The Teachers’ Retirement Board today selected ING U.S. as the new third party administrator, commonly called the recordkeeper, for the California State Teachers’ Retirement System supplementary savings plan, known as Pension2®.
Pension2 is the defined contribution part of the CalSTRS hybrid retirement system that also includes the traditional defined benefit pension and the defined benefit supplement, which is a cash balance program.
ING U.S., which will rebrand as Voya Financial in 2014, will take on its new role effective in the late summer or fall of 2014 on an eight-year contract with two one-year extension options. Specific contract terms are now under negotiation. The program’s current contract has been with TIAA-CREF.
“California educators have traditionally been under enrolled in low-cost, high-quality supplemental retirement savings options. Our desire is to increase participation by offering a competitive product that will enhance overall retirement security,” said CalSTRS Chief Executive Officer Jack Ehnes. “In a marketplace that offers CalSTRS members so many varied choices, some of which may not be in their best interest, we want educators to look seriously at the products and services we will be delivering with ING U.S.—soon to be known as Voya Financial—as our partner.”The 2013 CalSTRS “ Retirement Readiness Assessment Report ” found that nearly three-quarters of working members are concerned about being able to afford medical expenses in retirement, while 40 percent of retired members reported spending more than expected on health care in retirement. The report is a comprehensive survey of the financial standing and retirement planning of California’s 653,000 active and retired CalSTRS members. “Significant costs, such as healthcare, will be a fact of retirement life for our members. Having options, such as those offered through Pension2, allow members to prepare for these contingencies while they have the time to invest and grow their resources,” Mr. Ehnes added.