Case study | plan design and lifetime income
How one state university solved for retirement income for its employees in the absence of Social Security.
Higher Education | Mountain West | Metropolitan State University of Denver
surge in the number of employees who are on track for retirement1*
boost in employees meeting the recommended contribution rate2*
average reduction in investment fees for plan participants*
*Q3 2024 v. Q4 2024.
Background
Metropolitan State University (MSU) of Denver has always strived to overachieve when delivering higher education retirement benefits for its plan participants.
In its multi-vendor recordkeeper arrangement, MSU Denver employees could choose among multiple investment options including Nuveen and Fidelity target date funds. Participants could also contribute separately to a fixed annuity,
In 2023, administrators at the university noted a significant drop in employee contributions to their retirement plan including the guaranteed lifetime income component, TIAA Traditional3. This was a red flag for Amanda Berry, MSU Denver’s director of Total Rewards. Unlike employees at many other public universities, the MSU Denver 401(a) retirement plan is an employer-sponsored retirement plan that is intended to serve as a Social Security replacement plan for its employees. The school’s employees neither contribute to nor receive Social Security benefits for their employment at MSU Denver.
Berry found that too many employees were doing the minimum and were being defaulted to the retirement plan’s default investment without further thought about how their decision would impact their retirement years from now. Their disengagement could diminish their odds of a secure retirement down the road. Berry and TIAA discussed potential solutions that could both improve engagement and embed the option for a pension-like4 income stream into the retirement plan—all while reducing costs for its plan participants.
* TIAA Traditional is issued by Teachers Insurance and Annuity Association of America (TIAA)
Challenge
For employees
With the existing default, there was no embedded option for guaranteed lifetime income, making it more difficult for participants to keep up with contributions to the guaranteed lifetime income portion of their plan. Furthermore, MSU Denver’s employees had few other paths to retirement with guaranteed income. With an average age of 46, many employees were at a critical juncture for retirement planning.
For the plan sponsor
For some, happiness is a secure retirement. Getting employees to reengage in their critical retirement benefits was key to reversing the falling trend of retirement readiness, which had decreased to 19%, far below MSU Denver’s peer benchmark of 38%. TIAA’s proprietary retirement readiness5 is a measurement composed of several factors—the amount employees save, the investment allocations of savings, managing savings for retirement income and employees’ use of financial advice.
TIAA solutions
Berry was determined to reengage employees to take greater control of their benefits and improve their odds of a secure retirement. Over four months in 2024, she became a changemaker by working with TIAA to replace a set of Nuveen mutual funds in the default with the Nuveen Lifecycle Income CIT target date series6 that has an embedded guaranteed income source with the option for guaranteed income in retirement. The new default gave employees a lower-cost option that provides guaranteed income growth during employees’ working years plus the option for guaranteed income in retirement.
The new Nuveen CITs also cut the fees for participants in this default by 40 to 50 basis points, making the new version a win-win. CITs operate much like mutual funds but are subject to a different regulatory structure, often with lower fees than mutual funds.
Discover how your organization can reduce plan costs and boost employee retirement readiness.
Results
With Berry leading the effort, the university was able to make bold changes quickly over four months. Employees gained an option with an embedded guaranteed lifetime income fixed annuity, making it easier for employees to plan for their retirement goals.
By changing the default to the lower-cost Nuveen Lifecycle Income CITs, the university saved employees money in the process while not compromising quality. Plan participants are now paying less than a quarter of what they were before as the investment expense rates fell 40 to 50 basis points, on average, to 0.17%.
Employees at MSU Denver can now default into lifetime income. That’s huge. It helps them prepare to get them to and through retirement. It also makes our benefits package even stronger and helps us with recruiting and retention.
Declining contributions into the stand-alone guaranteed income source from the prior year immediately rebounded as employees reengaged with the new embedded option. The percentage of employees meeting the recommended contribution rate jumped from 32% to a peer-leading 53% from 2023 to 2024. As a result of the new guaranteed option for lifetime income, a fixed annuity called TIAA Secure Income Account, or SIA, the reengagement of employees and the commitment to higher contribution rates, the retirement readiness of MSU Denver employees jumped 122% to 42% in one year, alone, bringing it above its peer benchmark in a competitive market.
increase in the number of employees meeting the recommended allocation to the guaranteed lifetime income*
the increase in three months of the number of Boomers on track for retirement under the new default.**
out of 1260 plan participants saw their plan costs fall*
*Data as of December 31, 2024.
**Q3 2024 v. Q4 2024.
Solutions deep dive
Nuveen Lifetime Income
The Nuveen Lifecycle Income CIT series is a next-generation default investment that combines a familiar target date structure with the opportunity for guaranteed lifetime income. The Nuveen Lifecycle Income CIT series are available as an all passive (Nuveen Lifecycle Income Index CITs), blend of active and passive (Nuveen Lifecycle Income Blend CITs) and all active (Nuveen Lifecycle Income Active CITs) series.
Nuveen Lifecycle Income CIT Series offers a fully diversified portfolio in a single investment while providing the option to generate guaranteed lifetime income in retirement through an allocation to the
About SIA
Guaranteed growth. Income for life.
American workers deserve to retire with confidence, and 80% of plan sponsors agree that participants need in-plan income options.6
Now, 401(a) and 401(k) plan sponsors can provide participants with a unique, pension-like guarantee of lifetime income through the TIAA Secure Income Account, a fixed annuity issued by Teachers Insurance and Annuity Association of America (TIAA).
For higher education institutions that sponsor a 403(b), learn more about
For over a century, TIAA has served the financial needs of those working in public and nonprofit fields. TIAA and Nuveen have supported the financial futures of millions of investors. Together through our service-oriented culture, we remain committed to helping everyone retire with dignity.
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They wanted a solution that had the potential to reduce participants market volatility risk and broaden access to guaranteed retirement income.
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1 TIAA uses a proprietary metric—retirement readiness—that tracks participants’ savings amounts, asset allocation and allocation to a guaranteed asset class that is benchmarked against similar peers.
2 Based on a proprietary metric that measures contribution rates of similar peers.
3 All guarantees are on TIAA’s claims-paying ability. TIAA Traditional is a guaranteed interest annuity contract and not an investment for federal securities law purposes. Past performance is no guarantee of future results. TIAA Traditional is issued by Teachers Insurance and Annuity Association of America (TIAA).
4 Pension-like refers to the income received from a guaranteed-interest annuity contract, not income provided by a defined benefit pension plan.
5 To calculate retirement readiness, TIAA uses a proprietary metric that tracks whether plan participants are meeting benchmark recommendations for saving, for allocations and for allocation to the guaranteed asset class.
6 "PLANADVISER, “Retirement Income Evolution,” July 13, 2022"
As with all mutual funds, the principal value of a target date fund isn’t guaranteed at any time, including at the target date, and will fluctuate with market changes. The target date approximates when investors may plan to start making withdrawals. However, you are not required to withdraw the funds at that target date. After the target date has been reached, some of your money may be merged into a fund with a more stable asset allocation.
Target date funds share the risks associated with the types of securities held by each of the underlying funds in which they invest. In addition to the fees and expenses associated with the target date funds, there is exposure to the fees and expenses associated with the underlying mutual funds.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161 or go to
Annuity contracts may contain terms for keeping them in force. We can provide you with costs and complete details. TIAA Traditional and TIAA Secure Income Account are fixed annuities issued by Teachers Insurance and Annuity Association of America (TIAA), 730 Third Avenue, New York, NY, 10017: TIAA Traditional form series including but not limited to: 1000.24; G-1000.4; IGRS-01-84-ACC; IGRSP-01-84-ACC; 6008.8. TIAA Secure Income Account form series including but not limited to: TIAA-UQDIA-002-K, TIAA-STDFA-001-NUV and related state specific versions. Not all contracts are available in all states or currently issued.
The information contained is about the Nuveen target date strategies overall and also contains information about the Nuveen Lifecycle Income Collective Investment Trust Series (Lifecycle Income CIT Series) described in this material. Please note that the Lifecycle Income CIT Series is not a series of mutual funds and differs in many ways from the mutual funds using a similar strategy. Information about the mutual funds or management of the mutual funds should not be automatically applied to the CIT. The Lifecycle Income CIT Series may be referred to as “Funds” in the following disclosures.
Investing involves risk; principal loss is possible. There is no guarantee the Lifecycle CIT Series’ investment objectives will be achieved. The Lifecycle CIT Series are funds of funds subject to the risks of its underlying funds in proportion to each Fund’s allocation. Underlying Funds invest primarily in stocks and bonds. Large cap stocks may grow more slowly than the overall market. Growth stocks and stocks issued by smaller companies are more volatile than other stocks. Bonds lose value when the issuer is unable to make interest and principal payments when due or otherwise faces a decline in its credit quality. They experience volatility when interest rates fluctuate. Rising interest rates can cause bond prices to fall. Declining interest rates can cause bond income to fall. Non-U.S. investments involve risks including currency fluctuation, political and economic instability, and lack of liquidity and differing legal and accounting standards. These risks are magnified in emerging markets. The target date is the approximate date when investors plan to start withdrawing their money. The principal value of the Fund(s) are not guaranteed at any time, including at the target date. After 30 years past when the target date has been reached, the Funds may be merged into another target date Fund with the same asset allocation. The unit value of the Funds will fluctuate, and investors may lose money. The Fund may not achieve its target allocations and even if they do, the asset allocations may not achieve the desired risk-return characteristics and may result in the Fund underperforming other similar funds. Allocations are subject to change.
As a complex bank product, CITs are exposed to operational, regulatory and reputational risks. CITs may not be suitable for all plan investors or all plan needs and may outperform certain sector products during times of market volatility but also may underperform certain sector products over periods of time. Diversification does not assure a profit or protect against loss.
SEI Trust Company (the “Trustee”) serves as the Trustee of the Nuveen/SEI Trust Company Investment Trust III (the “Trust”) and maintains ultimate fiduciary authority over the management of, and the investments made, in the Lifecycle CIT Series. Each Fund is part of the Trust operated by the Trustee. The Trustee is a trust company organized under the laws of the Commonwealth of Pennsylvania and wholly owned subsidiary of SEI Investments Company (SEI). The Lifecycle CIT Series is managed by the Trustee, based on the investment advice of Nuveen Fund Advisors, LLC, the investment adviser to the Trust, and Nuveen Asset Management, LLC as investment sub-adviser to the Lifecycle CIT Series.
The Lifecycle CIT Series are trusts for the collective investment of assets of participating tax qualified pension and profit-sharing plans and related trusts, governmental plans and other eligible plans, as more fully described in the Declaration of Trust. As bank collective investment trusts, the Trust is exempt from registration as an investment company.
A plan fiduciary should consider the Funds' objectives, risks, and expenses before investing. This and other information can be found in the Declaration of Trust and the Funds’ Disclosure Memoranda. The Fund is not a mutual fund, and its units are not registered under the Securities Act of 1933, as amended, or the applicable securities laws of any state or other jurisdiction. Please refer to
The results experienced by this organization may not be typical of all plans. Individual plan results will vary. Investment products may be subject to market and other risk factors. See the applicable product literature or visit TIAA.org for details.
The testimonial was provided by a current client, and no direct or indirect compensation was given in return. No material conflicts of interest exist on the part of the entity giving the testimonial, resulting from their relationship with the adviser. Results experienced by this organization may not be representative of the experience of other clients, and there is no guarantee of future performance or success.
This material is for informational or educational purposes only and is not fiduciary investment advice, or a securities, investment strategy, or insurance product recommendation. This material does not consider an individual’s own objectives or circumstances which should be the basis of any investment decision.