Total benefits pre-funding can help credit unions remain employer of choice

CUNA Mutual Group’s Moreno Tells CUNA HR/TD Council Attendees They Can Offset Escalating Employee Benefits Costs

FORT LAUDERDALE, FL (April 28, 2014) — Credit unions struggling to keep up with the rising costs of their employee benefit programs should consider implementing a total benefits pre-funding program (TBPF), said CUNA Mutual Group’s John Moreno Monday, at a CUNA Human Resources and Training and Development Council Conference breakout session.

“Investment in people, namely salaries and benefits, is typically the largest expense an employer has and, unfortunately, it’s an expense we often don’t have a lot of control over,” said Moreno, senior executive benefits specialist.

Family health care premiums have increased 80 percent over the last 10 years, according to the Kaiser Family Foundation/Health Research & Educational Trust 2013 Employer Health Benefits Survey.  “With benefits costs increasing 8 percent annually and investments yielding only 1.6 percent on average, it’s becoming increasingly difficult for credit unions to maintain a competitive benefits package and remain an employer of choice.”

TBPF can defray the rising cost of benefits because it allows credit unions to pre-fund employee benefit obligations with potentially higher-yielding investments that would otherwise be considered “impermissible” by the NCUA. These investments are now allowed if they are directly related to the credit union’s employee benefits obligation or potential obligation for as long as that obligation exists.

“The benefit for credit unions is they can potentially increase investment returns, which in turn could improve the bottom line. Plus they can use the additional income to continue offering high-quality employee benefits.”

TBPF funding options include corporate-owned life insurance (COLI) which provides predictable returns through interest earnings on policy cash values and dividends; institutional managed account programs, which can include different investments such as mutual funds, stocks and bonds; and variable annuities or variable life insurance, which offer investment opportunities along with different features such as a guarantee of principal.

However, Moreno cautioned credit unions to be aware of the potential risks of TBPF as identified by the NCUA. These include:


  • Credit Risk
  • Interest Rate Risk
  • Liquidity Risk
  • Transaction Risk
  • Compliance Risk
  • Strategic Risk
  • Reputation Risk

When choosing a third-party provider, Moreno said to choose one that is financially strong, committed to the marketplace and will be there for the long term. He briefly highlighted CUNA Mutual Group’s TBPF program, which focuses on regulatory compliance, safety and soundness and building a well-defined investment allocation which provides broad diversification while minimizing risk.

“My experience has shown me that credit union HR professionals want to attract and retain top talent. A Total Benefits Pre-Funding program can help your credit union fund and provide best-in-class benefits.”

To learn more, follow @CUNAMutualGroup on Twitter, circle +CUNA Mutual Group on Google+, or visit

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; TruStage®-branded consumer insurance products; and investment and retirement services to help our customers succeed. More information is available on the company’s website at

CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wisconsin.


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