Plan Sponsor Interview with Boyd Bender on Retirement Income
Can you introduce WEA Member Benefits for our audience? How does WEA Member Benefits work with employers and participants when it comes to retirement benefits?
WEA Member Benefits (or “Member Benefits” for short) is comprised of multiple programs and trusts. Member Benefits offers retirement and investment, financial planning, and personal insurance programs that are designed specifically for the education community. Our flagship program, the WEA TSA Trust 403(b) program, was created by the Wisconsin Education Association Council (the state teacher’s union) in 1978 to offer Wisconsin public school employees a low-cost alternative to commercial retirement savings plans. The program operates as a not-for-profit trust that reinvests any profits back into the 403(b) program to benefit program participants and is governed by a Board of Trustees. The program focuses solely on the public school, non-ERISA 403(b) market. We are the top provider of public school 403(b) plans in Wisconsin, with over 430 school districts, 50,000 participants, and $4 billion in assets. The cornerstone of our program is group purchasing through scale to keep participant costs low. We utilize an Investment Committee to vet and monitor the investment lineup, which consists of active and passive options and offers four paths (Target Retirement Funds, do-it-with-help, do-it-yourself, and advisor-managed model portfolios) to meet varying levels of investor appetite for involvement in the portfolio selection and management process. Our Board of Trustees recently authorized public schools outside of Wisconsin to join the WEA TSA Trust for the first time.
We assist employers with 403(b) plan compliance (including providing and maintaining the plan document) as well as plan design. Many districts have implemented automatic enrollment, employer contribution and/or matching programs to attract, retain, and engage staff. We assist the plan sponsor during audits, provide a robust online portal for remittance and reporting, and provide consultative services regarding issues that may impact retirement plans such as current or proposed legislation.
Education is fundamental to how we work with plan participants (we call them members). We offer a range of in-person, online, telephone, and print material options. We offer group presentations, individual appointments, and a call center to meet participant needs. Our affiliated financial advisory firm, WEA Financial Advisors, Inc., is also available to members who have more complex questions.
What is the current thinking with regards to retirement income for WEA Member Benefits? Are there any implemented products or solutions? How have your thoughts on the topic changed over the years as the conversations on retirement income and decumulation evolved?
Our thoughts on retirement income are shaped by our members’ commonalities. Because public school employees are our niche, our typical member’s retirement income picture includes a defined-benefit pension from the Wisconsin Retirement System and Social Security. Together, these two sources typically provide lifetime income equal to 50%-70% of pre-retirement salary (depending on individual circumstances). Because most members start with this level of lifetime income, demand for converting their 403(b) balance into lifetime income is low. Rather, members generally prefer to maintain flexibility, highly value safety of principal, and want help as they approach Required Minimum Distribution (RMD) age. For many years, we have offered a range of investment and withdrawal options to support flexibility, safety, and tax planning:
- Stable Value investment option
- Partial lump-sum and systematic payments (monthly/quarterly/semi-annual/annual)
- Declining balance
- RMD support and failsafe integration with all withdrawal options
Members can utilize our financial advisory to discuss a sustainable withdrawal amount based on their situation, Roth conversion strategies, rollovers to our IRA program for Qualified Charitable Distributions, and more.
As the retirement income and decumulation conversation has evolved recently, we devoted resources in 2022 to investigate in-plan products and solutions that could be added to the program.
Conversations on retirement income often jump into a new product or solution, what are your thoughts on plan sponsors utilizing existing plan tools and infrastructure to create to influence participants with regards to decumulation? Is that something WEA Member Benefits is doing?
This question perfectly summarizes the conclusion of our 2022 investigation into products and solutions. We started with a product-centric approach and the idea that we would identify new in-plan solutions to implement. As our research progressed, we recognized that despite the commonalities among our membership, it is difficult to identify a solution that meets the range of nuances and complexities involved with individual situations…and that was before any recordkeeping considerations.
We began to recognize that our existing options and infrastructure are already well-positioned to meet member needs. Although our stable value investment, range of withdrawal options, and RMD support have been in place for many years, we have an opportunity to improve communication about our capabilities in this space, and that is where we’ve decided to focus in the short-term. We also feel our financial advisory is well-positioned to help fit members with the existing in-plan tools and strategies that best suit their needs.
That said, with the widespread recognition of the need for retirement income solutions, innovation may lie ahead. We intend to continue monitoring new in-plan retirement income products and solutions that fit our members’ needs in the coming years.