403b For The State Of Florida

[Tampa Gator 0]

I posted this on Vanguard's (www.Diehards.org) and wanted everyone here to see it as well:

 

403b for the State of Florida Community Watch

Tampa Gator | 07-28-03| 07:34 PM| Total Replies: 2

 

As you all know I am trying to push my company to make a switch from VALIC to Vanguard, TIA-CREF, or Fidelity due to high expenses.

 

My employer is related to a University in Florida, but we are not employees of the state system. I said before we have about $20million in employee's assets in our plans and VALIC is charging us about 1.05% above fund fees (M&E) fees which equates to about $200,000 a year versus having Vanguard for a full year only charging $30k (per quote).

 

My boss asked me to dig into the university's system and I did. Its an optional retirement plan (ORP) that employees can choose to do. They also have a traditional DB plan. However, their 403b gives them 5 choices of companies in order of most popular (VALIC, TIA-CREF, AETNA, Met Life, and Jefferson Financial). I got a hold of one of these contracts today with VALIC through the state and these employees get charged the same amount us we do.

 

Digging more is that all decisions are made in Tallahassee and the plans are pushed down to the Universities. Therefore, the State bargains with VALIC and not each State University individually. Well I guess that state employers are paying an arm and leg also. But most distirbing is too think how much DAM money VALIC is making off the state employees. WOW!!!! We are talking probably well over $1 Billion in employee assets (no clue). Take that times an extra 1.05% per year. WOWWWW!!!!!!!!!!!!!!!!!!!!!!!!!!

 

I hope I can get mine changed at my company and then even help the state learn more about it at our university level.

 

Thanks,

 

John (aka Tampa Gator)

 

 

[gschech 0]

It's all about lobbying and money. These insurance companies have the resources to go after the decision makers in the state capital. I believe the political folks either don't get it or don't care. Good luck in getting your company to switch vendors.

 

Garry

[Guest Erik]

This is the Devil's Advocate point of view which you may want to consider when pushing this issue:

 

In order for Vanguard's total expenses to be $30,000 on your plan, you (I assume) must have 100% of the plan invested in the S&P500 fund. As the S&P500 is not an actively managed fund, the expenses SHOULD be lower. With VALIC you get actively managed funds.

 

This is the approach that VALIC agents now take when confronted with questions about fees. Never mind the fact that their funds have done worse than the market over the past few years, VALIC will flatout say, "You know how poorly the market has performed recently. Don't you want someone actively looking after your money?" Makes me want to puke!