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CUNA Mutual Group’s total benefits pre-funding program reaches $1 billion in assets under management
Program Helps Credit Unions Offset Rising Benefits Costs and Remain Employer of Choice
MADISON, WI (February 4, 2015) — CUNA Mutual Group’s Total Benefits Pre-Funding program reached $1 billion in assets under management in January–a positive sign credit unions are taking advantage of previously impermissible investments to help fund the rising costs of employee benefits programs.
In 2003, the National Credit Union Administration adopted a rule formalizing its long-held view that, subject to a few restrictions, certain expected employee benefits obligations of federal credit unions may be pre-funded via otherwise impermissible investments, according to Jane Chesbro, CUNA Mutual Group vice president of specialty distribution.
TBPF defrays the rising cost of benefits because it allows credit unions to offset employee benefits obligations by using potentially higher-yielding investments that would otherwise be considered “impermissible” by the NCUA. CUNA Mutual Group launched its TBPF program in 2008, and 226 credit unions have since implemented a program.
Credit unions are challenged with flat or even shrinking margins, because returns on assets are not keeping pace with rising operating expenses, especially those related to employee benefits. In addition, family health care premiums have increased nearly 70 percent over the last 10 years, according to the Kaiser Family Foundation/Health Research & Educational Trust 2014 Employer Health Benefits Survey.
“It’s becoming more difficult for credit unions to maintain a competitive benefits package and remain an employer of choice,” Chesbro said. “TBPF offers credit unions an array of investment options that can help close the employee benefits gap.”
CUNA Mutual Group TBPF product offerings include a diverse array of investment solutions, including Bank Owned Life Insurance (BOLI), mutual funds, stocks, bonds, and institutionally managed portfolios that are customized to the specific needs of each credit union.
Assets under management have more than doubled in the last two years. Participating credit unions shared $40 million of incremental investment returns in 2014 alone, according to CUNA Mutual Group data. That extra income helps the bottom line and can be used to continue offering, or potentially add, high-quality employee benefits.
Said Chesbro, “Credit unions consider us a stable, trusted partner. We help ensure their long-term success and competitiveness because of our expertise, accountability in the fiduciary, regulatory compliance and service components of TBPF, and our unbiased, product-agnostic approach.”
Scott VanZandt, chief financial officer at Hudson Valley Federal Credit Union, Poughkeepsie, N.Y., said its TBPF program has been very beneficial.
“The CUNA Mutual Group staff was very patient and flexible as we went through the process,” VanZandt said. “They spent more time assisting us as opposed to pressuring us into a situation where we had to make a hasty decision.
“They were very clear about which investments were permissible and which weren’t. They reviewed our benefits costs and projected what they might cost over the next 10 years. It became apparent that it made sense to try to improve our potential for long-term investment growth,” he added.
To learn more about TBPF programs, call your CUNA Mutual Group sales executive; executive benefits specialist; or the Executive Benefits Service Center at 800.356.2644, ext. 6651035: or visit www.cunamutual.com/tbpf.
CUNA Mutual Group was founded in 1935 by credit union pioneers, and our commitment to their vision continues today. We offer insurance and protection for credit unions, employees and members; lending solutions and marketing programs; TruStageTM-branded consumer insurance products; and investment and retirement services to help our customers succeed. More information is available on the company’s website at www.cunamutual.com.
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Proprietary insurance is underwritten by CMFG Life Insurance Company. Proprietary and brokered insurance is sold by CUNA Mutual Insurance Agency, Inc., a wholly owned subsidiary. This insurance is not a deposit and is not federally insured or guaranteed by your credit union. For more information, contact your Executive Benefits Specialist at 800.356.2644.