CREF. “The County’s innovative plan design is a significant step toward a more sustainable public pension structure. It also maintains a focus on retirement income adequacy by providing employee directed options for lifetime income1, and by providing objective, non-commissioned advice.”2
Employees in Orange County who select the new plan will benefit from increased take-home pay plus a matching contribution from Orange County.
The new hybrid retirement plan includes the following plan design features:
- A DB plan featuring a lower benefit formula and lower requisite employee contribution.
- Reduces future funding liability for the County.
- Increases take home pay for the employee.
- An optional 401(a) plan for employee contributions administered by TIAA-CREF, featuring a dollar for dollar match on employee contributions up to 2% of employee salary.
- Provides greater budget predictability for the County, and increased opportunities for saving for employees.
- DC features are designed to combine with DB plan to help provide adequate replacement income in retirement.
- Lifetime income options as part of investment menu.
- Non-commissioned, objective investment advice for employees.
“We recognize that the County is at a critical turning point, and it is in all of our best interests to adopt a retirement plan that will help ease the budget and pension plan funding burdens while continuing to meet employee needs,” said Nick Berardino, General Manager of the Orange County Employees Association, which represents Orange County employees. “It was very important to us that the plan focuses on providing adequate lifetime financial security to our members, and in doing so, we support the selection of TIAA-CREF. In addition, this new plan provides for the accrual of meaningful benefits to more mobile elements of the workforce not available under the previous traditional pension plan.”
TIAA-CREF recently established a dedicated government market segment staffed by highly experienced professionals in public pension design. This segment is intended to bring TIAA-CREF’s expertise in core, risk-managed DC pension designs to the government market.
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $426 billion in combined assets under management (as of 3/31/10) and provides retirement services to the nonprofit and government fields.
Abby Aylman Cohen, TIAA-CREF
firstname.lastname@example.org, 212 916-4381
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1Subject to the claims-paying ability of the issuer.
2TIAA-CREF advisors receive no commissions. We compensate them through a salary plus incentive program that rewards client service as well as financial results.