These investments require pre-purchase analysis

CUES Podcast Episode 61 describes prescribed due diligence before investing to fund benefits plans.

Due diligence is a good idea before any credit union purchase. But the National Credit Union Administration actually requires a formal pre-purchase analysis before you buy investments to fund your employee and executive benefits plans. How is this best done? In Episode 61 of the CUES Podcast, Greg Smyth gives insights and guidance.

An executive benefits specialist with CUESolutions platinum provider CUNA Mutual Group, Madison, Wis., Smyth notes that benefits expenses have been consistently and dramatically increasing year over year, especially health insurance benefits. While benefits expenses may be increasing 4 percent to 5 percent a year, according to Smyth, investment yields for credit unions have been growing much more slowly, in the range of 2 to 3 percent annually. NCUA recognized this imbalance and created a way for credit unions to mitigate it by making certain investments to help fund their benefits plans that were previously considered “impermissible.”

“This expanded investment offering allows credit unions to seek potentially higher yielding investments” outside of section 703, he says. “And that extra income can go towards employee benefits expenses” and support offering really good benefits plans to staff.


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