CalSTRS and TIAA-CREF Team to Expand Retirement Savings Plan for California Educators - Forbes.com
The California State Teachers' Retirement System (CalSTRS) and TIAA-CREF, the national financial services organization and the leading provider of retirement services in the academic, medical, research and cultural fields, today announced they have joined forces to expand CalSTRS' supplemental retirement savings program, which is open to about 800,000 Californians. Through this relationship, CalSTRS, the second-largest public pension fund in the United States and TIAA-CREF will provide low-expense retirement savings vehicles for public school employees in more than 1,400 school districts and community college districts across California.
"We are very pleased to inaugurate this unique partnership with CalSTRS - an organization with which we share a common mission, set of values and commitment to serving those in the academic field," said Herb Allison, Chief Executive Officer, TIAA-CREF. "This relationship speaks to TIAA-CREF's commitment to giving clients high value and high quality retirement savings vehicles that can help individuals build financial security to and through retirement."
TIAA-CREF will perform all record keeping and trust functions and act as custodian of program records and assets for CalSTRS' existing 403(b) program. Further, the organizations are working together to increase the number and types of investment products by adding a 457(b) plan and Roth 403(b) plan this year and Traditional and Roth Individual Retirement Account (IRA) offerings in the coming year. Each of these plans offer school employees access to low-expense and high quality tax-advantaged savings vehicles.
"The combined strength of two leaders in the educational market will provide California's educators with enhanced savings options from a provider in which they can have confidence," said Jack Ehnes, Chief Executive Officer, CalSTRS. "TIAA-CREF, with their non-profit heritage, was the best choice. Their depth of experience in managing retirement plans, comprehensive and time-tested understanding of the needs of our members and transparent approach are the perfect fit for us."
CalSTRS members, like many individuals across the United States, will need to supplement their retirement income from defined benefit retirement plans with other forms of replacement income to help meet their needs and desired lifestyles in retirement. California's teachers do not receive Social Security for their time in the classroom and a career teacher can expect their CalSTRS pension to replace only about 62 percent of their salary.
TIAA-CREF will assume custodial duties for approximately $170 million in assets from current program participants when the new program becomes effective in fall 2007. TIAA-CREF mutual funds, other TIAA-CREF investment strategies, including the TIAA Real Estate Account, which invests directly into a diversified array of commercial and residential properties, as well as third party mutual funds, will be offered in the program.
This is not the first time CalSTRS and TIAA-CREF have worked together. In 2002, in an effort to cut through the clutter created by the nearly one hundred 403(b) providers from which California teachers can choose to invest, CalSTRS and TIAA-CREF teamed up to create a new online information bank called 403bcompare.com (www.403bcompare.com). The Web site, established by California law and administered by CalSTRS, is designed to help California teachers make informed investment decisions. It allows California teachers to more easily evaluate 403(b) investment options from different companies across consistent criteria such as fees and service levels and provides definitions to commonly used terms. The Web site was developed in close consultation with teachers in California and was the outgrowth of extensive focus groups and consultations with California teachers.
With a $171.1 billion investment portfolio, the California State Teachers' Retirement System is the second-largest public pension fund in the United States. It administers retirement, disability and survivor benefits for California's 795,000 public school educators and their families and 1,400 school districts. For more information on CalSTRS, visit www.calstrs.com.
TIAA-CREF is a national financial services organization with more than $414 billion in combined assets under management (3/31/07) and the leading provider of retirement services in the academic, research, medical and cultural fields. Learn more about TIAA-CREF.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members NASD, distribute securities products. TIAA (Teachers Insurance and Annuity Association) New York, NY issues annuities.