Federal Employee Demands Spur NARFE Premier FCU Annuity Option

So when $120 million NARFE Premier Federal Credit Union started searching for other solutions that could help diversify its 10,000 members' retirement plans, it was important to have an offering that would allow nest egg savings to be stretched into income distribution over a long period of time, said Todd Hoepker, senior vice president, strategy and market development at NARFE Premier. For one, most of the credit union members participate in the thrift savings plan, a retirement savings and investment plan for federal employees. However, the plan does not have an annuity option, which is something members had been asking about.

"They want that ability to rollover into a high-rate account," Hoepker said. "The majority of members are middle income. We want to be able give them more opportunities to diversify."

NARFE Premier wasn't satisfied with the remote-delivery services it had with a major industry provider for seven years, Hoepker said, adding the credit union wasn't seeing a lot of activity. Rather than throwing out the program and starting from scratch, the goal was to bring more services and products into the lineup so that members could have more options.

The credit union linked up with United Nations FCU Financial Advisors' Income Solutions, a platform of institutionally priced, immediate annuities. The Web-based retirement annuity pioneered by Hueler Investment Services offers members several features when converting their retirement assets, including competitive quotes, 10 carriers and fees that are less than the retail market, according to UNFCU.

"It gives the retired member who may be looking for another source of monthly income in a market that's doing what it's doing [now]--steady income," Hoepker said. "We're focused on making sure we have the right product regardless of [a
member's] means."

Steve Ryerson, president of UNFCU Financial Advisors, said the CUSO is looking forward to the new relationship.

"NARFE Premier FCU has long championed retirement education and supported benefits programs for federal employees, retirees and their families," Ryerson said.

NARFE, the association, has been vocal in Washington to ensure that federal employees are not left out in the cold as legislators consider cuts in retirement benefits. The group has testified on extending premium conversion rights that federal and postal employees have to federal annuitants, so that retirees too can pay their federal employee health benefits premiums with pretax dollars, which could save an average $400 each year, according to NARFE. Repealing the Social Security government pension offset and windfall elimination provisions has also been at the top of the association's list. Both provisions could substantially reduce the expected retirement income of retired federal workers, the group has said.

Meanwhile, NARFE Premier had a soft launch of Income Solutions in mid-May and officially offered the product on July 1. The credit union recently spoke at a NARFE meeting in Florida and the reception went very well, Hoepker said. More presentations are scheduled to come at other NARFE meetings.

"The average NARFE Premier member is 52 compared to the national average of 47. We have quite a few active employees who are in the process of planning for retirement," Hoepker said. "We offer IRA products, but we want to be able to offer additional programs."

The credit union recently cobranded its Web site with UNFCU's Income Solutions. Hoepker said NARFE Premier is considering signing on to investment advisory services through UNFCU Financial Advisors, a division of UNFCU Financial Services LLC, which is a wholly owned subsidiary of the $2.6 billion United Nations FCU. The ability to house trust accounts are in the final stages, Hoepker said.

"We won't establish trust accounts, just house them. The scale, seeing that it takes up to 10 years to see a return and the up-front costs, led us to decide to do it this way," Hoepker explained.

Even though NARFE Premier's members are either near or in retirement, the credit union is ramping up its outreach efforts to young people.

"With the transfer in wealth that's being talked about, we feel it's also important to cover the other end of the spectrum," Hoepker said, adding the credit union is aiming to get several programs off the ground in the third quarter.

--msamaad@cutimes.com