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A well-designed investment menu is key to helping employeesachieve their primary retirement goal—a secure monthly stream ofincome.

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By offering the right mix of investments and products that serveyour employees' needs, you can position them to retire withconfidence while mitigating risk and helping to meet yourobligations as a plan fiduciary. The following checklist providesplan sponsors with five steps to consider when designing orevaluating an investment menu:

1. Understand your employees' retirement income needs.

Use segmentation to determine who your employees are and whatthey need to meet their retirement income goals. Some importantfactors to consider include employee age, expected years untilretirement, investment knowledge and preferences and understandingof retirement income options.

2. Build your investment menu with a focus on retirementincome.

Offer diversified financial and investment products that canprovide a lifetime of retirement income. Include guaranteedproducts in your line up, such as low-cost, in-plan annuities. Onlyfixed annuities can provide a guaranteed stream of income that willlast a lifetime. (Note: Guaranteed income from annuities is subjectto the issuing insurance company's claims-paying ability.)

3. Include a default investment option.

The use of a default investment option can be effective atengaging employees who aren't proactive in making retirementplanning decisions. Select a default investment option that isaligned with your plan's objectives and takes into considerationaverage employee current age and retirement age, contributionlevels, income and other demographic factors.

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But remember, a default investment option is an important toolin overcoming employee inertia, but it isn't a substitute foremployee engagement—it's a starting point.

4. Provide advice and education to empower employees.

Offer education and advisory services to help employees makeinformed investment decisions that can lead to better retirementoutcomes. Advice and education can help employees to take actionsthat can help improve their retirement readiness.

5. Understand your fiduciary obligations and establish awell-thought-out process to meet them.

Meeting your fiduciary responsibilities will help to ensure youare providing and engaging employees with appropriate investmentmenu options. Consider using the following best practices to helpensure you are on track to meeting your fiduciary obligations:

  • Maintain a documented process.
  • Create and follow an Investment Policy Statement.
  • Establish evaluation metrics and benchmarks, and review them ona regular basis to carefully select and monitor fund options.
  • Consider engaging an outside expert such as an advisor orconsultant.

Your employees need access to the right investment and financialproducts to build a portfolio that will get them to and throughretirement. That's why it's so important to design a plan menu thatis built on a foundation of guaranteed income and offers diverseand competitive options.

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Ben Lewis is Senior Managing Directorof Institutional Strategic Sales at TIAA.

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This material is for informational purposes only andrepresents TIAA's interpretation of applicable law. It is presentedwith the understanding that TIAA is not engaged in rendering legalor tax advice. Investment, insurance and annuity products are notFDIC insured, are not bank guaranteed, are not deposits, are notinsured by any federal government agency, are not a condition toany banking service or activity, and may lose value. This materialis for informational or educational purposes only and does notconstitute investment advice under ERISA. This material does nottake into account any specific objectives or circumstances of anyparticular investor, or suggest any specific course of action.Investment decisions should be made based on the investor's ownobjectives and circumstances. Certain products and services areonly available to eligible individuals. Any guarantees are subjectto the issuer's claims-paying ability. Payments from variableannuities will rise or fall based on investment performance.TIAA-CREF Individual & Institutional Services, LLC, MemberFINRA, distributes securities products. Annuity contracts andcertificates are issued by Teachers Insurance and AnnuityAssociation of America (TIAA) and College Retirement Equities Fund(CREF), New York, NY. Each is solely responsible for its ownfinancial condition and contractualobligations. ©2019 Teachers Insurance and AnnuityAssociation of America-College Retirement Equities Fund, 730 ThirdAvenue, New York, NY 10017

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