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Announcing Optional Retirement Program (ORP) Enhancements
The University of North Carolina Board of Governors (BOG) is pleased to announce
enhancements to the Optional Retirement Program (ORP). These enhancements to the ORP will
allow the BOG to offer a broad spectrum of strategically selected investment options, better
manage the investment options available to ORP participants and provide a basis for consistent
decision making over time.
In recent years, the proliferation of investment options within the investment industry has created
an amount of choice that can be overwhelming to most investors. As part of the enhancements to
the ORP, you can look forward to a new, simplified selection of ORP investment funds from
which to choose. They will continue to be offered by the four current ORP carriers, AIG
VALIC, Fidelity Investments, Lincoln Financial Group and TIAA-CREF.
This new selection of funds provides a broad array of investment choices while providing
comprehensive coverage along the risk/return spectrum. The ORP carriers are offering
investment funds in each asset class that they consider among the best in class, based on
competitive returns at competitive and reasonable fees. Reducing the number of funds
offered under the ORP eliminates duplication and overlap of certain funds and allows for a
process of continuous monitoring of each fund by the University.
An overview of the following ORP enhancements is highlighted in the
attached ORP Enhancements At-A-Glance.
Streamline and offer new ORP Investment Funds
Designate Lifecycle Funds as the new Default Option
Offer access to new Mutual Fund Platforms provided by AIG VALIC,
Lincoln Life and TIAA-CREF
Offer Fidelity’s new retirement group annuity product
Next Steps
Step 1. For more details about the Optional Retirement Program changes, visit the UNC
system benefits website at:
Step 2. To learn more about the new investment fund selections offered by your investment
carrier, visit your ORP carrier’s dedicated website. You can visit the site any time beginning
May 1, 2006.
Fidelity Investments:
Lincoln Financial Group:
April 2006
Step 3. You may currently be allocated to an investment choice(s) that will no longer be
available--a “deselected fund.” Beginning July 1, 2006, visit your ORP carrier’s website or
contact your ORP carrier directly to redirect ORP future contributions and, if you so choose,
reallocate your existing balances among the new investment funds. You will have until
December 31, 2006, to redirect your future ORP contributions. If no change is made, your
future ORP contributions, beginning January 1, 2007, will be automatically directed to the
appropriate Lifecycle Fund (the new default option).
You may choose to keep your existing ORP money in any “deselected funds”
(funds previously available under the ORP). However, new contributions to
deselected funds will be prohibited after December 31, 2006. In the event existing
funds are not part of the core fund lineup, each ORP carrier will provide a strategy to
help you direct future contributions and, if you so choose, transfer existing balances
to an approved fund with a similar objective.
Types of Funds
Each ORP carrier will continue to offer a variety of investment choices,
within a broad array of fund categories. Each ORP carrier may have one
or more funds available in each asset class from which to choose. These
asset classes, established by the University, include fixed and variable
account investment options and mutual funds.
Refer to your ORP carrier’s website, as listed above, for details about the
new investment fund choices. You will have an opportunity to attend
meetings later this year to learn more about the ORP changes. Look for
more information about the ORP changes soon.
Background Information
In 2004, an ORP Investment Advisory Committee was established to
advise the system wide University Benefits Officer in the development of
an ORP Investment Policy Statement that describes how the BOG and the
University will carry out its fiduciary responsibilities for the program.
The Advisory Committee, assisted by a national benefits consulting firm,
is made up of University investments and benefits experts. In its
continuing role, the Committee will provide assistance in reviewing and
monitoring the ORP carriers, including their funds, fees and services.
More information about the work of the Advisory Committee can be
found on the UNC web site at:
Principal Protection
Money Market
Stable Value/Fixed Account
U.S. Fixed Income
Core Fixed Income
Inflation Indexed Bonds
Lifecycle Funds
U.S. Large Cap Equity
Broad Market
U.S. Mid Cap Equity
Small Cap Equity
International Equity
Specialty Funds
Voluntary Supplemental Retirement Programs
If you wish to supplement your retirement, you may continue to invest in voluntary supplemental
retirement programs that are made available by your campus, such as the State’s 401(k), the
State’s Deferred Compensation Plan (457) and various 403(b) plans. For more information
about these voluntary programs, contact your University Benefits Office.
April 2006
The University of North Carolina
Streamline and Offer New ORP Investment
Carriers under the ORP—AIG VALIC, Fidelity Investments,
Lincoln Financial Group, and TIAA-CREF—will offer
investment funds in each asset class and reduce the overall
number of investment funds they offer to no more than 20
funds per carrier. The reduction in the number of investment
funds allows the ORP to offer a streamlined core of
investment options.
Each ORP carrier was asked to ensure that each fund was
appropriately categorized in its investment class, and was
among the best in its class. Based on performance,
competitive fees and other factors, the President has approved
the new ORP investment fund lineup, as recommended by the
ORP Advisory Committee and outside benefits consultant.
Designate the Lifecycle Funds as the New
Default Option
A LIFECYCLE FUND is an investment that
features an asset mix determined by the level
of risk and return that is appropriate for an
individual investor. Factors that determine
this mix include an investor's age, appropriate
level of risk, the investment's purpose and the
length of time until the principal will be
Lifecycle funds can feature
conservative, moderate or aggressive growth
strategies. Aggressive growth lifecycle funds
are targeted to investors in their late twenties,
while conservative growth lifecycle funds are
targeted to investors in their late fifties.
Offer Access to New Mutual Fund Platforms
Provided by Three Carriers
*Introducing Fidelity’s New Retirement
Group Annuity Product
ORP participants will have an opportunity to select from the
new ORP funds beginning July 1, 2006.
Lifecycle Funds offered by each of the four carriers will
become the default fund in a situation where participants do
not select a fund. Previously, money market funds were
designated as the default fund.
Participants investing in deselected funds who do not make a
fund selection by December 31, 2006, will have all future
contributions directed automatically to the appropriate
Lifecycle Fund beginning January 1, 2007.
A participant may elect to keep existing ORP money in funds
that will no longer be available beginning July 1, 2006, or
transfer those assets to other funds with similar fund
AIG VALIC, Lincoln Financial Group and TIAA-CREF will
offer new mutual fund platforms to provide a broader
spectrum of strategically selected investment options.
ORP participants will have an opportunity to select the new
mutual funds beginning July 1, 2006.
Fidelity Investments will begin offering a group annuity
product through the Principal Financial Group (The Principal)
for those ORP participants who retire and wish to safeguard
retirement savings by receiving an income for life. This
annuity option continues to be available through the other
three ORP carriers as well as through Fidelity beginning July
1, 2006.
*Subject to approval by the UNC Board of Governors on May 12, 2006.
April 2006