Approved Vendors for Optional Retirement Plan (ORP) and Cash Match:TIAA-CREF andFidelity.
Asset Allocation: The way participants invest money between stocks, bonds or mutual funds.
Stocks: Shares in a corporation representing ownership of the company that issued the stock certificates.
Bonds: Debt obligations issued by corporations, banks and governments for terms normally ranging up to 30 years. Investing in bonds means lending the issuing company (or other borrower) an amount of money called the principal.
Mutual Funds: An investment company formed by a pool of money from many investors which is invested by a fund manager. The value of a share is determined by dividing the value of the portfolio by the number of outstanding shares.
Benchmarks: Accepted standards by which an investment option can be measured or judged. Also referred to as an index, a mutual fund is compared to its corresponding benchmark to measure performance.
Regarding plan loans, interest rate benchmarks are those specified in the plan document that are generally deemed reasonable by the plan for plan loans.
Defined Benefit Plan: A qualified retirement plan in which the plan assets accrue investment earnings in a centralized plan rather than allocating them to individual member accounts. In addition, faculty hired or rehired July 1, 2010, or later, without prior service credit, make mandatory contributions of five percent of their semi-monthly salaries to their retirement account. The actual amount of a faculty member’s retirement benefit is determined by using a specified formula that considers age, length of service and highest salary.
The VRS is a defined benefit plan.
Defined Contribution Plan: A qualified retirement plan in which VCU makes a contribution, equal to a specified percentage of creditable compensation, to the faculty member’s individual retirement account. The applicable percentage of VCU’s contribution depends on the faculty member’s hire date, as indicated below:
June 30, 2010, or earlier: 10.4 percent.
July 1, 2010, or later with prior service credit: 10.4 percent.
July 1, 2010, or later without prior service credit: 8.5 percent.
In addition, faculty hired or rehired July 1, 2010, or later without prior service credit make mandatory contributions of five percent of their semi-monthly salaries to their retirement account. The faculty member receives benefits based strictly on the total sum of contributions and investment returns.
The ORP is a defined contribution plan.
Diversification: Spreading money among several different investments in order to reduce risk.
Fiduciary: The entity that exercises any discretionary authority or control over the management of a plan and disposition of its assets, and has any discretionary authority or responsibility in the administration of a plan.
VCU is the fiduciary for the VCU Optional Retirement Plan (ORP).
VRS is the fiduciary for the Virginia Retirement System (VRS).
Investment Objective: Indicates the investment goals of a particular fund; for example, the investment objective of an aggressive growth fund may be to invest in more speculative securities, while a more conservative investment objective may be to invest in high-quality bonds of financially secure companies.
Plan Administrator: The person designated as such by the instrument under which the plan is operated, the plan document.
The plan administrator's responsibilities include acting solely in the interest of plan participants and beneficiaries, and for the exclusive purpose of providing benefits and defraying reasonable administrative expenses; managing the plan’s assets to minimize the risk of large losses; and acting in accordance with the documents governing the plan.