Seal of the  State of Connecticut, Office of the State Comptroller







Q. What are the goals of the restructuring of the Deferred Compensation Plan, Alternate Retirement Program, and 403(b) retirement savings plan for state employees?

A. The restructuring of these plans will:

Q. Why do this now? Didn't the State make changes several years ago?

A. The financial services industry has undergone a number of important changes in the past several years. Regulators and plan sponsors are taking a much closer look at hidden fees and other costs born by plan participants. New technology and new agreements among the major financial services companies now make it possible to give participants access to all investment options in a plan-not just those offered by one company. Mutual fund companies now offer lower-priced institutional shares and very low-priced index funds to plans as large as Connecticut's. These changes make it possible now to offer State employees a better plan with improved service and lower fees.

Q. How will I pay less in fees?

A. The goal of the restructuring is to provide central plan administration so that the asset-based fees that participants pay to support the administration and sales forces of the companies in the current plan will be dramatically reduced. In addition, those 403(b) plan participants who pay a monthly administration fee will no longer be charged this fee. The Retirement & Benefit Services Division of the State Comptroller's Office estimates that the average participant will save hundreds of dollars each year in reduced fees. For the 44,000 participants currently in the plans, these savings are estimated to total about $10 million annually. These dollars will stay in participant accounts to grow to help them meet their retirement income needs.

Q. How will investment choices be better?

A. The new plans will have: a) A family of very low cost index mutual funds, b) a family of low-cost lifestyle asset allocation funds, c) "best of class" institutional actively managed mutual funds and d) a new fixed account with assets managed and guaranteed by several insurance companies.

The index funds will be for participants who want to pay the lowest fees and do not want to pay extra for active fund management. The lifestyle or asset allocation funds are for participants who do not want to make decisions about where to invest their money but who seek higher returns than will likely be found in a guaranteed fixed account. The "best of class" institutional mutual funds will be selected with the advice of third-party fiduciary services.

No ING mutual funds will be offered by the plans to further guarantee no bias in either the selection of the funds or counseling or educational materials related to investing in the mutual funds. The new fixed account will diversify risk among several insurance companies and will provide competitive interest rates for participants who want the safety of a guaranteed account.

Q. I have had most of my money invested in the fixed account with my current insurance company. Will I have to do anything to protect my investment?

A. No. You will be able to keep your money invested in a guaranteed fixed account. The Retirement & Benefit Services Division of the State Comptroller's Office is currently in discussions with insurance companies providing guaranteed fixed accounts in the current plans to continue to manage the assets in those accounts for the new plans.

Q. Who selected the Third Party Administrator for the plans?

A. A review committee made up of labor and management members of the Connecticut State Employees Retirement Commission reviewed proposals from eleven financial service organizations and third party plan administration firms. The Committee recommended that the Comptroller enter into a contract with ING as TPA for all three Connecticut defined contribution plans.

Q. Why was ING selected as the Third Party Administrator?

A. The review Committee of the Connecticut State Employees Retirement Commission judged that ING submitted the best proposal and plan to implement the desired restructuring of all three defined contribution plans. ING currently provides services to the largest number of state employees participating in the deferred compensation plan and the second largest number of employees participating in the 403(b) plan.

ING's participation in sixteen Alternate Retirement Plans nationwide will also facilitate the transition to the new ARP. Finally, ING was judged to have the most experienced team to manage the new plans. For the past four years, ING has been the TPA for the $3.5 billion Massachusetts Deferred Compensation Plan. The experience of ING in managing that plan through its transition combined with the experience of the Connecticut-based ING dedicated team in servicing Connecticut State employees will facilitate the transition.

Q. What will happen to participants in the ARP who have invested with TIAA-CREF?

A. Since the creation of the ARP in 1975, TIAA-CREF has been the exclusive administrator and provider of investment and payout annuity choices for eligible State education employees. Beginning in January, 2006, TIAA-CREF will no longer be the ARP plan administrator. However, TIAA-CREF investment choices and payout annuities will continue to be offered. ARP participants will also be able to invest in the other investment choices available to the other plans.

Q. What is the timetable for plan changes?

A. The first plan to be improved will be the Deferred Compensation Plan, with a scheduled start date of July 1, 2005. Plan participants will begin to receive information about the improvements and the new investment choices in April. The 403(b) and Alternate Retirement Plan will be improved effective January 1, 2006. Plan participants will receive information about plan improvements and new investment choices in the fall so they will have plenty of time to take advantage of the changes.

The State Comptroller appreciates input on this and other issues from residents of the state. Please feel free to contact her office by phone - (860) 702-3300; mail - OSC, 55 Elm Street, Hartford, CT 06106; or, via E-mail -

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