What is the CSD Retirement Trust?

The Trust was created for educators by educators to provide the best Supplemental Retirement Program, 403(b) & 457(b), for K-12 Employees. The Trust is a consortium of school districts, charters and educational associations that have joined together to improve retirement planning and outcomes for their employees and reduce employee fees. The Trust also saves the employers time and money while ensuring compliance with 403(b) and 457(b) regulations.

Why should we join the Trust?

The Trust is a single provider, consortium approach to providing 403(b) and 457(b) programs to districts/charters/educational associations and their employees.  That approach benefits your participants and employees as follows:

1. As a single provider, the focus is on educating all your employees, not just plan participants, and understanding their retirement goals, thus reducing confusion and indecision.
2. The consortium approach dramatically lowers investment management fees and administrative expenses through its collective buying power and diligent investment evaluation and monitoring process, with those savings helping participants achieve their retirement goals.
3. The provider selection process was rigorous, thorough and objective resulting in a provider and plan that best fits the retirement needs and culture of K-12 participants.

What kind of advice can I, as a participant, expect if my district joins the Trust?

First, your financial professional will work with you to estimate your monthly defined benefit, if applicable, for your state’s program, and determine if you want additional monthly income. Next, your financial professional will help determine the amount of salary to defer each payroll period and investment options that best suit you based on return needed and risk tolerance. You may elect to meet with your financial professional periodically or, if you prefer, you can monitor your account using the Website or toll-free number. Your financial professional’s compensation is not affected by your choice of plan investment(s); your financial professional’s guidance is based on your long-term financial and retirement goals.

What kind of education can I expect if we join the Trust?

The financial professional assigned to you will conduct ongoing seminars at your employer. Some may be “lunch and learns,” as well as at other times. In addition, the Trust conducts education workshops that focus on how to optimize your State’s pension benefits and Social Security, and how those benefits interface with your 403(b) and/or 457(b) programs. These programs are open to all employees and are presented after school. The Trust’s education program also focuses on how to increase salary deferrals in the three years prior to retirement to increase your retirement balance.

How is the Trust able to significantly lower costs compared to other providers?

Individual investors pay retail prices when investing just as you do when going to a store. Because they buy large quantities, stores pay wholesale prices when they buy from a manufacturer, and the more they buy, the lower the price. That’s the way the Trust works. Investment options (mutual funds) often, but not always, have management fees that decrease once various asset levels are reached (“breakpoints”). Although an individual participant may have $2,000 invested in a specific fund, the total investment by all participants might be $5M (Trust has over 7,800 participants) and all participants receive the lower fee. Since the Trust started in January 2010 through December 31, 2020, over 90% of the investment options have lowered their fees through the Trust’s collective buying power and diligent investment evaluation and monitoring process. As of January 1, 2021, annual investment management fees range from 0.03% to 0.97% based on the fund(s) you choose. The weighted average investment fee, based on what current participants invest in, is 0.19%, less than 2/10 of 1 percent. If you invest in the fixed-income option, there is no investment management fee and the yield as of January 1, 2021 is 2.05%. Also, as the Trust assets increase (currently $206M) administrative fees decrease because of our buying power. When the Trust began in 2010 a participant with a $10,000 account balance paid $118 annually in administration fees. Today a participant with a $10,000 account balance pays $49 annually, a 59% decrease. Total plan administration fees are currently less than 0.2875%/28.75 bps annually of a participant’s plan assets, plus an annual $20/participant fee (see fee disclosure documents here). In a traditional multi-provider environment, that same participant may pay more.

Other than the fees and expenses noted above, will participants pay any other fees?

No, unless a participant chooses optional plan services, such as loans or the Guided Portfolio Services® (GPS) Program with VALIC Financial Advisors, Inc. (see additional information about investment advisory services here).

How do I know how much I’m paying?

The Trust promotes transparency in fees. The Trust will provide your employer with participant fee disclosure documents, which describe the various fees a participant could pay. The current participant fee disclosure documents can be found here. The Trust also shows the investment management fee for each fund on the PPT slide presentation. In addition, participants receive a quarterly account statement showing prior quarter balance, contributions during the quarter, change in market value of their investments and the administration fees for each investment they have.

Lower fees are great but are my choices limited by being with a single provider, and how have the Trust’s investment options performed?

It is important to draw the distinction between provider choice and investment choice. Provider choice means a participant can choose between various providers that hold assets, etc. Investment choice is not a product of the number of providers, per se. Investment choice is concerned with the quality and quantity of investments (mutual funds) available to participants. Provider choice typically leads to much higher employee fees. The Trust believes that having a single provider but retaining investment choice is in the participant’s best interest. Although the Trust is a single provider, it provides 32 diversified investment options including actively managed, index and age-appropriate target date funds. At the end of each calendar quarter the Trust reviews the performance of its investment options. Our quarterly review is about ensuring each investment option is striving to outperform its Morningstar Performance Rank in Category. This is the fund’s total return percentile rank relative to all funds in the same Morningstar Category. In 11 years, the Trust has only replaced four funds and, since the Trust’s inception, 97%% of our investment options have outperformed the average (in the better half) of their Performance Rank in Category.

If participants are currently working with an advisor, how will their current relationship be affected? What happens to their account? Is it automatically transferred to the new provider(s)? What about future payroll contributions?

We realize many employees are working with a financial advisor and understand that these long-term relationships are valuable. Participants have the choice of leaving their current 403(b)/457(b) assets where they are now or rolling them into the Trust. That is their choice. It is very important that employees confirm with their current provider that there are NO surrender charges or termination fees associated with moving their account to the Trust. It is only their new contributions that will be directed to the Trust.

Are there other benefits to the Trust for the participant?

Yes, if a participant wants to roll/transfer funds out of their 403(b) or 457(b) to purchase service credits in their state retirement program, there are no rollover/transfer fees. The Trust offers both a ROTH (post-tax contribution) as well as a traditional (pre-tax contribution) for participant deferrals in the 403(b) & 457(b) plans. The Trust also offers a managed account overseen by a professional investment advisor for participants who prefer that (see additional information about investment advisory services here), and a deferred annuity that enables participants to invest plan assets to provide additional guaranteed monthly income and defer required minimum distributions from the annuity until payments begin.