Effective Jan. 1, 2020, the monthly administrative fee for member defined contribution (DC) accounts will increase to $3.75 from $3.00. Since accounts are charged in arrears, members will see this fee deducted from their accounts in February 2020. INPRS’s Board of Trustees approved the new fee on October 25, 2019.
Who is affected?
The increase affects all defined contribution (retirement savings) plans administered by INPRS, including those associated with the following:
- Public Employees’ Retirement Fund (PERF)
- Public Employees’ Hybrid Plan
- My Choice: Retirement Savings Plan for State Employees*
- My Choice: Retirement Savings Plan for Local Government Employees*
* INPRS predicts that there will be sufficient funds from member forfeitures in the PERF My Choice plans to cover expenses for those plans.
- Teachers’ Retirement Fund (TRF)
- Teachers’ Hybrid Plan
- My Choice: Retirement Savings Plan for Teachers
- Legislators’ Defined Contribution Fund
Why is this fee increasing?
The current fee was developed based on a forecast of administrative expenses in 2017 and 2018. The new fee reflects actual costs and a more stringent and refined method for tracking those costs.
Are these new fees competitive?
No one likes paying administrative fees. However, even with the increase, INPRS’s administrative fees will be among the lowest of government defined contribution plans in the nation. According to a national survey of government plans, INPRS new fees will be near the lowest 25th percentile of $3.67 and well below the average of $5.50. (Source: 2018 NAGDCA Survey).
INPRS remains committed to operating with an efficiency that will permit these fees to stay low.
What is a defined contribution account, and who has one?
INPRS defined contribution accounts are the place where your retirement savings are deposited. This can include both your contributions and your employer’s, if any. These accounts used to be known as Annuity Savings Accounts (ASAs).
Members of PERF and TRF hybrid plans have both a defined benefit (pension) plan and a defined contribution retirement savings account. The fees only apply to the defined contribution accounts.
Members of the PERF and TRF My Choice plans have a single defined contribution account from which the fee will be deducted.
INPRS predicts that there will be sufficient funds from member forfeitures in the PERF My Choice plans to cover expenses for those plans.
I’m retired, does this affect me?
This change impacts members with active defined contribution accounts (either accepting contributions or earning interest).
If you took all the money from your account at retirement – including making it part of a monthly benefit – it does not affect you. However, if you have money remaining in your account, you will be assessed the fee.
Why can’t INPRS pay the fee? Why do I have to?
Internal Revenue Service (IRS) regulations require plan expenses be paid directly from members’ DC accounts.
How do you calculate the amount of the administrative fee?
INPRS’s member fee policy outlines the methodology used to determine administrative fees. You can find the fee policy online here.
What expenses do administrative fees cover?
Administrative fees cover the costs associated with external record keeper fees as well as INPRS internal DC administrative expenses.
What has INPRS done to help offset the fee increase to impacted members?
INPRS has reduced the fees that impact investment returns of your defined contribution account. The annual fee savings for your self-directed investment options include:
- Approximately $322,000 across equity (stocks) and inflation linked investment options.
- Approximately $375,000 for the Stable Value Fund.
- Approximately $174,000 for Target Date Funds.