Below are answers to several common questions about the enhancements we've made to the new statement. Please note that along with your statement, we sent you the “Understanding Your Quarterly Retirement Portfolio Statement” brochure, which provides a step-by-step guide on how to read your statement. (If you've chosen to receive your statement via e-delivery, you will receive a link to an interactive, online version of the Guide.)
Why did TIAA-CREF change the statement?
Because of Pension Protection Act legislation passed by Congress, many employers are now required to provide certain plan level data to their participants on a quarterly basis. As a result, we redesigned the Quarterly Retirement Portfolio Statement to show more information at the plan level.
We have also introduced several enhancements to the statement that give you a greater range of information you can use when evaluating your retirement plan, including the Personalized Rate of Return and the Retirement Income Projections sections.
I have a few retirement plans, with several different annuities in each plan. How can I use the new Statement to help me keep track of my different holdings?
Start by looking at the Portfolio Breakdown section, which gives you a snapshot of the total accumulations in all of your retirement plans and other accounts. This section shows your balances separately by plan annuity contracts, and other investments, and also provides the balances for your other accounts.
For more detailed information about your accumulations, you can refer to the remaining sections of the statement. For example, the Plans section lists all of your annuity contracts and the other investments you have in your plans, and may also provide vesting information. The Plan Investment Detail section shows the beginning and ending balances for your pretax and after-tax investments by asset class, along with unit/share price information.
Additionally, the Plan Transaction Detail section lists all of the transactions that occurred over the past quarter in your plans, including contributions, transfers and distributions. You'll find further details about any other retirement or savings account investments you have — including transaction information — in the Other Accounts section. And the Annuity Contracts in Your Plans section provides a listing of all annuities in your employer-sponsored retirement and savings plans. Finally, the Other Investments in Your Plan section gives an investment summary for your other investments in your employer-sponsored retirement and savings plans.
The older version of the statement included a section that showed the interest rates for the TIAA Traditional Annuity. However, I notice that the new statement does not include this section. Where can I find TIAA interest information?
The new statement no longer shows TIAA interest rates as a separate category, but instead shows the cumulative investment gains/losses for all of your accounts and funds. To view performance for TIAA Traditional, refer to the Activity Summary by Asset Class section (TIAA Traditional is in the “Guaranteed” asset class category).
Please note that any guarantees under annuities issued by TIAA are subject to TIAA’s claims-paying ability. Payments under CREF and the TIAA Real Estate Account are variable and will rise or fall based on investment performance.
I recently took out a loan from my retirement plan, but I do not see the loan balance on my statement. Where is loan information located on the new statement?
The Portfolio Summary section on page 1 of the Statement lists the aggregate total of your loans on the “PAL Loan Balance” line. If applicable, you may see a message under the “Plan Header” section stating that your plan balances are subject to any outstanding participant loan balance(s). To obtain additional information about your loan, log in to your accounts and go to manage your portfolio.
Why are the “Annuity Contracts in Your Plans” and “Other Investments” sections separated in the “Portfolio Breakdown” section, as well as in the sections at the end of the statement?
Due to certain insurance laws, we are required to periodically show total annuity holdings by contract. So if you have multiple annuity contracts under a plan, or an annuity contract within more than one plan, we must show you your total annuity holdings at the contract, rather than the plan, level. To see all annuity contracts in your plans, go to the “Annuity Contracts in your Plans” section, where you'll find each of your annuity contracts listed.
If you have other, non-annuity investments such as TIAA-CREF Brokerage Services accounts and mutual funds, these investments are listed separately from your annuity holdings. The reason is that these types of investments are not considered insurance products and therefore must be listed separately from your annuity contracts. (The only exceptions are mutual funds included as subaccounts under our TIAA Access product, which are considered annuity contracts and hence listed in the annuity section.)
In the “Asset Allocation Summary” section, what does the “Multi-Asset” asset class mean, and what types of investments does it include?
The term “Multi-Asset” refers to “fund of funds” holdings, which are funds that invest in both equity (i.e., stock) and fixed-income (i.e., bond) funds. Multi-Asset funds give you an investment that's diversified among stocks and bonds all in one convenient holding. Currently, the TIAA-CREF Managed Allocation Fund and the TIAA-CREF Lifecycle Funds are our only offerings in the Multi-Asset asset class category. Please see the prospectus page for more details about these investments. (Note: The “TIAA-CREF Funds — Retirement Class” prospectus contains information on the Managed Allocation Fund, and the “TIAA-CREF Lifecycle Funds — Retirement Class” prospectus contains information on the Lifecycle Funds.)
Which investment products are included in the “Other Accounts” section?
This section only lists non-plan sponsored products, and generally includes the following:
In the “Other Accounts” section, which investments are considered “Other Investments”?
The investments in this section include the following:
The “Disclosures” section at the end of the statement discusses why it's important not to invest more than 20% of your holdings in any one company. Does this mean that I should not have more than 20% of my money in TIAA-CREF?
No. This is simply legal disclosure suggesting that investors should not have more than 20% of their assets in any one company or industry in order to help them maintain a diversified portfolio. For example, this disclosure suggests that you should not keep more than 20% of your funds in a technology mutual fund or a precious metals fund.
What is the Retirement Income Projection?
The Retirement Income Projection is a simple hypothetical projection of monthly income you might expect in retirement, based on three factors:
We've introduced the Retirement Income Projection to help you track your progress toward achieving your retirement goals and to determine whether your current savings level is likely to be sufficient for your needs. We show this hypothetical projection of your future income in today's dollars, not in the actual future dollars you would receive at retirement, because most people find it easier to think about an income projection in today's dollars.
It's important to keep in mind that the Retirement Income Projection is only a hypothetical generic sample that doesn't take into account all of your TIAA-CREF retirement investment information (for example, recent changes you made to your contribution amounts may not be reflected in your Projection). Also, since the projection is hypothetical, the income shown is not based on a guarantee of the performance of your accounts, so your actual results could vary significantly from the projected amounts. See below to learn how we calculate the Retirement Income Projection.
Why is the Retirement Income Projection just an estimate?
The purpose of the Retirement Income Projection is to help you determine whether your current savings strategy will enable you to achieve your retirement income objectives, or whether you may need to increase your savings rate. Because of the unique variables of each participant's TIAA-CREF retirement portfolio and certain regulatory requirements affecting the creation of personalized income projections, it would be very difficult to provide a detailed, personalized retirement income illustration for your Statement. See below to determine when you may want to request a more personalized retirement income illustration from TIAA-CREF.
How is the Retirement Income Projection calculated?
We calculate your Retirement Income Projection through the following steps:
Remember that the projected monthly income in the Retirement Income Projection is not stated in the actual future dollars you might receive beginning at age 65; rather, it is an estimate of the value in today's dollars of the monthly retirement income you might begin receiving at that age. Also, while many retirement income projections offered by other financial companies or sources ignore the effects of inflation, we added a hypothetical inflation rate to show its effects on your income.
It's important to note that the 6% annual return used for the Projection is hypothetical and does not account for the unique gain or loss attributes of your specific investments available through TIAA-CREF. Also, the Projection does not assume that every TIAA-CREF investment will grow at 6%. For example, in calculating the Projection, we assume that investments that are already paying out interest only will remain level, since these earnings will be taken out of your accumulations each year. Additionally, we ignore investments that are already being paid out, assuming that these accumulations will be depleted when the retirement date occurs.
In regard to plan contribution levels, your Projection assumes that your contributions will continue at their current rates, with a 3% annual growth in your and your employer's contributions. Your Projection also assumes that as these contributions are made, they become part of the accumulations subject to the calculation described above.
Your Projection also assumes that you receive your retirement income from an annuity using a “single life” option with a 10-year guaranteed period. If you have an annuity partner and plan to receive income over both of your lives, you can generally expect your projected monthly income to be 10% to 15% lower, depending upon the joint life income option you select.
Finally, your Projection shows how your projected monthly income might change if you increase your current level of personal contributions by $100 and $250 per month. These additional contribution rates show you how saving a little more now can make a big difference in your monthly retirement income — and a potentially large difference if you still have many years to save before age 65.
Why does TIAA-CREF use a 6% growth rate and a 3% inflation rate assumption in the calculations?
Based on our research, we believe that a 6% growth rate and a 3% inflation rate are appropriate assumptions to use in calculating projected retirement income over long time periods. Of course, actual rates of return are likely to be higher or lower than 6%, especially over short-term periods. Recently, for example, equity performance has been very negative over the short term.
It's important to remember that the Retirement Income Projection is a simple hypothetical example that doesn't take into account different rates of return for various types of investments. Nevertheless, for most TIAA-CREF participants, their Projection is a valuable tool that will help them assess their retirement savings strategy effectively.
Does TIAA-CREF make more detailed and customized projections of my retirement income available?
If your retirement date is still two or more years away, your Retirement Income Projection should give you enough information to guide your decisions about how much you may need to save. The TIAA-CREF website also includes planning tools and calculators you can use when developing a retirement savings plan, including the Retirement Goal Evaluator, which can help you evaluate your current savings strategy.
If you're within two years of your retirement date, or otherwise want a more detailed retirement income illustration that's tailored to your unique personal investment portfolio and uses a range of different assumptions, you can create a Retirement Illustration online. You can also call the TIAA-CREF Telephone Counseling Center at 1 800 842-2776 for assistance in obtaining a Retirement Illustration.
How come my statement doesn't include a Retirement Income Projection?
Your Statement will not include a Retirement Income Projection if:
What exactly is the new Personalized Rate of Return (PRR) that now appears on my statement?
The PRR is an estimate of the performance of the investments in your retirement portfolio that shows how your total accumulations performed over the previous quarter and calendar year. In order to develop your PRR, we approximate the impact that your “cash flows” — i.e., the amount of money you either put in or took out of your funds/accounts between the beginning and end of the most recent period — have had on your overall performance. When creating the calculation, it's important to account for these cash flows, because they can have a significant impact on your portfolio's performance.
Please note that under certain circumstances, you will not see a PRR calculation on your Statement. See below to learn more.
How is the PRR helpful to my retirement planning?
The PRR provides you with estimated rates of return that enable you to see how your total balance performed over the previous quarter and calendar year. Without the PRR, in order to estimate performance for these time periods, you would first have to look at the performance for each of your accounts/funds, then take into account how much money you put into each account/fund, and then consider whether you put in or took out any money between the beginning and end of the period (and when you did so). The PRR considers all of these factors and estimates how your holdings in the retirement plan performed for the given time periods. (Since the PRR only estimates overall performance for the current quarter and calendar year, keep in mind that such short-term results are not indicative of long-term performance.)
What data are included in my PRR calculation?
In general, the PRR includes:
For a detailed description of how the PRR is calculated, refer to the Disclosures section on your statement and the questions below.
Are there any data that are not included in my PRR calculation?
Yes. Certain of your balances and transactions will be reported in your Statement but will not be “factored” into the PRR calculation. The following will be excluded from the PRR:
Is the PRR simply the weighted average performance of all the accounts/funds in my plan?
No, the weighted average return is the average of your retirement and savings accounts/funds' performance weighted by the amount you have allocated to each account/fund. However, unlike the PRR, this weighted average return does not include the money you put into or took out of your plans during the period. When calculating your PRR, we consider both the amount and the timing of all the cash flows into and out of your accounts/funds.
Why is the PRR just an estimate?
To create precise PRRs for you, we would have to compound your returns for your accounts/funds over every period for which there were cash flows. These computations would involve a great deal of processing and would thus prevent timely mailing of the quarterly statements. Therefore, we create the PRRs using estimates.
To calculate your estimated PRR, we use a methodology called the Modified Dietz Method. This methodology takes into consideration your intra-period cash flows and assumes that the return for the entire period is also the return that applies to each sub-period following the cash flow. This methodology is common among investment companies that provide clients with a PRR. The larger your cash flows compared to your initial balance, the farther our estimated PRR will be from your true PRR.
Can you give me some examples of how the PRR is calculated?
Why doesn't my statement include a “Personal Rate of Return” section?
If your statement doesn't include a PRR, this could be due to a number of factors, such as: you have a low beginning balance; your cash flows exceed the beginning balance; or other circumstances occur that could result in a magnified PRR. If any of these situations occur in any quarter, the year-to-date PRR will be suppressed for the remainder of the year, although we may be able to show PRRs for future quarters.
Here is an overview of the situations in which the PRR will be suppressed:
Conditions when the total quarter PRR will be suppressed:
Conditions when the total year to date PRR will be suppressed:
If you do not have a PRR, we will suppress the display of the “This Period” PRR and “Year-to-Date” PRR on your Statement until the next year and provide the following message:
“Your Personalized Rate of Return is not available this quarter or for the remainder of the year because of your cash flows or other circumstances that may become magnified as part of the calculation.”
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
© 2009 Teachers Insurance and Annuity Association-College Retirement Equities Fund, New York, NY 10017
© 2009 and prior years, Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF), New York, NY 10017
