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Feedback On Frontline's The Retirement Gamble

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Frontline is airing tonight (and many other times) The Retirement Gamble which looks at the challenges we face saving for retirement. I was lucky enough to be interviewed for this piece but unfortunately got the word last week that I didn't not make the final cut. I was told I was one of the last edits. I kind of feel like the guy who lost out to Aaron Paul for the role Jessie in Breaking Bad! Just kidding. It was a total honor to be interviewed. I am thrilled to report that three of my favorite 403(b) warriors (four if you count John Bogle) reportedly made the final cut: Cyrstal Mendez, Steve Schullo and Dan Robertson. I would love to get a discussion going about your thoughts on The Retirement Gamble.

 

Dan Otter

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Thanks Big red. We were happy that we contributed our little part to this important broadcast. We are scheduled to have lunch with the producers in NYC this weekend. We hope they will focus on the 403b in another broadcast. I was thrilled they gave so much time to John Bogle!!!!

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Guest Joel L Frank

I would have placed the floodlight on the employer as Plan Sponsor. The employer is a Plan fiduciary and the fiduciary standard dictates that the employer assure that only no-load funds and index funds be sold to its employees. This is exactly what our Federal Government, as Plan Sponsor of the Federal Thrift Savings Plan, has done for federal employees. MS did not even mention that the employer is a Plan Fiduciary let alone the very existence of the Thrift Savings Plan.

 

Having said that, I would have gotten the details of the 401(k) Plan for Prudential employees. I then would have compared it to the high cost plans that Prudential peddles; i.e., to the NJ State Employees Deferred Compensation Plan. I then would have asked the Prudential spokeswoman: Why are the higher cost funds sold to non-Prudential employees? That's what Mike Wallace would have done but MS is no Mike Wallace.

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Great Job Steve and Dan! Way to get punched in the gut and bounce back.

 

Watching the JP Morgan guy answer the Fiduciary question was the funniest part! I was cracking up.

 

I bet they have enough footage to do a follow up.

 

I was amazed that so many teachers were featured.

 

ScottyD

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I found the total report spot on. I found it amusing that the Prudential women did not know that index funds outperform active management when asked. She probably did know. Dan we still love you even though you didn't make the final cut. Steve, I like your glasses. I am sending this to several people. Thanks for posting it here or I would never had known about it.

 

Tony

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Dear all,

 

I am new to this website but not new to the 403b investing arena and feel fortunate to have found you!!! I started 403b (TSA's in the old days) investing at LAUSD in the mid 1980's and continue to this day. In other words, I have been alone and isolated reading prospectuses and company propaganda for many years. During this time, I would watch in disbelief as employees would listen to sales pitches that clearly were not in their best interests. This website and Frontline's "The Retirement Gamble" are the only place I have heard mention of fiduciary responsibility. I have spent many hours explaining annuities, funds, fees, load, no-load, etc, etc.....all to deaf ears. I only help family members and a few close friends now. Thank you for all your efforts. I would like to add one observation to the discussion: the life insurance industry, perhaps the main culprit, got off way too easy.

 

Bob

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Bob, one of the great mysteries is after all of these years, why haven't more of our colleagues stepped forward and demand changes. PBS frontline and the WSJ tried for weeks to find enough teachers. All they came up with is this old man, me, and thank goodness crystal Mendez. PBS dropped the California problem because of this problem. They spent a great deal of time interviewing all of the stakeholders and taped our oversight committee proceedings. Hopefully they might focus on the 403b at a later date.

 

Steve

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Kudos, Steve, for your contribution to this important show! There's much more to be said on the topic, of course, but the Frontline episode is definitely a step in the right direction.

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Guest Joel L Frank

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dcp_signin.jpg

 

dcp_basics_text.gif
The New York City Deferred Compensation Plan (DCP) is an employee benefit available to New York City employees. The Plan is comprised of two programs: a 457 Plan and a 401(k) Plan. Eligible employees may choose to enroll in either the 457, the 401(k), or both.

There are three different types of contributions that can be made to DCP:

  • Regular Contributions: All participants of the Plan may make regular contributions (a percentage of income).
  • Regular Contributions as an Alternative to FICA Taxes: There are special eligibility requirements for this provision of the Plan (a minimum of 7.5% of income).
  • Deferral Acceleration for Retirement (DAR): This is the catch-up provision of the 457 Plan for eligible participants nearing retirement with underutilized contributions (a fixed dollar amount).

arrow.gifLearn more about Regular Contributions
arrow.gifLearn more about Regular Contributions as an alternative to FICA taxes
arrow.gifLearn more about Deferral Acceleration for Retirement (DAR)

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While the Deferred Compensation Plan is a benefit offered by the City of New York to its employees, it is a wholly self-funded plan paid for by participants’ fees. The current administrative fee is $20.00 per quarter, regardless of whether a participant has a 457 account, a 401(k) account, or both. In addition, the plan's investment funds are assessed an administrative fee of .0004.

To see the Plan's low management fees, visit the Investment Funds section of this Web site.

The Plan's investment funds have:

  • No front end loads (sales charges or commissions paid for an investment at the time of purchase)
  • No back end loads (sales charges or commissions paid for an investment at the time of sale)
  • No surrender charges (fees charged when an insurance or annuity product is surrendered for its cash value)
  • No 12b-1 fees (marketing fees)
  • No transaction fees (brokerage/transfer fees)

plan_services.gif
In-House Counseling
Client service representatives are available at the Plan’s administrative office to discuss investment options, investment histories, and general Plan information and benefits. Appointments can be made by calling (212) 306-7760 between 9:00 a.m. and 5:00 p.m. Monday through Friday.

Work-Site Presentations
Presentations are given at agency work locations. This allows the Plan the opportunity to provide a large number of employees with updated Plan information at their convenience.

Telephone and Internet Services

  • Obtain forms and brochures (by telephone for delivery by FAX or mail)
  • Leave messages at anytime for response by client service representatives
  • Obtain daily fund values and participant account balances
  • Obtain contribution history and transaction activity
  • Make deferral percentage changes
  • Initiate account changes for the redirecting of contributions and transferring of funds
  • Utilize the custom transfer features - Dollar Cost Averaging and Rebalancer

Daily Valuation of Participant Accounts
The Plan’s recordkeeping system enables participants to always have up-to-date, personal account information.

Quarterly Statements
The Plan issues quarterly statements, which are designed to provide detailed and easy-to-understand account information. Statements are issued two weeks after the close of each calendar quarter.

Newsletters
Periodically, the Plan distributes newsletters which accompany quarterly statements. Newsletters include pertinent Plan news, as well as information on a variety of topics.

Annual Report
A comprehensive, annual financial report is available to all participants. The report includes the financial statements of an independent auditor, the performance results of the Plan’s investment options, and any administrative, investment or legal changes which have affected the Plan during the year.

=====================================================================================================================

As stated all costs/fees are paid for by the participant/investor. Investment options' expense ratios plus administrative costs total about 40 basis points or $400.00 per $100,000 of account value. All of this was accomplished without any complaints from the unions. It was done voluntarily by the City. Why? Because the City recognizes that it must carry out its legal function as fiduciary to the same extent as it does with the Defined Benefit pension system of the City. It's as simple as that. Anyone that says this is a complex issue has not recognized what it means to be a fiduciary.

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I just watched this; it was pointed out to me by the DC manager at Colorado PERA. My district is in the final stages of an RFP decision for a new plan and I sent this out to our committee members. Very timely for us!

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