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Defined contribution committee reviews target‑date funds, fees and participant options
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Summary
Committee reported strong use of target‑date funds in the 401(a) and 457 plans, reviewed performance and fees, and discussed whether to add a 'real assets' option or brokerage window; staff will revisit lineup in early 2027.
The Norwalk defined contribution committee on Jan. 14 reviewed plan holdings and participant behavior, reporting high usage of target‑date funds and favorable recent returns.
Consultants reported the 401(a) plan holds about $28 million and the 457 plan about $62.7 million. They said roughly 87% of 401(a) assets are invested in target‑date funds and that target‑date quarterly returns ranged from about 3.2% to 5.75% for recent vintages, though some vintages underperformed peers because of small‑cap exposures. The average expense ratio cited for active funds was about 35 basis points; a median fee on Callan slides appeared as 45 bps.
Trustees discussed expanding participant options (for example, a diversified real‑assets option that aggregates TIPS, REITs and commodities) and cautioned against adding many stand‑alone niche funds. A brokerage window was raised as an alternative that would give participants broad choice but the consultant warned brokerage windows often lead to higher fees for participants and limited usage. The committee agreed to consider a real‑assets option and to revisit the lineup in early 2027.
Trustees also asked whether staff had surveyed participants about satisfaction; staff said no recent survey exists but offered to work with Jared to set one up and circulate results to trustees before any changes.
Next steps: consultant to return with analysis of a potential diversified real‑assets option and the committee to consider changes in early 2027.
