Individual Account Program target-date fund shifts

Every five years a normal adjustment process occurs in the Individual Account Program’s (IAP) target-date fund (TDF) lineup.

The process adds a fund for younger public employees, while the most mature of the TDFs moves into the Retirement Allocation Fund.

The reason for the adjustments is two-fold:

• To limit the number of TDFs managed in the overall IAP program.
• To keep the overall target-date-based investment strategy working as intended.

How are target-date funds intended to work as an investment strategy?

Target-date funds are used within retirement plans throughout the public and private sector, not just at PERS. TDFs are tied to your age by date of birth and/or the age at which you wish to retire. They are intended to age with you, with investment managers adjusting the investments within them as time goes by. For the IAP, the Oregon Investment Council (OIC) is the investment manager.

TDFs aimed at younger investors will typically be exposed to more risk because there is more time for them to weather the ups and downs of stock markets. As TDFs near the anticipated retirement year in their names, investment managers will adjust the mix of investments within them to be less risky. More risk early on allows for greater opportunities for funds to grow over time. Less risk aims to conserve what’s there with some continued growth.

For example, shifting the most mature TDF into the RAF will decrease investment risks for public employees who are closest to retirement.

To make the adjustments, investment managers will follow an investment roadmap tool called a “glidepath.”

TDFs in between the youngest and most mature funds will retain their names and have the risk of their investments shift slightly according to the glidepath OIC uses. Typically, risk is managed by adjusting the diversity of the investments within a TDF.

To learn more about the IAP TDFs, visit our IAP target-date funds webpage, which includes a table that lists all of the target-date funds in the IAP.

For more information about IAP investments, visit Treasury’s Individual Account Program webpage, which includes fact sheets about each TDF.

Remember Member Choice

If you feel the TDF you’re invested in doesn’t match your retirement savings goals or risk tolerance, you have an option to change it called “Member Choice.”

By making a Member Choice election, you can pick the TDF you want to be in for the upcoming year.

Changing your TDF is optional and can be done through Online Member Services (OMS) in September of each year.