1、1,An Analysis of Defined Contribution (DC) Plans Great Plains Public Employee Retirement System Forum November 14, 2007,Jon Forman, Vice Chair, Board of Trustees Oklahoma Public Employees Retirement System (OPERS) www.law.ou.edu/faculty/forman.shtml,2,Overview,OPERS and SoonerSave Fees and Individua
2、l Accounts Improving Asset Allocations for Individuals,3,ORGANIZATIONAL STRUCTURE Oklahoma Public Employees Retirement System,Advisors & Consultants,Board of Trustees,Director of Finance and CFO,Director of Member Services,Executive Director,Director of Information Technology,Chief Investment Office
3、r,Assistant CFO Financial Services,Administrator Member Services,Administrator Defined Contribution Plans,Manager Communication & Counseling,General Counsel,4,OPERS Traditional DB Plan 6/30/2006,Active OPERS Members 45,472 Retired OPERS Members 24,372 OPERS Plan Net Assets $5,817,165,538 OPERS Funde
4、d Ratio 71.4%,5,SoonerSave,Division of the Oklahoma Public Employees Retirement System (OPERS) Administered by 13 member Board of Trustees One of the first deferred compensation plans for public employees Top ten State plans in participation %.(67% as of 9/30/2007),6,SoonerSave,7,SoonerSave - Contri
5、bution Limits for 2007,Regular $15,500 50+ Catch-Up $20,500 for employees age 50 and older Standard Catch-Up $31,000 available 3 years prior to year of retirement,8,SoonerSave Investment Options,Bond Balanced Large-Cap Mid-Cap Small-Cap International Stable Value Self-Directed Brokerage Option,9,Soo
6、nerSave,10,SoonerSave 457 Plan Review,As of12/31/06,11,Fees,Portfolio management, fund administration, shareholder service, and other miscellaneous costs. GAO these investment fees make up 80 to 99 percent of fees Record-keeping fees associated with maintaining participant accounts, processing fund
7、selections, and mailing account statements. Fees associated with setting up a plan and explaining it to employees,Source: U.S. Government Accountability Office, Private Pensions: Changes Needed to Provide 401(k) Plan Participants and the Department of Labor Better Information on Fees (GAO-07-21, 200
8、6),12,Fees Hurt,Imagine a 45-year-old employee who plans to leave $20,000 until age 65 6.5 percent net annual return 7 percent investment return minus percent for fees that $20,000 will grow to $70,500 If fees are 1.5 percent that $20,000 will grow to just $58,400 additional 1 percent annual fee red
9、uces account balance by 17 percent,13,DB Annual Rates of Return outpace DC Plans 1995-2002,Source: Retirement Services Roundtable analysis of Watson Wyatt data,(1.3%),14,Fees Recent Developments,Regulation U.S. Department of Labor ERISA Advisory Committee Legislation Rep. George Miller Litigation Br
10、each of fiduciary duties,Source: Jonathan Barry Forman, The Future of 401(k) Plan Fees, in New York University Review of Employee Benefits and Compensation2007, Chapter 9, pp. 9-1 to 9-18 (Alvin D. Lurie ed., 2007).,15,Improving Asset Allocations for Individuals,Lifecycle Funds Lifestyle Funds Manag
11、ed Accounts,16,Target Maturity Funds (LifeCycle Funds),Member chooses fund closest to projected retirement date Fund will allocate investments over time from aggressive to conservative Average expense ratio 1.29%* Meant to be one-stop shop for retirement investing. Does not consider assets outside t
12、he fund or life expectancy Does not offer employer fiduciary protection,*Source: Morningstar as of 12/31/06,17,Lifestyle Funds,Member selects fund reflecting their risk tolerance: Conservative, Moderate, Aggressive Meant to be one-stop shop for retirement plan investing Up to member to consider asse
13、ts outside of plan in selecting fund Does not reflect age or other life changes Does not offer employer fiduciary protection,18,Managed Accounts,Personalized to individual financial circumstances and retirement goals Considers Assets outside the Plan Reflects life and age changes Employer Fiduciary Protection Asset allocation based on information provided by member Asset based fees,
