The Catholic University of America

Investment Policy Statement: The Catholic University of America 403(b) Retirement Plan

Approved by:

Executive Committee of the Board of Trustees

History:

Issued   -- January 2012

 

Revised --

Related Policies:

 

Additional References:

 

Responsible Official:

Vice President for Finance and Treasurer tel. (202) 319-5606

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Plan Information
Plan Sponsor:                                                     The Catholic University of America
Plan Name:                                                         The Catholic University of America Retirement Plan
Type of Plan:                                                       403(b) Defined Contribution Plan
Participant Directed Investment Options:            Yes
Frequency to Change Investment Options:         Daily
Purpose of Investment Policy Statement
The purpose of the Investment Policy Statement (IPS) is to assist the Plan Sponsor in effectively structuring appropriate investment options for plan participants.  This includes establishing a prudent process for selecting, monitoring, and, when necessary, replacing funding options. 
This IPS shall be reviewed at least annually by the Investment Subcommittee and can be updated as necessary and made available to participants upon request. 
Statement of Objectives
Investment objectives for the Plan have been established in conjunction with a comprehensive review of current Investment Options. The objectives are:
-  To assure offering of investment options to comply with the requirements of ERISA Section 404(c) which relieves plan sponsors from fiduciary liability for participant investment decisions if certain requirements are met. 
-   Provide returns comparable to the appropriate benchmark for the asset categories
-   Provide opportunities to diversify across the risk-return spectrum with a range of investment choices within varied asset classes
-   Control the costs of administering the plan and managing investments
The Plan will encourage participants to take an active role in their retirement planning by providing education and information so that they can make informed decisions about their participation and funding option selections. 
Roles and Responsibilities
Board of Trustees Responsibilities
The Investment Subcommittee of The Catholic University of America’s Board of Trustees will provide overall plan governance over the 403(b) Retirement Plan (the Plan).  The Committee meets formally on a semi-annual basis, or more necessary as required, to review the overall performance of the Plan. 
Plan Sponsor Responsibilities:
-   Retirement Program structure
-   Retirement Provider selection
-   Administration of the Retirement Program
-   Monitoring of Retirement Providers and Retirement Program
-   Monitoring of Investment Options in conjunction with the Retirement Providers and the investment consultant; including designating default investment options when appropriate
-   Notification to participants of Investment Option changes within required timeframes
Retirement Provider Responsibilities:
-   Offer Investment Options and funds within such options that reflect broad diversification opportunities
-   Limit redundant fund options within an asset class
-   Monitor and report on fund performance and overall participant activity to the Plan Sponsor at least annually in a format or template approved by the Plan Sponsor
-   Identify funds that do not meet the investment criteria and provide recommendations for appropriate action at least quarterly
-   Report to the Participants on a periodic basis the return performance and other data pertaining to its Investment Options in conjunction with the Plan Sponsor
-   Communicate at least annually to Participants invested in a default investment option, explaining that other investment options are available
Participant Responsibilities:
-   Determine the amount of compensation to contribute to the voluntary plans
-   Select investment choices based upon their own individual needs, goals, time horizon, and risk tolerances
-   Monitor the investment selections by reviewing the quarterly participant statements
-   Schedule periodic reviews with the Retirement Provider(s)
Investment Options
The Plan shall provide each participant with the ability to diversify among an array of asset classes in order to construct individual portfolios consistent with their desired level of risk over their respective time horizons.  The Plan will offer broad asset classes through a mutual fund menu and/or a variable annuity in the fund menu including: 
-   Cash or Equivalents
-   Guaranteed or Stable Value
-   Lifecycle/Target Date Funds
-   US Fixed Income
-   US/Global Inflation Protected Bond
-   US Equities
-   Global/International Equities
-   US/Global Socially Responsible Equities
-   US/Global Direct Real Estate
-   Global/International Bond
Qualified Default Investment Alternative
The default investment option will be used in situations where a participant does not actively select a funding option under the Plan.  On an annual basis, the Plan Sponsor shall review each default option to ensure it continues to be an appropriate default option.  The Department of Labor requires that the default investment option be one of the following:
-   Lifecycle or targeted-retirement-date fund;
-   Professionally-managed account;
-   Balanced fund;
-   Capital preservation product for only the first 120 days of participation
Selection Process
The approval of the investment managers/products offered through the Plan is one of the primary responsibilities of the Plan Sponsor.  Any changes to the investment options will be reported to the Investment Subcommittee. The Plan Sponsor will approve an Investment Option that meets the following minimum criteria: 
-   The Investment Option must be a mutual fund, a collective or commingled fund or a separate fund managed by a bank, insurance company, investment management company, or investment adviser as defined by the Investment Advisers Act of 1940
-   The Investment Option must be able to provide historical quarterly performance numbers for a period of at least three years reported net and gross of fees
-   The Investment Option must be able to provide performance evaluation reports prepared by an objective third party that illustrate the risk/return profile of its manager relative to other funds of like investment style
-   The Investment Option must articulate in its prospectus or other disclosure documents a clear investment strategy that has been in place for a reasonable period and which the Plan Sponsor can confirm has been adhered to over that time
-   The manager or sponsor of the Investment Option shall have no outstanding legal judgments or past judgments, which, in the opinion of the Plan Sponsor, reflect negatively upon it
-   The Investment Option's manager must have been in place for three years or more, or must have an identifiable and portable track record from previous responsibilities
-   The Investment Option must be valued on a daily basis
Additional aspects of the Investment Option will be reviewed such as:
-   History of the firm
-   Management and ownership structure
-   Breadth of products offered
-   Financial stability of the company
-   Investment philosophy
Periodic Review
Each specific option available within a given mutual fund or variable annuity subaccount fund shall be offered based upon its overall value within its asset class category. While frequent change in specific options is neither expected nor desirable, monitoring the investment performance is a fluid process as it is expected that investment options will be added and deleted from time to time as part of an ongoing evaluation process.  Each funding option shall be reviewed pursuant to the following evaluation criteria: 
-   Comparison of the funding option’s return results to appropriate indices and peer groups
-   Risk characteristics
-   Any material changes to the funding option’s organization, process, or portfolio manager or team
-   Any material litigation or regulatory action against the firm that may impact future performance or the reputation of the provider
-   Significant loss or growth of assets under management
-   The funding option is sufficiently utilized by plan participants
If the Plan Sponsor determines that a fund does not meet the monitoring criteria, it will be placed on a watch list. Fund(s) placed on the watch list must be reviewed by the Plan Sponsor every 90-120 days.  A fund can remain on the watch list for up to one year.  The Plan Sponsor will consult with the Investment Subcommittee as necessary.  Upon further review, if the Plan Sponsor determines the funding option remains a suitable investment no further action will be taken.  However, when the Plan Sponsor, with guidance from the Investment Subcommittee, determines a funding option is no longer suitable it will take necessary action to remedy the situation.  The Plan Sponsor will notify the Investment Subcommittee and Finance Committee regarding actions taken. 
Education and Advice
Investment education is critical to the success of plan participants.  Education will be provided to participants in the following manner: 
-   Onsite meetings with representatives from the Retirement Provider
-   Plan Sponsor website
-   Online enrollment
-   Online fund performance summary
If participants are provided with an investment advice provider to assist participants in saving for retirement, the Plan Sponsor shall assess the advice providers’ qualifications, the quality of services offered and the reasonableness of any fees charged for the service.  This process shall avoid self-dealing, conflicts of interest or other improper influences.  Any issues will be immediately reported to the Investment Subcommittee.