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Teacher's Retirement Fund


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#1 prowler

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Posted 14 September 2007 - 06:29 AM

In our specific situation, the Teacher's Retirement Fund (TRF) is made up of two parts: a Pension and an Annuity. Aside from the Pension portion of this TRF and focusing on the "Annuity" savings account (ASA) - our paperwork indicates that the ASA provides 5 choices of investments, and that we have opted to place our investments 100% with the "Guaranteed Fund". Our paperwork also shows that expected annual growth in this fund is approx 6%.

It seems that the past performance of this Guaranteed Fund is comparable to a sister fund, namely the "Bond Fund" which is described as follows: This fund consists of a broad range of corporate, government, and agency instruments. It can have up to 10% in high yield bonds and up to 10% in non-U.S. fixed-income instruments. The objective of the fund, over the long term, is to outperform the Lehman Brothers Aggregate Bond Index. Investment in this fund involves risk.

No such detailed description exists for the Guaranteed Fund, other than this: The rate for this fund is determined annually by the Fundís Board of Trustees. The balance of each memberís account at the beginning of the quarter is credited interest at the end of each quarter.

Question 1: What exactly is the nature of the Guaranteed Fund? In what specific areas is it invested?

Question 2: With much past discussion on the elevated and exorbitant annual expenses associated with NEA retirement options - where do we fit into this picture? Our most recent TRF paperwork shows that annual GROWTH for this Guaranteed Fund in the ASA is approx 6% and that Management fees for this fund are ZERO%. What are we missing here?

Thanks for any clarification

#2 prowler

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Posted 14 September 2007 - 07:13 AM

Ooops. A quick answer to myself here, as I found the info regarding the intent and direction of the ASA Guaranteed Fund. That takes care of question #1 on my initial post. See ASA here.

I still would like clarification on the relationship between the Teacher's Retirement Fund (TRF) and the NEA directed investments. I am under the impression that the NEA oftentimes directed teachers toward high expense annuities and high expense 403b plans. This doesn't sound like the TRF fund we have at this time. Is the TRF a more viable place to park retirement funds than some other sort of NEA annuity? Is the TRF - in fact - similar in nature to the Fed's Thrift Savings Plan (TSP).

Aside from the TRF annuity question above, our 403b investments are currently invested with VALIC. Our intent there is to roll those assets over into comparable self-managed low expense Vanguard Funds ASAP.

Thanks

#3 Guest_Sierra_*

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Posted 14 September 2007 - 08:55 AM

QUOTE(prowler @ Sep 14 2007, 07:29 AM)  

In our specific situation, the Teacher's Retirement Fund (TRF) is made up of two parts: a Pension and an Annuity. Aside from the Pension portion of this TRF and focusing on the "Annuity" savings account (ASA) - our paperwork indicates that the ASA provides 5 choices of investments, and that we have opted to place our investments 100% with the "Guaranteed Fund". Our paperwork also shows that expected annual growth in this fund is approx 6%.

It seems that the past performance of this Guaranteed Fund is comparable to a sister fund, namely the "Bond Fund" which is described as follows: This fund consists of a broad range of corporate, government, and agency instruments. It can have up to 10% in high yield bonds and up to 10% in non-U.S. fixed-income instruments. The objective of the fund, over the long term, is to outperform the Lehman Brothers Aggregate Bond Index. Investment in this fund involves risk.

No such detailed description exists for the Guaranteed Fund, other than this: The rate for this fund is determined annually by the Fundís Board of Trustees. The balance of each memberís account at the beginning of the quarter is credited interest at the end of each quarter.

Question 1: What exactly is the nature of the Guaranteed Fund? In what specific areas is it invested?

Question 2: With much past discussion on the elevated and exorbitant annual expenses associated with NEA retirement options - where do we fit into this picture? Our most recent TRF paperwork shows that annual GROWTH for this Guaranteed Fund in the ASA is approx 6% and that Management fees for this fund are ZERO%. What are we missing here?

Thanks for any clarification


I googled to find out that your Teachers' Retirement Fund is you primary retirement benefit provided by your state of Indiana. I fail to see any connection with your TRF which is an agency of State government and your National Education Association.

The Guaranteed Fund is invested in the same investment fund as the employer's contributions. Most probably it is a mix of equities and fixed income securities.

Joel L. Frank


#4 prowler

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Posted 14 September 2007 - 09:33 AM

Hi Joel -

Thanks for your prompt reply. Okay, this is slowly beginning to sink in. After more reading and searching the Internet, I think the clouds are beginning to dissipate slightly (LOL).

As you indicated, this State Teachers' Retirement Fund is in no way connected to the NEA or to a 403b plan. It is a separate benefit provided by the State - specifically for State employees .... divided into 2 parts; namely, a Pension and an Annuity. The annuity in which I happen to be invested turns out to be a blessing (IMO). It is called the Guaranteed Fund. Each year, the Board of Trustees established a rate of growth for this Guaranteed Fund. Effective July 01, 2007 and running until June 30, 2008, the established interest rate of growth is 6%. The maintenance fees for this Fund are ZERO.

If my understanding of the facts is right, this will serve as a nice place to leave my "fixed income" portion of my retirement portfolio - until I reach the age of 70 1/2. At the time of RMD, I will be required to roll these assets out.