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“Both [the] plan and the board's consultant, Mercer Investment Consulting, continue to believe that the Pre-Arranged Portfolios are designed and structured appropriately for the demographics of the NYCDCP participants,” the letter concluded. Included with the letter was a memo from Mercer IC, which noted that the standard allocations for nearly all institutionally sold off-the-shelf target-date funds assume a retirement age of 65 and do not take into account DB plan benefits. When the glide paths were designed for the NYC plan, DB benefits and retirement age were incorporated into the customization of the funds. Mercer added that the City of New York’s Pre-Arranged Portfolios utilize the “through” glide path methodology, with the rationale being plan participants rely on these funds for income throughout retirement, which may last 30 years or more. A chart in the Mercer memo shows the Pre-Arranged Portfolios have a higher equity allocation, except for the Static Allocation Fund, into which each fund merges 15 years after the target date. The Static Allocation Fund has an equity allocation lower than the median.
“Both [the] plan and the board's consultant, Mercer Investment Consulting, continue to believe that the Pre-Arranged Portfolios are designed and structured appropriately for the demographics of the NYCDCP participants,” the letter concluded.
Included with the letter was a memo from Mercer IC, which noted that the standard allocations for nearly all institutionally sold off-the-shelf target-date funds assume a retirement age of 65 and do not take into account DB plan benefits. When the glide paths were designed for the NYC plan, DB benefits and retirement age were incorporated into the customization of the funds.
Mercer added that the City of New York’s Pre-Arranged Portfolios utilize the “through” glide path methodology, with the rationale being plan participants rely on these funds for income throughout retirement, which may last 30 years or more.
Rebecca Mooreeditors@plansponsor.com