Investing August 15, 2018

Investors Consider Fund Fees, Performance When Making Purchases

Forty percent say information about fund fees is “very important” when selecting a mutual fund, ICI found in a survey.

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Mutual fund investors on the whole are very savvy about fees, according to a survey by the Investment Company Institute (ICI). Based on data collected in mid-2017, ICI says 90% of mutual fund-owning households consider the fees and expenses of a fund, with 40% indicating that this information is “very important.”

Additionally, 90% of mutual fund-owning households consider the historical performance of a fund, with 50% saying this information is “very important.” Seventy-eight percent consider a fund’s performance compared to an index, with 35% saying this is “very important.”

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Furthermore, 90% consider the fund’s investment objective as well as the risk level of the fund’s investments. Thirty-six percent say that each of these measures is “very important.”

“Mutual fund-owning households review many factors when choosing mutual funds to help them achieve their investment objectives, such as the fund’s fees and expenses, the historical performance of the fund and the risk level of the fund’s investments,” says Sarah Holden, senior director of retirement and investor research at the ICI. “By carefully considering these aspects of a fund, they are able to make informed choices and save and invest to meet their future financial goals.”

ICI conducted the telephone survey of 5,000 households from May to July 2017.

Compliance August 15, 2018

School District Accused of Age Bias in Salary to Avoid Pension Contribution

A provision in a union contract limits the salary increases of teachers who are within ten years of retirement eligibility to no more than 6% above their previous year's salary, which prevents the school district from having to make contributions to the Teacher’s Retirement System.

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Urbana School District No. 116 violated federal law prohibiting age discrimination when it limited the salary increases that older teachers had earned, pursuant to an unlawful provision of a collective bargaining agreement, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit.

 

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The agency’s pre-suit investigation found that the Urbana School District limited the salary increases of Charles Koplinski and a group of other teachers older than 45 because of their age, due to a provision of a collective bargaining agreement between the school district and the union representing teachers, Urbana Education Association IEA-NEA. That provision limits the salary increases of teachers who are within ten years of retirement eligibility to no more than 6% above their previous year’s salary.

 

Julianne Bowman, the EEOC’s district director in Chicago, says that for school districts other than Chicago, the Illinois state pension code provides that if a teacher’s final average salary for purposes of calculating pension benefits includes a year in which the teacher received a salary increase of more than 6%, the school district must contribute to the Teacher’s Retirement System to cover the increased pension cost attributable to the salary increase greater than 6%. “Urbana cannot try to avoid making a contribution required by state law by limiting salaries of older teachers because of their age,” Bowman says.

 

Koplinski, age 52, had completed post-graduate classes that should have entitled to him to receive more than a 6% raise for the 2015-16 and 2016-17 school years. But because Koplinski’s age at the time put him within ten years of retirement eligibility, his raise was capped at 6% for both school years.

 

The Regional Attorney of the Chicago District Office, Gregory Gochanour, explains, “If Koplinski were age 40 instead of age 50 when he completed the post-graduate classes that would have entitled him to more than a 6% salary increase and he would have received his full raise. Instead, his raise was capped at 6%. Setting salaries based on age is age discrimination, plain and simple, and violates federal law.”

 

The EEOC filed suit in the U.S. District Court for the Central District of Illinois (Equal Employment Opportunity Commission v. Urbana School District No. 116 and Urbana Education Association, IEA-NEA; Civil Action No. 18-cv-2212-CSB-EIL) on August 10.

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