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Times change. So can the way you invest.

Retirement planning today isn’t like it was for our grandparents, whose pensions covered the majority of their financial needs in retirement. Today, more responsibility rests with employees, so we take very seriously our responsibility to provide you the best and most up-to-date investment funds possible.

With input from our consultant for plan design Callan LLC, we’re customizing and redesigning the Core Investment and Target Date Funds (TDFs) available through Savings Plus. We’re keeping up with the times and excited to share our new investment fund lineup with you.

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Core Investment Fund Lineup

New Core Investment Fund lineup available April 1, 2020.

Savings Plus will officially release a Fund Redesign on April 1, 2020, created to make it easier for you to build a diversified investment portfolio. We’re providing one fund option in each asset class to reduce the decisions you need to make in creating a portfolio that meets your specific investment style.

Core Investement Funds chart

risk reward chart

This Potential Risk/Reward chart displays the range of relation between risk and return potential of the asset classes available through Savings Plus. TDFs and the Socially Responsible Fund don’t appear because those funds diversify investments across several asset classes.

Target Date Funds (TDFs)

Our Target Date Funds are Getting a New Look, Too.

As part of our Fund Redesign, our investment consultant for plan design, Callan LLC, analyzed important participant data like age, salary, CalPERS pension formulas, life expectancy, average retirement savings balances, and participant behavior. This information was used to customize our TDFs to keep pace with industry best practices and better meet the needs of our participants.

The newly designed TDFs are better positioned to help plan participants replace a higher percentage of their income during retirement years while retaining a balanced risk exposure. In addition, the design takes into account longer life expectancy. TDFs align with the year you turn age 65 and are adjusted for longer term growth potential that gradually becomes more conservative until you reach your mid 70s. Assets are then moved into the most conservative TDF, the TDF-Income Fund.

Note: A glide path is how a TDF’s investment mix becomes more conservative over time.

glide path

TDFs are designed to provide a lifelong, diversified investment strategy because they aim to keep pace with you throughout every stage of life. They’re appealing if you’re the type of investor who would prefer that your investments be managed for you. TDFs:

  • Offer a one-decision investment strategy.
  • Feature a diversified mix of investments.
  • Automatically rebalance to an investment allocation that grows more conservative over time.

Target Date Funds invest in a wide variety of underlying funds to help reduce investment risk - you pay only the proportionate share of the expenses of those funds. Like other funds, target date funds are subject to market risk and loss. Loss of principal can occur at any time, including before, at or after the target date. There is no guarantee that target date funds will provide enough income for retirement.

Frequently Asked Questions (FAQs)

Section 1. Core Fund Lineup Redesign

1. Why is the core fund lineup being redesigned?
Savings Plus’s investment consultant Callan LLC provides Savings Plus a biennial analysis and ongoing plan design recommendations. The purpose of this review is to maintain an optimal investment lineup that keeps pace with industry best practices and provides the most up-to-date investment funds for your retirement readiness. We’re keeping up with the times and are excited to share these changes to make it easier to build a diversified investment portfolio. We’re providing one fund option in each asset class to reduce the decisions you need to make to create a portfolio that meets your specific investment style.

2. Why are funds being eliminated from the core fund lineup?
We’re changing our core fund lineup to make it easier to build a diversified portfolio. Currently, we offer both an active and a passive investment fund in each of the five major asset classes: Bonds, Large Cap, Mid Cap, International, and Small Cap. We have chosen to offer either an active or a passive fund option in each asset class based on the best balance of expected returns, risk, and investment management fees. Reducing our core fund lineup to one fund option per asset class simplifies your selection process and reduces the chance for redundancy while still offering you an efficient array of investment choices.

3. What will the new core fund lineup look like?
Core Fund lineup

4. Why is the Short-Term Investment Fund (STIF) being eliminated from the core fund lineup?
Currently the core fund lineup includes two short-term investment funds, the STIF and the STIF Cash. An analysis by Callan LLC determined that the STIF-Cash is better suited to fill the Short-Term Investments asset class of the core fund lineup.

5. Why is the Diversified Real Return (DRR) fund being eliminated from the core fund lineup?
We introduced the DRR fund option in 2011 as a way to further diversify your portfolio; however, utilization has been very low, so we're eliminating it from the fund lineup.

6. Why is a new Small-Mid Cap Fund being introduced to the core fund lineup?
Our Small-Mid Cap Fund accommodates the benefits of both the Small and Mid Cap asset classes while simplifying your selection process and eliminating some redundancy of the underlying investments in the prior stand-alone Small and Mid Cap funds.

7. How do I get information about these new fund choices?
The Fund Fact Sheets provide the overall objective and strategy of each fund and information about the investment managers, fees, performance information, and other important disclosures. The Fund Fact Sheets are located on our website, savingsplusnow.com. Additionally, you may request the Fund Fact Sheets by contacting the Service Center. The Small-Mid Cap Fund Fact Sheet will be available early 2020.

8. Will the new core funds be managed by professional investment managers?
Absolutely. Savings Plus Investment Policy remains consistent. We will continue to use outside, professional, and experienced investment managers. We select these companies through a competitive bid process and continue to evaluate and monitor them for both qualitative and quantitative performance measures. Refer to the Fund Fact Sheets to identify the investment managers associated with each fund.

9. Will any of the new core funds be subject to the 2.0 percent redemption fee?
The redemption fee will continue to apply to the TDFs and the International Fund as stated in our Excessive Trading Policy.

10. When will the new core funds be available?
The new core fund lineup will be available on April 1, 2020. See answers to questions 2 and 3 for more information.

Section 2. Target Date Funds (TDFs) Redesign

11. What is a TDF?
Savings Plus’s TDFs are custom-built investment portfolios that are designed and managed by investment professionals to meet the needs of Savings Plus participants. Each TDF aims to stay appropriately invested throughout each stage of life, based on demographic analysis of State of California employees and Savings Plus participant behavior. TDFs are intended to provide you with a well-diversified investment portfolio that keeps pace with you in every stage of life.

12. How are the redesigned TDFs different from the current TDFs?
Currently the TDFs align with your date of birth, based upon the assumption you will begin taking distributions at age 62. The redesigned TDFs align with the year you turn age 65. They’re adjusted for longer-term growth potential that gradually becomes more conservative until you reach your mid 70s. Assets are then moved into the most conservative TDF, the TDF Income Fund, where the allocation to stocks, bonds, and short-term investments remain steady.

13. How do I know if a TDF is right for me?
You may find TDFs ideal if you want your investments professionally managed without paying an additional fee. Instead of selecting several funds from the core funds lineup with the goal of achieving balance between stocks, bonds, and short-term investments as well as between international and domestic stocks, a TDF is more like one-stop shopping. The TDFs mix different types of stocks, bonds, and other investments that provide more growth opportunity when you’re younger and get more conservative as you get older. Savings Plus automatically rebalances your TDF investments so you stay appropriately invested throughout life and market changes. 

The way it works is you invest 100% of your assets in the TDF based on your date of birth, without having to think about your asset allocation or making additional investment choices. The funds are created to automatically rebalance to an investment allocation that grows more conservative until you reach your mid 70s.

TDFs offer:

  • A one-fund investment decision
  • A diversified mix of investments
  • An investment strategy that automatically becomes more conservative over time
  • An investment option that automatically rebalances
  • Professional management

14. Why are the TDFs being redesigned?
Savings Plus’s investment consultant for plan design services, Callan LLC, performed an in-depth analysis of our participant demographics, taking into account factors such as age, salary, CalPERS pension formulas, life expectancy, average retirement savings balances, and participant behaviors. Based upon their analysis, they recommended we update our TDFs to keep pace with industry best practice and better meet the needs of our participants. The newly designed TDFs are better positioned to help participants replace a higher percentage of their income during retirement years while retaining a balanced risk exposure. In addition, the design takes into account longer life expectancy. 

The new TDFs are adjusted for longer-term growth potential and will continue to become gradually more conservative until you reach your mid 70s. At that time, your assets will be moved into the TDF Income Fund, where the allocation to stocks, bonds, and other investments will remain steady. Additionally, we are adding exposure to a Global Tactical Asset Allocation strategy (GTAA).

15. What is a Global Tactical Asset Allocation (GTAA) Strategy?
A GTAA manager has flexibility to invest in diversified investments such as U.S. and non-U.S. stocks, bonds, and alternatives. Additionally, the GTAA manager has the flexibility to change investments and their relative exposure in the portfolio as worldwide economic conditions present new opportunities.

16. How do TDFs rebalance over time?
Making regular adjustments through rebalancing counteracts the effects of asset class performance differences by selling some of a portfolio’s underlying assets that have performed the best and investing more in areas that have fallen behind, which can help keep an investment strategy on target. When you invest in a TDF, the fund rebalances monthly to ensure that it maintains the desired allocation to the underlying investment strategies. Essentially, rebalancing will help you maintain your investing plan regardless of what the market does.

17. What is a glide path?
The glide path is how a TDFs investment mix changes over time, as depicted below. TDFs are designed to gradually become more conservative as the target date approaches. The funds with closer target dates have higher allocations to bonds and short-term investments and lower allocations to stocks. This shift helps ensure lower volatility as you get closer to and throughout retirement. You don’t need to change the investments yourself once you have selected the appropriate TDF. Instead, the underlying investments within each fund adjust automatically over time. The charts show the glide path for the current and redesigned TDFs. 

18. How do I know which new TDF is appropriate for me?
The following table shows the TDF that aligns with your date of birth.

TDF Fund Name Birth Year Range
TDF-2065 1998 to 2002
TDF-2060 1993 to 1997
TDF-2055 1988 to 1992
TDF-2050 1983 to 1987
TDF-2045 1978 to 1982
TDF-2040 1973 to 1977
TDF-2035 1968 to 1972
TDF-2030 1963 to 1967
TDF-2025 1958 to 1962
TDF-2020 1953 to 1957
TDF-2015 1948 to 1952
TDF-Income Before 1948

19. Why is the TDF-2015 being added back to the lineup?
The fund is added back to the investment lineup because of the expanded glide path for all TDFs. Since the new glide path takes investors to their mid 70s, we are reintroducing the TDF-2015 for participants who were born between 1948 and 1952. The revised glide path is designed to help participants replace a higher percentage of income during retirement years while retaining a balanced risk exposure.

20. Where can I find information about the new TDFs?
The Fund Fact Sheets provide the overall objective and strategy of each fund as well as information about the investment managers, estimated fees, performance information, and other important disclosures. The Fund Fact Sheets are located on our website, savingsplusnow.com. Additionally, you may request the Fund Fact Sheets by contacting the Service Center. The newly redesigned TDF Fund Fact Sheets will be available early 2020.

21. Will TDFs be subject to the 2.0 percent redemption fee?
The redemption fee will continue to apply to the TDFs and the International Fund as stated in our Excessive Trading Policy.

Target Date Funds invest in a wide variety of underlying funds to help reduce investment risk - you pay only the proportionate share of the expenses of those funds. Like other funds, target date funds are subject to market risk and loss. Loss of principal can occur at any time, including before, at or after the target date. There is no guarantee that target date funds will provide enough income for retirement.

Communication Plan

  • Third Quarter 2019 Horizons
  • Emails to CalHR representatives (November – December)
  • Coming your way in early 2020 is a comprehensive brochure that explains more about our Fund Redesign. In the meantime, it’s a great time to think about your longer-term goals so you’re ready to make any necessary portfolio changes when our simplified fund lineup becomes available.
  • If you are enrolled in ProAccount®, our managed account service, look for a notice that explains changes pertaining to our managed account service that are also coming in April 2020.
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