Virginia Colleges and Universities Moving to Different 403(b) Plan Model

Fourteen Virginia private colleges are planning to join a newly created multiple employer plan (MEP) with the expectation of reducing their administrative burdens and cutting costs while helping employees prepare for retirement.

The schools are members of the Council of Independent Colleges in Virginia (CICV), an umbrella organization representing 28 private, nonprofit institutions. According to VirginiaBusiness.com, a CICV committee has been working for more than five years on the project, known as a 403(b) Multiple Employer Plan (MEP).

One of the reasons for high interest in the new plan model is the increasing oversight responsibilities for 403(b) plans that higher education institutions have faced since passage of 403(b) regulations in 2007. Many schools have had to add administrative staff to handle oversight issues, the news report said.

Robert Lambeth, CICV’s president, says the MEP will allow many retirement plan responsibilities to be handed off to outside firms that have been vetted by CICV. At the same time, colleges participating in the plan expect it to offer employees a better selection of investment options in addition to more guidance on retirement planning.

Paul Davies, the MEP’s board chair who is vice president of administration and finance at Randolph-Macon College, says that, by combining assets, the plan was able to negotiate reduced fees for employees while giving them individualized counseling, financial planning and access to professional asset-management services.

The MEP will cover more than 9,400 people at 14 schools, including Appalachian College of Pharmacy, Averett University, Bridgewater College, Edward Via College of Osteopathic Medicine, Emory & Henry College, Ferrum College, Hollins University, Lynchburg College, Mary Baldwin University, Randolph-Macon College, Shenandoah University, Southern Virginia University, Sweet Briar College and Virginia Wesleyan University. They will join the MEP in phases through the middle of next year.

According to VirginiaBusiness.com, goals for the MEP include:

• A robust education and financial advising program aimed at helping employees meet retirement goals,
• Constant monitoring of investment options and fees;
• Reduction of colleges’ administrative burden, fiduciary liability and cost in managing retirement plans; and
• Flexibility that allows each school to tailor the plan to accommodate its needs.

Firms providing services to the MEP include:

• Millennium Advisory Services: employee investment advising and education;
• Pentegra Retirement Services: plan administration and compliance;
• PRM Consulting Group: RFP (request for proposal) consulting and management;
• SageView Advisory Group: plan-level investment advising;
• TIAA: recordkeeping; and
• Troutman Sanders: legal services.

A similar plan model has been in place for years for public K-12 plan sponsors—the Wise Choice for Educators Combined 457(b)/403(b) Plan—a co-operative built by the Illinois Public Pension Fund Association (IPPFA).