February, 1999
Interim Report

Faculty Policy Committee

Subcommittee on Changes to the MIT Retirement Plan
 
 
 
 
 

"Studying the MIT Retirement Plan is like peeling an onion:

there is always another layer"


Goal: To understand and to convey, by a written report to the Faculty Policy Committee, the effect of the proposed changes in the Retirement Plan on its members, and to make suggestions for improvement.
 

Charge:

1. To analyze and understand the differences between the proposed changes and the current plan in terms of: 
  • available options and services
  • risks (on the upside and the downside) to members

 2. To highlight any specific issues that may cause problems or present opportunities for members.

3. To identify specific suggestions, if there are any, of modifications in the proposed changes that could alleviate any of the identified problems.

4. To convey in a written report the results of this analysis.

 

The Subcommittee membership is:
 

Sheila Widnall, Chair - sheila@mit.edu

Peter Diamond - pdiamond@mit.edu

Paul Gray - pogo@mit.edu

Henry Jacoby - hjacoby@mit.edu

Edwin Thomas - elt@mit.edu

Roy Welsch -  rwelsch@mit.edu


Table of Contents
 

1. Summary and Conclusions

2. Overview

2.1 Components of the MIT Retirement Plan
2.2 Why the Need for Change?
2.3 Highlights of Changes to the Plan
 

3. Changes in the MIT Retirement Plan

3.1 Changes to the Supplemental 401(k)/RPSM Plans
3.1a Increase Allowable in Employee Pre-Tax Contributions

3.1b Initiate Third Investment Option

3.1c Freer Exchange Between Investment Funds

3.1d Outsourcing of Fund Management to Fidelity with Additional Investment Offerings available Spring 1999

3.1e Transfer of Investment Expenses to Participants

3.1f Changes in Fixed Fund Accounting to Market Value

3.1g Addition of Immediate Vesting

3.1h Addition of New Annuity Options

3.1i Provision for Early Distribution of Plan Assets

3.1j Proposed Elimination of Post-Tax Contributions on January 1, 2000

3.1k Loans available (with IRS restrictions)
 

3.2 Changes Effective January 1, 1999 in The Basic Plan

3.2a Revision of Crediting Procedure for the 5% Account

3.2b Changing of Normal Retirement Age from 65 to 62

3.2c Benefit Accrued Past Normal Retirement Age (NRA)

4. Future Issues

4.1 Withdrawals, Annuities, and Lump Sum Distributions

4.2 Interest on the 5% Account

4.3 Proposed Elimination of Post-Tax Contributions on January 1, 2000

4.4 Participant Services

4.4a Communications

4.4b Counseling

Appendix 1: Glossary of Terms

Appendix 2: Annual Expense Ratios for Various Investment Options

Appendix 3: Review of the "Market Value Adjustment" Issue

 
 

1. Summary and Conclusions

The Benefits Office in conjunction with the Strategic Review of Benefits Committee and the Committee on Faculty Administration have developed proposals to deal with issues affecting the MIT Retirement Plan (MITRP). Some of the proposed changes are required to keep the plan tax-qualified, and were instituted on January 1, 1999; some offer increased flexibility to draw retirement benefits while working part time and increased benefits from a lowering of the normal retirement age to allow individuals to phase into retirement. One component of the changes is a response to concerns that the plan's investment options are too limited, with only the Fixed and Variable Fund available for managing participants' accounts. The changes that provide access to a wider set of options will allow participants to build an investment portfolio to meet their individual needs. Finally, since the servicing of the plan has gotten beyond the capacity of MIT to manage, the plan administration will be outsourced.

These proposals for change have been presented to the MIT community in a variety of forums. But the issues are complex and constrained by legal and regulatory requirements. Some are highly technical, requiring considerable effort to master all the details. Therefore, the Faculty Policy Committee appointed this subcommittee to study these proposed changes, and to recommend modifications, if necessary, to meet expressed concerns.

The Committee presents this interim report on their findings to the Faculty Policy Committee, and will follow with a final report in the spring when individual concerns have been received and the changes have been completely specified.

It is not the intention of this report to substitute for MITRP descriptions, documents and the annual reports, which are available from the Benefits Office and on their web site, http://web.mit.edu/benefits/www/. Rather we wish to lay a sufficient foundation for our observations and conclusions. We hope that the work of this committee will help in the discussion of the changes in progress.

In our review to date, we have concentrated on those issues that for legal and regulatory reasons had to be settled to meet a January 1, 1999 deadline, and other changes that were put in place at the same time. Among the several changes, four issues have received most of our attention, and our conclusions about these items can be summarized as follows. Each is discussed in more detail in the body of this report.

The Choice of Fidelity Investments to Manage the Defined Contribution/401(k) Assets. As of April 1, 1999, the management of this component of plan assets will be carried out using the services of Fidelity Investments to manage individual investment accounts for participants. We have reviewed the steps that the Benefits Office went through, seeking bids and negotiating fees, and we are comfortable with the procedure followed.

The Shifting of Investment Account Expenses from MIT to the Participants. This change will result in a small reduction in the growth of a participant's ultimate retirement assets for those who remain invested in the funds that are "cloned" from the current Fixed and Variable Funds. The increased option to choose other funds with possibly higher returns may make up for this loss. All in all, it is our conclusion that this change, which puts us in line with almost all our competing institutions, is fair. We also believe that this change should be considered in balance with all of the changes, some of which increase benefits to participants

Required Elimination of Fixed Fund Book Value and Procedure for Accomplishing Change in Accounting for Fixed Fund Accounts to Current Market Value. To calculate the "book value" of member Fixed Fund accounts a five-year smoothing procedure for crediting capital gains was used by MIT to lower the volatility of credited returns. With the required removal of the guarantee to pay at retirement the greater of book value or market value, a portion of the capital gains of recent years had to be allocated to member accounts to bring them to market value as of January 1, 1999. We have reviewed the procedure used to allocate capital gains to member accounts, and its potential for creating inequities between members of long standing and those who joined only recently, and found it to be a sound approach.

The (Mandated) Choice of an Index Outside MIT's Control for Calculating Returns on Certain Accounts. In the past, MIT has managed the assets that lay behind one part of the MIT-funded defined benefit component of the MITRP, and the rate of return on member's accounts was based on MIT's actual investment results. The IRS now requires a non-MIT index for this purpose. MIT has chosen an alternative index, and specified maximum and minimum values, on a provisional basis. Discussion continues regarding the ultimate form of the index (which will be revised), and it is the Committee's judgment that this interim step is appropriate.

Remaining Issues. Several issues remain to be settled, and our Committee will follow them through the coming months. Key among these is the evolution of the system providing withdrawals, annuities and lump sum distributions, the ultimate selection of the market index for part of the defined-benefit assets, and possible elimination of post-tax contributions to the defined-contribution component of the plan. These issues are covered in more detail in Section 4. Also, with the greater flexibility provided in the revised plan comes greater risk so that the extent and quality of the information provided to participants takes on greater importance. This issue is also covered in Section 4.

In this interim report, we cover the key features of the changes made as of January 1, 1999, and further revisions to come in spring 1999 and beyond. A number of specialized terms and acronyms are used in the presentation, and these are defined in Appendix 1. We feel comfortable that the changes that went into effect on January 1, 1999 are fair.

We were aided in our deliberations by staff from the Benefits Office, the Personnel Office and the Treasurer's Office. We thank them for their collegial and expert input to our understanding of these issues.
 

2. Overview

2.1 Components of the MIT Retirement Plan

For the past ten years, the MIT Retirement Plan (MITRP) has consisted of two components, the Basic Plan -- defined benefit plan supported by contributions only from MIT, and the Supplemental 401(k) Plan -- contributory defined-contribution 401(k) plan. This component receives member contributions, which are matched by MIT. We now describe elements of this plan exclusive of the changes that were initiated on January 1, 1999 and then we highlight the changes.

The MIT Retirement Plan covers all employees, faculty and staff, at the Institute. It is the product of a merger of separate plans in 1989: The Retirement Plan for Staff Members (RPSM) and the Retirement Plan for Employees (RPE). Some of the details of the current plan are the result of the carryover of features and restrictions from this earlier system.

When the plan was modified in 1989, individual accounts from the prior RPSM were maintained as RPSM 401(k) accounts and segregated from the Supplemental 401(k) accounts established under the new plan. No further contributions have been made to these RPSM accounts but they continue to appreciate and form part of the overall defined-contribution assets for faculty and staff hired before 1989. Faculty and staff joining MIT after 1989 do not have RPSM accounts. At the time of retirement, the combination of the Supplemental 401(k) Plan and the RPSM accounts will provide most of the total retirement benefit of a long-term faculty member who has contributed the maximum amount over his or her career.

The benefit from the Basic Plan is expressed as the value of a single-life annuity payable at retirement, although the participant may actually choose from a variety of annuity options of equivalent value. This annuity may increase, after retirement, through the application of triennial cost of living adjustments. The Institute funds this benefit through periodic contributions to the Benefits Fund of the MITRP's Trust. Basic Plan benefits are insured by the Pension Benefit Guaranty Corporation (PBGC).

The value at retirement of an account in the Supplemental 401(k) Plan (where the contributions are defined, but not the benefits) depends on a number of factors. All participants have had the opportunity to voluntarily contribute 1% - 5% of salary to the Supplemental 401(k) Plan. The Institute matches these contributions dollar-for-dollar. This account has been invested in the Fixed and Variable Funds as directed by the participant.

Accounts accumulated under the former RPSM are also invested in the Fixed and Variable Funds. This plan consisted of the 10% contribution from MIT plus a required 5% contribution from the participant. Under the current rules, one half of the contribution from MIT plus its investment returns have to be annuitized upon retirement.

Thus the total value of an individual's account in the Supplemental 401(k) Plan and in the RPSM (if any) at retirement depends on the member's contribution to the plan, the MIT contribution, the choices made by the participant between investments in the Fixed and Variable Funds, and the performance of the financial markets where the funds are invested.

The Institute has provided record-keeping services and the trustees have guided the investment policy, even though almost all day-to-day investment decisions were made by outside firms. The Institute has picked up all of the costs associated with the plan, such as investment, custodial, legal, and actuarial fees. The normal practice is to deduct these costs from investment returns as is done by TIAA/CREF and some other 401(k) retirement plans or to charge participants a fee as a percentage of account balance, with the employer paying a flat fee per participant.

The Institute has set annuity rates by a smoothing formula that limits the maximum increases or decreases to the fixed annuity interest rate to .25% per quarter. This smoothing can increase benefits when rates are dropping, but can lower them when interest rates are rising

2.2 Why The Need For Change?

First, certain practices must be amended in order to preserve the tax-qualified status of the plan and bring the plan up-to-date with changes in IRS regulations. The advantages of preserving this status are many. Under a tax-qualified plan, substantial benefits flow to plan participants: participants pay no taxes on employer contributions until funds are withdrawn; participants may make pre-tax contributions; investment returns accumulate tax-deferred; certain lump-sum distributions may be taxed at reduced rates; and accrued benefits may not be attached in case of bankruptcy.

Second, many view the investment options in the Supplemental 401(k) Plan and the RPSM as being very limited, with only the choice between the Fixed and Variable Fund and restrictions on movement of funds between them. Some feel they do not have sufficient options that would allow them to build an investment portfolio to meet their needs.

Finally, the servicing of the plan has gotten beyond the capacity of MIT to manage to the standards set by modern financial-services institutions. This includes providing responsive record keeping, managing increased investment options, providing up-to-date account valuation, supplying additional service to members, expanding annuity offerings, and insuring continual IRS qualification of the plan with the frequent changes in regulations. The question then arises as to whether the core mission of MIT should include being in the business of 401(k) record keeping.

The Benefits Office in conjunction with the Strategic Review of Benefits Committee and the Committee on Faculty Administration has developed proposals to deal with these and other issues. Some of the proposed changes are required to keep the plan tax-qualified, and were instituted on January 1, 1999; others will occur in the spring of 1999. The Committee has reviewed these changes and we outline them below with our comments.

2.3 Highlights of Changes to the Plan

Some changes deal with the request for more investment options and better services. This is accomplished by outsourcing the administration and management of the plan to an outside financial services institution, Fidelity Investments, and allowing plan participants a much wider choice of investment options. In its decision to outsource the management and administration of individual accounts and offer a wider choice of investment options, MIT held discussions with several outside financial service organizations. We have examined the requirements established by MIT and the proposals received from several vendors. The Committee also reviewed the process that was used to select Fidelity Investments as the outside vendor for the 401(k) portion of the plan and we are comfortable with the process.

This change will be seen as a benefit by many who have asked for more investment options, but may be of concern to others who have neither the time, the experience nor the inclination to enter into more direct management of their retirement assets. To accommodate these concerns, the investment options will include the continuation of the current Fixed and Variable Funds. By April 1, 1999, the current assets of the MIT Fixed and Variable Funds will be transferred to Fidelity Investments for their day-to-day management. The investment guidelines of the Fixed and Variable Funds will be set by an MIT oversight committee, following the current philosophy of these funds, but specific investment decisions will now be made by Fidelity Investments. These particular funds will be managed as mutual funds but offered only to MITRP participants. They have been referred to as "cloned" funds in some MIT literature.

Although the Fixed Fund will initially contain the investment vehicles that currently make up the MIT Fixed Fund, and the investment policy oversight will be provided by MIT, it differs from the previous MIT Fixed Fund in that it will always be valued at market. Thus during periods of rapid growth, it will show the full market increase. Conversely, during market retrenchments, its value can decrease.

In addition to the Fixed and Variable Funds, participants will have access to a variety of mutual funds. Each of these funds bears a specific expense ratio charge that is set by Fidelity, in some cases after negotiation with MIT. Different funds incur different expenses for managing the fund including management and trading expenses, investment advisory service fees and advertising. The proposal is for the expenses of the individual fund accounts to be taken out of gross investment returns so that participant accounts receive investment returns net of these fund expenses.

Since the bulk of the investment fees on the Fixed and Variable Funds have to date been paid by MIT, charging these fees to the accounts in the future will adversely affect account balances for all participants including retired faculty who have accounts. The annual expense ratios for the universe of mutual funds are typically in the range .1% to 1.5% of assets depending on the investment option selected (see Appendix 2 for a table of annual expense ratios for various investment options.).

Also in the future, MIT will negotiate group rates for annuities, which will be available to participants. An expressed concern has been that an outside firm would not set annuity rates using the same formula that MIT has been using to set them, and would therefore subject retiring participants to greater risk from interest rate fluctuations. To meet this concern, MIT will provide retirees with a choice, for a period of time the length of which is still under discussion, between using an MIT-set annuity rate or one that MIT negotiates at a group rate with a commercial carrier.

There are many other proposed changes. Some are designed to enable early retirement by providing increased flexibility and increased benefits. IRS regulations permit more flexibility in phasing in to retirement than is present in the current plan. By changing the normal retirement age (NRA) to 62, and allowing retirement benefits to be drawn while working part time, the MITRP will provide individuals with increased options and increased benefits. The next section lays out the various changes in more detail.
 
 

3. Changes in the MIT Retirement Plan

This section describing the changes is divided into two parts. The first part deals with changes to the Supplemental 401(k) Plan. The changes in plan administration for the Supplemental 401(k) Plan will also apply to assets contained in the RPSM Plan as discussed. (See Appendix 1 for a glossary of terms).

The second part deals with changes to the Basic Plan, the defined benefit plan to which MIT is the sole contributor.

3.1 Changes to the Supplemental 401(k)/ RPSM Plan

The revisions to the Supplemental 401(k)/RPSM Plan fall into two rough categories. One set results from changes made as of January 1, 1999. A second set of revisions will come later with the completion of the transfer of plan assets and management to Fidelity Investments, expected some time in spring 1999. Both are discussed below.

3.1a) Increase in Allowable Employee Pre-Tax Contributions

An immediate change will be an increase in the amount a participant can contribute to the Supplemental 401(k) Plan, as a pre-tax employee contribution. The current maximum is 5%. After January 1, 1999, an individual will be able to contribute as much as 20% up to a maximum of $10,000. The MIT match will remain at dollar-for-dollar only up to 5%.

3.1b) Initiate Third Investment Option

ERISA gives advantages to retirement plans that have at least three investment options. The MITRP will meet this criterion by immediately offering a money market fund through Fidelity Investments into which participants can shift account assets. The money market fund will bear an expense ratio of .42% of assets effective January 1, 1999, thus reporting returns net of this charge. There will be no cost for Fixed or Variable Fund assets until April 1, 1999 after full transfer to Fidelity Investments at which point they will bear expense ratios of .22% and .28% respectively.

3.1c) Freer Exchange between Investment Funds

ERISA gives advantages to retirement plan that offer participants the opportunity to transfer assets among all available investment options at least quarterly. Previously, the MIT Retirement Plan restricted transfers of assets between the Fixed and the Variable Funds. In order to transfer assets, the participant had to be above age 55, and then assets could only be transferred from the Variable to the Fixed Fund. As of January 1, 1999, a participant may transfer funds monthly among three funds, Fixed, Variable and the new Money Market Fund without any restrictions on age. And after April 1999, with the new access to and information about individual accounts, daily transfers will be permitted across all of the options.

3.1d) Outsourcing of Fund Management to Fidelity With Additional Investment Offerings Available Spring 1999

In the spring of 1999, a number of additional options will be available. Fidelity Investments will offer the Fixed and Variable Funds with investment oversight policy provided by MIT. Supplementing these options will be a set of 8 to 10 Core Funds offering a variety of risk and return profiles. The Benefits Office will support these funds with informational brochures and investment analysis software. Finally, for MITRP participants who wish to have access to a still larger group of funds, Fidelity Investments will offer, without additional transfer fees, access to selections from 21 Mutual Fund families through its FundNet.

Some participants have inquired whether shares in individual companies will be acceptable investment vehicles. The answer is no. IRS rules require arm's length transactions in 401(k) plans. Since it is not possible to insure that there is no "interest" in a particular stock purchase, this option will not be available to MITRP participants.

The initial transfer of a participant's retirement assets to Fidelity Investments will create two separate groups of accounts: group#1 will be a combination of all current Supplemental401(k) balances plus any RPSM member contribution account, and 50% of any RPSM MIT contribution account. Group#2 will be the remaining 50% of any RPSM MIT contribution account. At initiation, assets in these account groups will be invested in the same proportions of the Fixed and Variable Fund as they are now.

The resulting balance in group #2 may not be paid as a lump sum at retirement. However, the requirement that these funds be annuitized will be eased. Instead, retirees will be allowed to have this portion of their assets paid in any form (including annuity) that results in payments being made in installments that continue at least 10 years. The participant will have the full choice of investment options for all accounts.

The structure of the new plan with its use of individual accounts that are marked-to-market makes it possible for individuals to roll over funds from certain other qualified plans so that their assets can be managed in one place. Many faculty may find this an attractive option. Possibilities for rollovers include other 401(k) plans, KEOGH's, and SEP-IRA's. However, IRS regulations currently do not allow rollovers of either 403(b) plans or TDA's. Assets that are rolled over into an individual's account will be segregated from the MITRP accounts and the individual will bear any costs from a rollover from a Keogh or IRA account.

3.1e) Transfer of Investment Expenses to Participants

Under the current plan, MIT has borne the expenses for the 8700 employees currently in the plan. In addition, since there is no option to treat participants differentially. MIT has borne the expenses for the 5300 former employees who have not retired for whom MIT continues to hold an account. After April 1, the proposal is to have all plan participants pay investment expenses associated with the expense ratios of the particular investment option that they have chosen. MIT will bear the cost of the transition between MIT and Fidelity Investments. With the exception of funds invested after January 1, 1999 in the money market account, no account will be charged investment expenses and will continue to receive the gross return on the assets until April 1, 1999. MIT will continue to pay the MIT-based expenses of operating the plan, such as the communication and counseling that individuals receive from the Benefits Office and any on-campus record keeping.

Thus, after the plan is set up, participants will receive net investment returns, as occurs for a traditional mutual fund investment account. Expense ratios are: for the Fixed Fund, an annual expense ratio of .22% of assets; for the Variable Fund, an expense ratio of .28% of assets. Other choices will bear other expense ratios. One option available only to MIT participants will be an institutional S&P 500 Index fund at an expense ratio of .1% of assets, roughly 50% below the best rate available to individual investors. Since these funds accumulate tax free, these expenses are paid with before tax assets. (See Appendix 2 for a table of Annual Expense Ratios for Various Investment Options)

In considering this change in the charging of MITRP investment expenses the Committee has considered several issues. With the move to participant choice of investment options, each account will bear a specific cost, depending on options chosen by the participant. It has been suggested by some that MIT fund the Fixed and Variable Fund charges, expecting individuals to pay the costs of their choices of other options. Another suggestion would be to fund an equivalent portion of the expenses for all funds. Another option would be for MIT to pay a portion of the costs for all participants in the MITRP for a transition period.

These suggestions must be viewed in light of the fact that the plan's investment options will include mutual funds (and other funds that use the mutual model for funding expenses). Mutual fund accounting systems are structured to deduct expenses daily, so that net returns are reported. In addition, the daily deducting of expenses is outlined in a mutual fund's prospectus, and must apply to all account holders as outlined by the prospectus. This makes it virtually impossible to track gross returns for MIT participants.

There has been a shift away from being able to recover pension plan cost from the portion of the Employee Benefit Pool supported by federal contracts. And with the move to supporting full faculty salaries on Institute funds, MIT now pays a much greater share of these employee benefit expenses out of its general budget.

We raise the issue that the faculty benefits in other ways from the cost savings experienced by MIT by having plan participants pay investment costs, thus freeing up discretionary funds for educational and research purposes. As mentioned above, there are good reasons for shifting this cost from MIT to plan participants. The Committee believes that this cost shifting should not be considered in isolation, but evaluated in the context of all changes, some of which increase costs to MIT, and more generally in terms of the overall retirement benefits package. For all of these reasons, we believe this is a fair proposal.

3.1f) Change in Fixed Fund Accounting to Market Value

Prior to 1999, a participant's Fixed Fund account value was expressed as its "book value," defined as the sum of MIT and individual contributions plus interest and dividends and a portion of net capital gains experienced by the Fixed Fund. The aggregate of book values could differ from the aggregate market value of the fund. "Market value" is defined as the sum of MIT and individual contributions plus interest and dividends and all net capital gains experienced by the Fixed Fund. At the time of payment of the participant's account, such as at retirement, if the market value of the fund exceeds the aggregate of book values, the book value of the fund is increased by a "market value adjustment" which multiplies the book value of an individual account by the ratio of aggregate market value to the aggregate of book values.

At all times since this book value-market value comparison has been performed, the market value has exceeded the book value. The amount by which market value has exceeded book value is the "market value adjustment." During 1998, in response to the growth in the market, the following market value adjustments have been experienced.

The possibility of paying a benefit at a value other than the account's market value violates IRS qualification requirements. Therefore, the concept of book value must be abandoned. As a result, all Fixed Fund accounts received a market-value adjustment based on returns through December 31, 1998, and on January 1, 1999 all participant accounts were given the market value adjustment, as described above. From now on, they will be at market value each day. The proposal is -- and the IRS requires -- that these funds be allocated in proportion to the asset value of the individual accounts on December 31, 1998. This is equivalent to allocating the funds as if everyone were retiring on this date.

Some faculty have raised the question of whether this method of allocating the unallocated funds is fair. After considerable deliberation, the Committee has concluded the process used was appropriate. The Committee's reasoning is described in Appendix 3.

3.1g) Addition of Immediate Vesting

Under the new plan, vesting will be immediate. That is, a participant will immediately have a right not only to his/her own contributions, but also to the MIT contributions to their account. This provides an obvious financial benefit to new participants. It also provides benefits to other participants of the plan and eases the management of the plan itself. Under this change, the plan will no longer be required to test pre-tax contributions to insure that high-income individuals are not overly weighted in the plan. Therefore, there will no longer be the possibility -- as has occurred of cutbacks of the contributions of highly compensated participants. (The IRS defines highly compensated. The boundary for 1999 is $80,000.)

3.1h) Addition of New Annuity Options

Under the new plan, MIT will continue to offer its traditional annuity for the defined-benefit portion of the plan, for a time to be determined, subject to review. MIT will also offer annuities at negotiated group rates from outside carriers to provide a choice. MIT will continue to take Supplemental 401(k)/RPSM money back into the Benefits Fund to provide an annuity for the defined contribution portion of the plan using the same interest rate assumptions and mortality tables as have been used in the past. If MIT continues to offer such choice in annuities, this could create an additional expense to MIT since participants will likely make the choice of an MIT annuity only when the MIT rate is more favorable than the commercial rate. The issue of annuities is further discussed in Section 4 and remains a future issue for the committee.

3.1i) Provision for Early Distribution of Plan Assets

Under the new plan, distributions of assets will be available at age 59 1/2 if the plan participant is working less than 50% time. Such arrangements require the approval of the department head. On the date a participant begins working at less than half time, the participant is eligible for MIT subsidized health insurance, life insurance and other benefits under specific conditions spelled out in Benefits Office documents.

3.1j) Proposed Elimination of Post-Tax Contributions on January 1, 2000

Under the current plan, contributions to the Supplemental 401(k) Plan (SP) can be either on a pre-tax or post-tax basis. Pre-tax means that you do not pay federal or state income taxes on the amounts contributed but do pay these taxes when the contributions are withdrawn. Post-tax means that you do pay federal and state taxes on amounts contributed, but not when the contributions are withdrawn. MIT proposes to eliminate post-tax contributions to the MITRP. As a result of this change there will be no after-tax contributions which have previously been subject to Federal discrimination tests, designed to ensure that high-income individuals are not overly weighted in the plan. Therefore, there will no longer be the possibility -- as has occurred -- of cutbacks in the contributions of highly compensated participants. This issue is further discussed in Section 4, future issues.

3.1k) Loans available (with IRS restrictions)

Loans will be available under the new plan for purposes such as the purchase of a home, education or medical expenses. This should encourage younger participants to put assets into the plan knowing that they will be available under IRS restrictions for other uses. Under these rules, a loan will be available from $1,000 up to 1/2 of the value of the account, not to exceed a loan of $50,000. The loan will have a 5-year payback period and payroll deductions will be used for repayment. A longer period for home purchase will be available. Spousal consent will be required to obtain a loan from pension assets. Payment of a reasonable interest rate is required on these loans.

3.2 Changes Effective January 1, 1999 in The Basic Plan

The noncontributory, defined benefit portion of the plan is referred to as the Basic Plan. It was created in 1989 with the merger of the RPE and certain benefits from the RPSM. Under the Basic Plan, a retiree receives the larger of the annuity calculated using two different methods of calculation. (This maximum approach is a consequence of the merging of two separate plans earlier.) One calculation is an annuity equal to 1.65% of the sum of salaries received in all years between 1989 and the date of retirement, actuarially adjusted to provide the full benefit at normal retirement age (NRA). The second calculation is the annuity that could be purchased (given annuity pricing at the time of retirement) by the amount in a notional or shadow account, which is credited with 5% of salary each month and earns a notional rate of return. To date, the 1.65% calculation has yielded larger retirement benefits for almost all retirees since this maximum approach was initiated.

3.2a) Revision of Crediting Procedure for the 5% Account

In the past, the investment growth of the Fixed Fund was used to determine the growth of the notional 5% account. (This account also received a market value adjustment on December 31, 1998 in the same way as the Fixed Fund as described above.) Under the current IRS regulations, the continued use of the Fixed Fund appreciation, as it is managed by MIT, is not an option since IRS now requires an arm's length method to compute account growth. Therefore, to compute the growth of the 5% account after January 1, 1999, MIT must select some market index whose growth is outside the control of MIT.

The Committee met with the Treasurer's Office and discussed this issue. The Treasurer's Office proposed a temporary resolution to carry us through the January 1, 1999 transition with final details to be resolved this spring. In order to file with the IRS (which was done in December), the Treasurer's Office has selected an external index and a method to comply with IRS regulations such as a floor and or smoothing that prevents any decrease in the value of defined-benefit assets in the 5% account. The Treasurer also proposed that by a date certain of March 1, 1999 a choice of index and method (floor, smoothing) will be made with a retroactive adjustment to participants' accounts if the adjustment is positive. The Committee expects to be actively involved in this issue. See Section 4. Future Issues for a more complete discussion.

3.2b) Changing of the Normal Retirement Age from 65 to 62

Under the current MIT Pension Plan, the normal retirement date is July 1st following the 65th birthday. An individual retiring on this date who falls under the 1.65% benefit receives the full sum of 1.65% of salary as an annuity. Actuarial adjustments are made for individuals who chose to retire earlier or later than the Normal Retirement Age (NRA.)

The Executive Committee of the Corporation has approved a limited-time change to the normal retirement age (NRA) from 65 to 62, effective immediately and continuing through December 31, 2003. This effectively backdates the calculation of the pension benefit with an NRA of 62 to 1989. This change will be revisited before the end of the fifth year to ascertain whether the assets of the plan continue to support the decrease in normal retirement age to 62 and to determine if the change has resulted in an increase in faculty retirement. Even if the change is not continued past 2003 this change provides an increase in the benefit from the Basic Plan.

As a result of this change, participants may elect to retire at age 62 and receive annuity benefit payments from the 1.65% account without the current reduction for early payment. Or, if participants elect to retire before age 62, the reduction for early retirement will be less than it would be if normal retirement age were 65. The benefit under the 5% account is not affected by the change in NRA.

The decrease in normal retirement age from age 65 to age 62 adds a permanent increase to all benefits earned since the Basic Plan began on July 1, 1989 (January 1, 1990 for some union members) and to all benefits that will be earned as long as the NRA of 62 is in place. If the normal retirement age rises back to 65 after December 31, 2003, the higher age will apply only to benefits earned after December 31, 2003. The effect of age 62 normal retirement age on benefits earned while it is in effect will not be lost.

For all plan participants upon their retirement, benefits will be the sum of the benefit earned during years when the NRA was 62 and that earned when the NRA was 65. Thus, this change increases permanently the Basic Plan benefit for all participants no matter when they retire. This occurs because the calculation of benefit for each year of employment will use an actuarial table adjusted to provide the full benefit at that year's NRA, with corresponding increases for those who retire later.

In addition, this change affects the Cost-of-Living Adjustments under the Basic Plan. After Basic Plan benefit payments begin, they will increase once every three years as determined by a cost-of-living formula. The first increase is scheduled three years after normal retirement age. By decreasing normal retirement age from 65 to 62, the first cost-of-living adjustment for a person who retires at age 62 or earlier would be due at age 65, instead of at age 68 as under the current plan.

3.2c) Benefits Accrued past Normal Retirement Age (NRA)

To avoid age discrimination, benefits must continue to be earned for participants who work past normal retirement age. Thus during ones working life at MIT, interest will continue to be credited to the 5% Account. And the 1.65% benefit will continue to be accrued to participants' accounts. The 1.65% Benefit will be actuarially adjusted for late commencement so that the participant receives the full value that is in their account at retirement. The annuity payments will be increased to reflect the later start.
 
 

4. Future Issues

The Committee plans to complete its work this spring, with a goal to produce a final report by April 1, 1999 which will incorporate all of our findings and conclusions. We have identified several important issues for future concern that the Committee will take up in some detail for its final report. These are discussed below. We welcome faculty input on these and other issues.

4.1 Withdrawals, Annuities, and Lump Sum Distributions

To date, we have focused on how participants and MIT contributions are credited to the plan, and how the plan and the assets will be managed. Also of great importance, is the question of how participants will get their money out. For many faculty, pension assets represent an important part of their total assets.

Tax and estate planning is a complex area that each individual must consider based upon his or her situation. Questions the Committee will explore and lay out for the faculty deal with whether the MIT Pension Plan will allow the range of payout flexibility with its potential for tax and estate planning that is permitted under IRS regulations.

Also, there are serious questions as to whether MIT should continue to bear the risk and the expense to remain in the annuity business. This issue is currently under examination by the MIT administration. We will continue to be engaged in this issue.

4.2 Interest on the 5% Account

As discussed in Section 3.2a, under the Basic Plan, a retiree receives the larger of the annuity calculated using two different methods of calculation. One calculation is an annuity calculated by the 1.65% method The second calculation is the annuity that could be purchased (given annuity pricing at the time of retirement) by the amount in a notional or shadow account which is credited with 5% of salary each month and earns a notional rate of return. To date, the 1.65% calculation has yielded larger retirement benefits for almost all retirees since this maximum approach was initiated. Nevertheless, it is appropriate to use good rules for both methods of calculation.

In the past, the 5% notional accounts were credited with a rate of return in the same way that the fixed fund accounts were credited (a smoothed return and a market value adjustment at retirement). This method is not allowed by the IRS, which requires use of a rate of return calculation over which MIT has no control once a method is selected. In addition, there is the requirement that a defined benefit not decrease in nominal terms, which can be avoided by choosing a formula for crediting the 5% account which never results in a negative rate of return.

There are two issues in picking a notional return rule. One issue is having a suitable expected rate of return. The second is using a formula that avoids negative rates of return while preserving roughly the suitable expected rate of return for the accounts. There are several approaches that can be taken to accomplishing these ends. One approach is to select a return index that is rarely negative, such as the yield on 10-year Treasury bonds, and to add to it a fixed amount, reflecting the expected difference between the returns on a portfolio just of Treasury bonds and a diversified portfolio that makes a more appropriate choice of risk and return. For example, a portfolio 40% in stocks and 60% in bonds (or 50-50) might be appropriate. One could take the historical difference in long-run return on such a portfolio and on Treasury bonds and add this to the Treasury bonds return index (with the credited amount subject to a floor of zero return). A second approach is to base the return directly on the index associated with a suitable portfolio (e. g. 40% weight on the monthly return on the S&P 500 or Russell 3000 and a 60% weight on the monthly return on an index of all taxable long-term bonds outstanding in the market, or 50-50). Since an index like this is very volatile on a monthly basis, there would then need to be a smoothing formula to comply with the nonnegativity constraint and yet roughly retain the expected rate of return. There are several approaches to such smoothing formulas.

While MIT did need to file a statement with the IRS before the end of the year declaring its choice of an index and method of smoothing for the 5% account, MIT has not yet made a selection that is meant to apply for the longer term. Such a choice will be made this spring, with a retroactive upward adjustment for the early months of the year if the choice has a higher return than the index filed with the IRS. The committee is discussing with MIT how to select a suitable index and smoothing formula and will report on the choice once it is made.

The committee is also concerned that the present method of calculating the 1.65% basic benefit is subject to risk for participants in the event of significant inflation and the committee wants to explore whether this method should be modified in the future.

4.3 Proposed Elimination of Post-Tax Contributions on January 1, 2000

Under the current plan, contributions to the Supplemental 401(k) Plan (SP) can be either on a pre-tax or post-tax basis. Many participants in the plan have taken advantage of this option and will need to consider what the elimination of the post-tax option will mean for them. Pre-tax means that you do not pay federal or state income taxes on the amounts contributed but do pay these taxes when the contributions are withdrawn. Post-tax means that you do pay federal and state taxes on amounts contributed but not when the contributions are withdrawn. In both the pre- and post-tax cases all earnings are not taxed until withdrawn. Contributions to the 403(b) Tax Deferred Plan (TDA) can only be on a pre-tax basis. The overall limit on pre-tax contributions to the SP and TDA combined is $10,000 with some exceptions. MIT proposes to eliminate post-tax contributions to the MITRP. As a result of this change there will be no after-tax contributions which have previously been subject to Federal discrimination tests designed to ensure that high-income individuals are not overly weighted in the plan. Therefore, there will no longer be the possibility -- as has occurred -- of cutbacks in the contributions of highly compensated participants.

Why would one ever use the post-tax option for the SP? Under pre-tax the earnings on a maximum of $10,000 can be deferred from taxation. By putting the maximum allowed post-tax contribution of $8000 in the SP, and the maximum allowed pre-tax contribution of $10,000 in the TDA, the earnings on a total of $18,000 can be deferred from taxation. This can be a significant advantage.

There is an alternative approach. Put $10,000 pre-tax in the SP. Then buy an after-tax tax-sheltered Annuity (TSA) for $8000 on your own from an outside provider (TIAA, for example, sells them). The TSA will also shelter earnings from taxation until withdrawal. Again you would have the earnings on $18,000 deferred from taxation.

Typically, TSA contracts have an insurance component that guarantees that upon the death of the investor all contributions (not necessarily earnings) will be paid to the beneficiary or estate even if their market value has declined below the original contribution. Some typical costs of this insurance are TIAA (.23%), Vanguard (.38%), and Fidelity Investments (.80% or 1.50%). Fidelity Investments also imposes surrender charges of up to 7% during the first five years. All these fees are on top of the usual fund management fees that are often somewhat higher for TSA plans than for TDA plans. For most people, this insurance option is of little value and relatively expensive.

TDAs do not have to have this insurance component and there are many TDA options at MIT that do not have insurance or surrender charges. Therefore, it is more expensive to buy outside TDA's rather than stay inside MIT and buy TDA's.

The above discussion implies that there is no advantage to eliminating the post-tax option for SP contributions.

However, there is a drawback to allowing the post-tax option to continue. Federal law says that post-tax contributions have to be monitored (at some cost to MIT) to insure that highly compensated individuals (incomes over $80,000) are not over-represented among all members using the post-tax option. If they are, then the post-tax option cannot be used. This monitoring goes on throughout the year and thus the post-tax option could be withdrawn during the plan year.

At the time of withdrawal of the post-tax option, highly compensated individuals would have to revert to pre-tax contributions to the SP and then make their own outside (e.g., TSA) arrangements for future post-tax contributions. At the present time, highly compensated individuals are not over-represented in the group electing the post-tax SP option. This situation will likely change when the Benefits Office is able to contact those lower paid individuals who may have elected post-tax contributions because of a misunderstanding of their options. The Committee will continue to discus this issue with the Benefit's Office.

4.4 Participant Services

4.4 a) Communications

The Benefits Office has carried out seminars for participants on these retirement issues, and prepares written material in the form of annual reports and information about changes. This effort has been increased in order to keep participants apprised about the changes under way now. However, it has been the experience of our Committee that a great deal of time and effort is needed, given the current documentation, to master even the essential details, jargon, acronyms, etc. that are needed to understand the plan and to make intelligent individual financial decisions. One reason for the difficulty is that the Institute lacks the written material that is needed to help busy faculty and staff members learn what they need to know to manage their retirement affairs. This interim report itself is an indication of the problem, in the amount of descriptive material we have had to include in order to support our view of the changes.

It is our view that interests of faculty and staff have been well served by the MIT Administration, in the way it has managed the plan, and perhaps lack of full understanding of its details were not so critical in the years when individual choice was limited. With the expanded options, it is important for an individual to understand the concept of the risks associated with investing as well as the risk of inflation and to understand the basics of investing and asset allocation so the value of material carefully crafted to educate participants is greatly increased. This will be the continuing focus of the educational programs and resources that will be made available to the MIT community with the assistance of resources that will be forthcoming from Fidelity and others.

Our Committee will continue to work with the Benefits Office, the Treasurer's Office, and other parts of the Administration, to discuss what is needed, and to seek the additional specialized resources to produce it.

4.4b) Counseling

In the past, members' assets were invested and managed by the Institute through the office of the Treasurer. Consequently, the Institute assumed fiduciary responsibility for the risk of avoidable unsatisfactory performance. After January 1, 1999 each member of the MIT Retirement Plan is individually responsible for the management of his or her Supplemental 401(k) Plan assets. The Benefits Office and Fidelity Investments will provide information concerning investment risks and returns, but will not provide investment advice.

Fidelity Investments has made available a money market fund as well as two funds, the Fixed Fund and the Variable Fund which are intended to continue the investment strategy the Treasurer's Office employed in the past in exercising its fiduciary responsibility for the two funds available to participants in the Supplemental 401(k) Plan. They are intended as investment vehicles for individuals who are not experienced investors and who have been satisfied with the past performance of the funds managed by the Institute. Each participant must decide whether these Cloned Funds are suitable investment vehicles for the long-term future.

The possibilities for investment of participants' funds are vast. Beyond the many additional mutual funds that will be available through Fidelity Investments after April 1999, the establishment of a brokerage account by a member will permit access to any listed mutual fund as well as to securities issued by the United States Treasury. Individuals who are not experienced investors should seek professional advice concerning appropriate investment asset allocations.

The Benefits Office will have information available on the Fixed and Variable Funds, the money market fund and the 8-10 core funds. Fidelity will provide a software package, called Portfolio Planner, to assist participants in selecting an appropriate mix of investments. This software package will be populated with our selection of core funds to aid individuals to allocate assets across the risk-reward spectrum.

Our committee will continue to discuss this issue.
 
 

Appendix 1: Glossary of terms

  1. Annuity: a promise of income, usually in the form of a contract that guarantees a fixed or variable payment to the recipient usually at retirement. In a fixed annuity the amount will ultimately be paid out in regular installments varying only with the payout method elected. In a variable annuity, the payout depends on the value of the underlying investments.
  2. Annuity purchase rate: means the interest rate used to determine the factor for converting an account balance to an annuity income. MIT's interest rate is the trailing 12 month average rate of 10-year Treasury notes determined quarterly except that it will never go up or down more than one-quarter of one percent from the rate used in the preceding quarter.
  3. Basic Plan: the Massachusetts Institute of Technology Basic Retirement Plan, a defined benefit plan fully funded by MIT.
  4. Benefits Fund: the fund from which all fixed benefits are paid (including any cost of living increases and, for certain people who were members of the Retirement Plan for Staff Members, the qualified spouse and early retirement supplement benefits.) All Basic Plan Benefits are paid from this fund.
  5. Book value: refers to Fixed Fund account balances prior to 1999. Contributions and credited earnings to accounts are known as the book value of the accounts.
  6. Bond Index: a weighted average of the value of selected bonds.
  7. "Cloned" funds: a term describing The Fixed and Variable Funds after transfer to Fidelity Investments management.
  8. Defined benefit plan: plan that promises to pay a specified amount to each person who retires after a set number of years of service.
  9. Defined contribution plan: plan that promises to contribute a specified amount. Generally, each participant decides how to invest from among options offered.
  10. ERISA: Employee Retirement Income Security Act, 1974 law governing the operation of most private pension and benefit plans. The law eased pension eligibility rules and established guidelines for the management of pension funds.
  11. Expense Ratio: annual investment management fees charged to specific mutual fund accounts expressed as a percentage of account assets.
  12. Fixed Fund: an investment option under the Supplemental 401(k) Plan. The Fund is a balanced fund consisting primarily of bonds with some stocks.
  13. Fixed Fund "distribution rate": the monthly credited investment return to accounts in the Fixed Fund. The rate was determined by formula and reflected all interest and dividends, realized and unrealized gains or losses on common stocks and other equity securities, and realized gains or losses on bonds and other fixed income securities. To maintain a relatively stable distribution rate, gains and losses are distributed over five years.
  14. Index (associated with the 5% Account Method): -- still to be defined
  15. Index Fund: mutual fund whose portfolio matches that of a broad-based index such as Standard & Poor's Index and whose performance therefore mirrors the market as a whole. Many institutional investors, especially believers in the EFFICIENT MARKET theory, put money in index funds on the assumption that trying to beat the market averages over the long run is futile, and their investment in these funds will at least keep up with the market.
  16. FundsNet: an "open window" to mutual funds made available to participants by Fidelity Investments.
  17. IRS, Internal Revenue Service: U.S. agency charged with collecting nearly all federal taxes, including personal and corporate income taxes, social security taxes, and excise and gift taxes.
  18. Lump sum distribution: single payment to a participant or beneficiary covering the entire amount of an agreement. Participants in Individual Retirement Accounts, pension plans, profit-sharing, and executive stock option plans generally can opt for a lump-sum distribution if the taxes are not too burdensome when they become eligible.
  19. Market value: fair market value price at which an asset or service passes from a willing seller to a willing buyer.
  20. Market Value Adjustment: prior to 1999, Fixed Fund Accounts, when they were distributed or converted to an annuity, were credited with a one-time adjustment known as a market value adjustment. The market value of the Fixed Fund fluctuates daily and was computed monthly. If the market value of the Fixed Fund was greater than the book value of all of the accounts, the market value was divided by the book value and this percent was applied to the book value account balance. This was known as the Market Value Adjustment. At the end of 1998 all Fixed Fund accounts were credited with the Market Value Adjustment.
  21. Mark-to-market: adjusting the valuation of a security or portfolio to reflect current market values.
  22. Mutual Fund: fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities or money market securities. These funds offer investors the advantages of diversification and professional management. For these services they charge a management fee.
  23. Normal Retirement Age (NRA): a Defined Benefit term referring to the assumed retirement age used for determining full benefits.
  24. "Open Window": an investment option which provides for access to other mutual funds.
  25. Outsourcing: when a third party does the record keeping of a retirement plan.
  26. RPE: the former plan for service and support staff or the Retirement Plan for Employees.
  27. RPSM: the former plan for faculty and staff or the Retirement Plan for Staff Members.
  28. Rollovers: movement of funds from one investment to another. For instance, an Individual Retirement Account may be rolled over when a person retires into an annuity or other form of pension payout system.
  29. Supplemental 401(k) Plan: the MIT defined contribution plan that includes the current Supplemental 401(k) Plan, the former RPSM plan account balances and the pre-74 member account balances under the former RPE plan.
  30. S&P 500 Index: a broad-based measurement of changes in stock market conditions based on the average performance of 500 (or S&P 500) widely held common stocks.
  31. Tax-Deferred Annuity (TDA): a salary reduction plan which allows employees of not for profit organizations to elect as an alternative to receiving taxable cash in the form of compensation to contribute pre-tax dollars to a tax-deferred retirement plan.
  32. TIAA-CREF: one of the four TDA companies available to MIT employees.
  33. Variable Fund: one of the MIT Supplemental 401(k) Plan investment options which invests in stocks.
  34. Vesting: the right an employee acquires by length of service to receive employee-contributed benefits under a retirement plan.
  35. 1.65% Pay Method: a method for determining Basic Plan benefits. Under this method, you earn an annual benefit equal to 1.65% of your pay each pay period. This annual benefit is calculated assuming benefit payments will start on your normal retirement date and will be paid for as long as you live with no survivor benefits.
  36. 5% Account Method: a method for determining Basic Plan Benefits. Under this method, a bookkeeping account in your name is credited each month with an amount equal to 5% of your pay. This account is also credited with an investment return based previously on the return for the Plan's Fixed Fund, now to be changed to an external index. When you elect to receive your benefit, the balance in your bookkeeping account is converted to a pension (an annuity) using the plan's assumptions about interest rates and your life expectancy.
  37. 401(k) Plan: a salary reduction defined contribution plan whereby an employee may elect, as an alternative to receiving taxable cash compensation, to contribute pre-tax dollars to a qualified tax-deferred retirement plan.
  38. 403(b) Plan also referred to as a Tax Deferred Annuity (TDA): a TDA is a salary reduction plan for not for profit organizations whereby an employee may elect, as an alternative to receiving taxable cash compensation, to contribute to a tax-deferred retirement plan.

Appendix 2: Annual Expense Ratios for Various Investment Options

Stock Funds

Fidelity Blue Chip Growth .72%

Fidelity OTC .76%

TIAA CREF Stock .31%

Vanguard Index Trust 500 .19%

Vanguard Primecap .51%

Vanguard Windsor .27%

Vanguard Windsor II .37%

Growth Funds Average 1.45%

Growth & Income Funds Average 1.27%

Balanced Funds

Fidelity Puritan .64%

TIAA CREF Social Choice .29%

Vanguard Wellesley .31%

Balanced Fund Average 1.32%

Bond Funds

Fidelity Bond Pool .20%

TIAA CREF Bond Market .29%

Vanguard Total Bond Market .20%

Vanguard GNMA .31%

Special MIT Funds

"Cloned" MIT Fixed Fund .22%

"Cloned" MIT Variable Fund .28%

Fidelity Institutional Index S&P 500 .10%
 

  •  
  • Appendix 3: Review Of The "Market Value Adjustment" Issue

    As mentioned in Section 3.1f, all Fixed Fund accounts received a market-value adjustment based on returns through December 31, 1998, and on January 1, 1999 all participant accounts were given a market value adjustment so that these accounts will be at market value. These unallocated funds were distributed to individual accounts in proportion to their asset value on December 31, 1998. This is equivalent to allocating the funds as if everyone were retiring on this date.

    Some faculty have raised the question of whether this method of allocating the unallocated funds is fair.There are two ways of framing the fairness issue. It is important to recognize that these two approaches have opposite implications for who gains and who loses from mark-to-market on December 31, 1998 relative to the fairness consideration.

    One way is backwards looking and is really reexamining the historical fairness of the existing procedure. This way is based on asking the question of the value that the accounts would have today if the Fixed Fund had been mark-to-market historically. With a historical approach, people with large early accumulations relative to recent contributions lose.

    The second way of framing the fairness issue is to ask the question how mark-to-market changes what would otherwise have happened if the methods of the Fixed Fund were to be continued into the future. That is, if we weren't changing the Fixed Fund, the fairness issue of not having mark-to-market would probably not be raised, since that is the way we have been treating everyone who retires. With a prospective approach, people who would have retired under the current guidelines with small accumulations relative to their final years' contributions lose. This forward-looking approach uses the current plan as a baseline for fairness considerations, while the backward-looking approach uses a hypothetical history of mark-to-market as a baseline for fairness considerations.

    After some deliberation, the Committee has concluded that it is not appropriate to revisit the historical workings of the Fixed Fund. Moreover, the Committee thinks that the issue of fairness as applied to deposits that might be made in the future is not a compelling reason for changing the proposed method. Moreover, this prospective change is just one part of many changes affecting future deposits. Thus the Committee concludes that the proposed allocation is appropriate.
     

     


    mit Comments to FPC Subcommittee on Changes to the MIT Retirement Plan
    Last modified: March 1, 1999