Long known for providing pension plans, the AFL-CIO is teaming up with Wilmington Trust and BNY Mellon to offer a new target date Collective Investment Trust fund series specifically tailored to meet the needs of labor-sponsored defined contribution plans.
The AFL-CIO, the nation’s largest federation of labor unions, on Monday announced what it calls a “groundbreaking collaboration” with Wilmington Trust, BNY Mellon, PGIM Fixed Income and AFL-CIO ITC Financial to distribute 12 new target date collective investment trust (CIT) funds, expanding retirement planning options for its 56 unions and 12.5 million members.
The product is being billed as an important extension of the AFL-CIO suite of branded investment products—bringing the federation’s values to the defined contribution market.
“This suite of target date CIT funds is a welcome addition to the lineup of financial products which carry the AFL-CIO name,” said AFL-CIO President Richard Trumka. “Defined benefit plans remain the bedrock of a secure retirement. However, the Labor Movement’s philosophy that all Americans are entitled to retire with dignity and financial security dictates that we must also ensure that defined contribution investors’ interests are protected. This product provides a cost-effective solution that brings this proposition to life. We are grateful to our partners for sharing our values and making good on that commitment.”
The AFL-CIO target date fund series was developed as a low-cost product for defined contribution plans. Offered in five-year increments, the target date solutions provide democratized pricing—a flat fee of 12 basis points for all investors—that will help foster retirement security for working Americans.
Wilmington Trust will serve as trustee for all 12 funds; BNY Mellon will provide the glidepath and index management for the funds; PGIM Fixed Income will manage the fixed income component of the products; and AFL-CIO ITC Financial, LLC, the broker-dealer subsidiary of the AFL-CIO Investment Trust Corporation, will handle distribution.
“As a trustee with nearly 120 years of experience successfully managing large, complex transactions, Wilmington Trust’s primary goal with this collaboration with the AFL-CIO is to offer high-quality retirement solutions to millions of American workers,” said Bill Farrell, Executive Vice President, Wilmington Trust. “We’re excited to work with America’s leading federation of labor unions to offer these solutions, and, together, we are confident we can help more U.S. workers effectively prepare for retirement.”
Wilmington Trust is a leader in the CIT market, with more than $83.4 billion in assets under administration across funds managed by more than 37 Sub-Advisors and available on more than 49 trading platforms as of March 2, 2021. In 2019, Wilmington Trust collaborated with the Nasdaq Fund Network to provide searchable ticker symbols for more than 20 CITs for the first time, addressing the need for transparency with CITs and enabling stakeholders to access information more easily on these vehicles. As a fiduciary, Wilmington Trust collaborates with more than two dozen industry partners to offer access to CITs.
CITs are pooled, tax-exempt investment vehicles sponsored and maintained by a bank or trust company that also serves as the trustee. CITs combine assets from eligible investors into a single investment portfolio with a specific investment strategy. By pooling assets, sponsors of CITs benefit from the economies of scale to offer lower overall expenses.
“BNY Mellon is extraordinarily proud to partner with the AFL-CIO on this exciting and important initiative,” said Andy Provencher, head of North American Distribution for BNY Mellon Investment Management. “We have been working together with the AFL-CIO for several years; today’s launch marks a significant milestone in that critically important relationship, and we’re eager for what comes next.”
PGIM Fixed Income—part of PGIM, the $1.5 trillion global investment management business of Prudential Financial, Inc.—will manage fixed income sleeves for the product. With $968 billion in assets under management as of December 31, 2020, PGIM Fixed Income is one of the largest and most experienced fixed income managers in the industry.
“We share the AFL-CIO’s commitment to increasing accessibility of quality investment management for American workers,” said Mike Lillard, Head of PGIM Fixed Income. “We have a long history of managing money for Taft-Hartley plans and their beneficiaries, helping them achieve their retirement goals.”
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
