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New Default Investment Funds for Retirement Plans
April 29, 2008, Volume 54, No. 31

If you participate in Penn’s retirement plans but you’ve never actively selected your investment funds through TIAA-CREF or Vanguard, a change is in store for you. Your retirement assets will soon be moved to a new investment fund. It’s important to note that if at any point in your career at Penn, you’ve made an active election about how you wanted your contributions invested, this change will not affect you.

Whether you contribute your own money to a Penn retirement plan, receive University contributions, or both, you’re in charge of your own destiny when it comes to deciding how to invest that money. Countless investment options exist, from stock and bond funds to money markets and real estate funds. Most plan participants have made active decisions about where to invest their money, but some have not.

Perhaps you were overwhelmed by the number of choices available, or maybe it just slipped your mind! Whatever the reason, the result is that money which has been put into a retirement account with no investment election is automatically placed in a default investment fund. For many years, this default fund has been a money market fund. Money markets are considered a conservative, “safe” investment—but they may not provide sufficient diversification and therefore may not be suitable for long-term financial goals such as retirement planning.

But now, thanks to a new federal regulation, Penn is able to provide a new default fund that should prove more appropriate for your retirement needs. This new fund will automatically adjust your investment mix based on how close you are to retirement age, taking a more aggressive approach when have many years until retirement, and becoming more conservative over time.

If your Penn retirement plan will be affected by this change, you will soon receive a letter at your home address explaining these new default investment funds in more detail. Information about Penn’s retirement plans is also available online at www.hr.upenn.edu/Benefits/Retirement, or by calling the Penn Retirement Call Center at 1-877-PENN-RET (1-877-736-6738).

Related: Summary Annual Report for the Retirement Allowance Plan

Almanac - April 29, 2008, Volume 54, No. 31