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On Friday, March 3, 2017, the Indiana Public Retirement System (INPRS) Board of Trustees approved a policy for charging administrative fees for certain INPRS accounts.
As of Jan. 1, 2018, INPRS’ Annuity Savings Accounts (ASAs) will be categorized as separate defined contribution (DC) accounts, according to Internal Revenue Service (IRS) definitions and are required to have plan expenses paid directly from the DC account.
At the meeting, the Board approved INPRS’ member fee policy, which outlines the methodology in which the organization will use in determining administrative fees. The policy can be viewed here.
Members with active Annuity Savings Accounts (either accepting contributions or earning interest) in the PERF Hybrid Plan, PERF My Choice Plan (formerly ASA Only), TRF Hybrid Plan and the LEDC plan, will be impacted by this change.
Members in these plans will receive direct communication from INPRS regarding these fees including the expected amount of fees and when they will first be charged to members’ accounts, which is currently anticipated to be in early 2018.
Below are answers to questions you may be asking about fees:
Why is INPRS going to charge administrative fees?
When annuity savings accounts are separate DC accounts, administrative fees can only be paid from the DC account- they cannot be paid from the pension fund. INPRS anticipates the annual administrative fee to be approximately $36. INPRS’ peers charge $50-60 per year. It is important to know that these fees are not new, rather, the source of payment is.
The INPRS Board of Trustees has approved the organizations’ fee policy but not the specific amount of the fees. Specific fee amounts are expected to be set later in 2017.
Can you give me an idea of what the administrative fees cover?
Administrative fees will cover the costs associated with external record keeper fees, transition costs associated with record keeping and INPRS internal DC administrative expenses.
I read that INPRS’ Annuity Savings Accounts are now being managed by MetLife. Is this true?
No. INPRS continues to manage members’ annuity savings accounts (ASA)- the portion of a members’ benefit which receives contributions from employers, employees, or both, and is invested based on the members’ choices. These accounts have not been transferred to MetLife. Beginning in 2018, retiring INPRS members wishing to annuitize the balance of their INPRS ASA have the option to purchase an annuity through MetLife or any other provider of their choosing. Currently, INPRS has the ability to issue annuities to their members directly and will no longer do so after 2018.