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Retirement Resources
for the Massachusetts
Banking Industry
- Since 1946 -

News

2017 Annual Meeting will be held on April 26, 2017

Meeting Announcement will be sent to Member Banks at end of March.

Plan A Investment Performance

NEPC recently reported to the Board of Trustees the investment results from CBERA’s Plan A investment funds.

For the year ending December 31, 2016 the absolute returns for all core funds were positive. The highest return was earned by the DFA US Small Cap Fund at 23.5%. Equity Income Fund (12th percentile), earned the highest relative ranking among comparable funds. All core investment funds performed at or above the median fund in their respective universes for the ten years ended on December 31, with Templeton’s International Equity Series and TRP Blue Chip Growth Fund earning top 13th percentile ranks. Although not available prior to 2015, the T. Rowe Price Mid-Cap Growth continues its historically strong relative performance (top 2th percentile over 10 years).

Within the Plan’s target date fund line-up, all Retirement Funds from Retirement Balanced to Retirement 2060 earned returns in excess of 6% over the past year. The highest performers were the 2030, 2045, 2050 and 2055 Funds whose returns were 7.7%. For longer term periods of five and ten years, Retirement 2010 to Retirement 2055 Funds all place in the top decile of funds in their comparable Morningstar universe. The Retirement 2010 through Retirement 2055 Funds all place in the top percentile ranking for the ten-year period.

For the quarter ending December 31, asset weighted return for the Plan was 1.3%. For the past year, the return was 8.4%. These returns reflect the quality of the funds offered within Plan A as well as individual participant investment elections.

NEPC Recently reported to the Board of Trustees the investment results from the CBERA Group Trust portfolio:

CBERA Group Trust Investment Performance

Period Ending December 31, 2016

Period

Gross Investment Return* Corporate Funds Universe Ranking

One Year

11.6% 1

Three Years

7.1% 6

Five Years

8.1% 49

Ten Years

8.3% 3

*All periods greater than one year are annualized

2016 Pre-Retirement Seminar

CBERA hosted, over two days in June, its Annual Pre-Retirement Seminar with fifty-three participants and thirteen spouses in attendance. Speakers addressed a variety of topics to be considered before retiring.

Roberta Taylor, founder of Pathmaking for Life, spoke to the attendees about the changes associated with retiring. Her segment focused on three points for a successful retirement: transition, planning and possibilities. She reminded the attendees that transition is not only about endings but also beginnings. It requires letting go. It is part of the spiral of life in which there are ebbs and flows. She spoke about the importance of structure, purpose and staying connected. In planning for retirement, she suggested exploring personal fulfillment, time management, community, and motivation. She engaged the audience by having everyone write down and share with their fellow attendees a list of people that would be impacted by their retirement, and how each person on the list would be affected. She showed a short video of a 96 year old yoga instructor as an example. A participant stated “very helpful - especially for individuals who have a hard time letting go - How can I continued to be fulfilled - very needed topic especially with people living longer.”

Sabrina Feliciano, a Public Affairs Specialist from Social Security, provided an overview of the current state of affairs at the Social Security office. She stressed the ease and security of the Social Security website and encouraged all to visit the website. Sabrina made the audience aware of the existing programs and rules. It was remarked, “Sabrina was great in guiding us through the maze of Social Security. She answered a personal question at the end so that made it more beneficial.” Another attendee stated that Sabrina gave a “concise presentation of benefits and deadlines. Knowledgeable answers to audience questions.”

Terry Barry, a consultant, shares her healthcare research and personal experiences to illustrate the complexities of the retiree health care system. She advised the attendees that in order to receive the optimal healthcare in retirement one must be his/her own advocate and ask questions. She provided a laundry list of questions along with various resources to inquire on the search for healthcare in retirement. An attendee wrote, “Terry knows her stuff. The handout is a great resource; and personal experience anecdote highlights important issues.” Another noted, “this is one of the most daunting areas of this whole retirement process. Terry was great in pushing home the “do your homework and be “pro-active” in the process.”

Frank Maloney, President of CBERA, delivered his presentation with the goal of having as many informed retirees as possible, so that they are confident and able to make a better decision at their time of retirement. He discussed the uncertainty of future expenses from the basic cost of food, shopping, periodic home repairs, to costs like health care expenses. He explained their investment choices, benefit options and how their decisions affect long term retirement success. CBERA prepared an estimated projection retirement benefit for each of the participants. In addition, he spoke to attendees regarding the tax implications for lump sums, installment distributions and pensions. Also, he highlighted the relationship between receiving Social Security benefits and working. An attendee commented “Frank is a fun and very knowledgeable speaker. The information is very necessary and a lot to digest but Frank’s delivery is clear and concise. He is great.”

Bob Morrill, managing partner of Gilmore, Rees & Carlson, P.C., spoke on the topic of estate planning. He reviewed critical tools that can be used to make sure that financial matters after death are resolved as intended. Bob provided our members with the key elements in a straightforward and easy to understand manner. An attendee wrote, “I have got to do this! Bob was great, and I found the healthcare proxy information most helpful.” Another stated, “Bob really does speak non-attorney. He makes complex, tense and important subject understandable; no small talk. His words put a lot in perspective.”

Any participant considering retiring in the next five years should plan on attending the next seminar in June, 2017.

2016 & 2017 Qualified Plan Limits

IRS Contribution Limits for 401(k) Plans (Plan A)
and Annual Benefit Limitations for Pension Plans (Plan C)

2017 2016

Maximum 401(k) Employee Pre-Tax and Roth 401(k)
Contributions Combined (per year) - PLAN A

$18,000 $18,000

Maximum 414(v) Pre-Tax “Catch-Up” Deferrals

$6,000 $6,000

Maximum 401(k) Employee Pre-Tax, (excluding “Catch-Up”)
Roth 401(k), After - Tax and Bank Matching Contributions
Combined (per year) - PLAN A

$54,000 $53,000

Maximum Annual Pension Plan Benefit -
PLAN C, Adams & IFS Pension Plans

$215,000 $210,000

Maximum Annual Compensation - ALL PLANS

$270,000 $265,000

Highly Compensated Employee (HCE) - ALL PLANS

$120,000 $120,000

Please note: an eligible Plan A participant can continue to elect to make Pre-tax (elective), Roth and/or After-tax
non Roth) contributions up to a total of 75% of their compensation.
A participant can elect to not contribute to Plan A.

Highlights from Annual Meeting

Frank Maloney, President of CBERA, presented the 70th Annual CBERA Annual Meeting on April 20, 2016. Banks in attendance included initial members of the Association from 1946 including George Peabody Coop (now North Shore Bank), Needham Bank, Newton South Coop (now part of Village Bank), Northampton Coop (merged with Greenfield Coop last year), South Shore Coop (Coastal Heritage Bank as of December 2015), Stoneham Bank and Wakefield Coop. These banks showed great faith in creating an Association whose mission is to help banks’ employees accumulate sufficient funds for a comfortable retirement that enables them to continue representing their institutions in the community. While making this happen differs from 70 years ago, this focus has not changed. CBERA’s goal to foster relationships and help your employees build successful retirements motivates us every day. We seek to help you build a strong community bank that enables you to attract and retain talent with exceptional qualified retirement plans.

This year the Association moved its office from its prior twenty year location. The move prompted a major review and disposal of accumulated “stuff” – paper documents, folders and other pre-technology “junk” – as well as a retrospective mindset. It was a reflection on the many people who helped fulfill CBERA’s important mission from former Board Members now retired or deceased to Retirement Representatives who continually strove to helped employees plan for retirement and challenged us to former CBERA staff members, especially prior president Boon Ooi. All of these people made CBERA the association that it is today and one can be proud of which to be a part.

CBERA’s motto is Building Successful Retirements. What does this mean to our current participants? For our younger participants, it means educating them and structuring a 401k Plan that assists them in making choices today that will give them more choices in the future.

CBERA accomplishes this by having banks’ senior officers serve as Trustees of the Association who guide its decisions, hiring an exceptional investment consultant that illuminates the best approach to 401k design and selects outstanding investment managers and, lastly, working with T. Rowe Price assuring the logistics are in place and build on each success. How exactly does this play out for an employee? A 401k plan needs well-performing funds and a plan design with auto features such as eligible auto enrollment, annual auto contribution increase and auto investment default and reasonable participant and employer fees. All of this improves the chances of increased and better choices in the future. This is the focus for CBERA, NEPC and T. Rowe Price.

From a defined benefit plan perspective, CBERA helps each employer build and maintain a plan that has controlled funding costs so that the defined benefit plan is there when a participant retires.

For those approaching retirement for whom executing a successful financial retirement is a priority, CBERA’s job is to explain how to think about the “when” and “how” of benefit options. CBERA cannot guarantee the perfect answers for anyone but it helps impending retirees formulate the right questions to ask. The Association actively helps each participant think about their circumstances and the options and implications so they can build confidence and comfort about what to do upon retirement to meet their specific financial needs and wishes upon retiring.

2015 was a mixed year for Plan A. Total invested assets at year end were $411 million compared to $432 million the prior year. Investment returns for 2015 did not compare favorably to prior years. Per NEPC’s calculations, the 2015 asset weighted investment return was 1.9%. The year’s best performing core fund was TRP’s Blue Chip Growth Fund. As tracked by Morningstar, Blue Chip earned 11.1% placing it in the top 3% of US large growth funds and top 1% over the past five years.

TRP’s Mid-Cap Growth Fund, added at the beginning of 2015, also had an exceptional year. The Fund earned a 6.6% return placing it in the top 3% of Mid-Cap Growth funds in 2015 with a 10-year historical ranking of top 3%. The poorest performer among the core line-up was the TRP Equity Income Fund. US Large Value funds have struggled, especially Equity Income. Our longest standing fund, in Plan A since the mid 1990’s, is Templeton’s Foreign Equity Fund. Although its performance was negative during 2015, it performed better than it did in 2014. Longer term, the Foreign Equity Series has earned a top 3% placement Morningstar ranking over the past ten years.

For 2015 the Retirement Dates funds’ returns ranged from -.8% for the Retirement 2010 to .2% for the Retirement Funds 2040 and beyond. The relative performance of these target date funds, which received 57% of new contributions in 2015, is beyond peer. As tracked by NEPC using Morningstar’s rankings, all Retirement Funds from 2010 to 2045 place in the top 1% of target date funds over the last ten years. The 2050 and 2055 Funds, with shorter track records, have strong placement as well. 2050 is a top 7% performer over the past five years, and the 2055 Fund, a top 11% ranking. The Retirement 2005 Fund is in the top 3% over the ten year time frame. The Retirement Balance Fund – formerly the Retirement Income Fund, has a top quartile 10 year ranking.

The performance of the Retirement Date Funds is critical to Plan A’s long term success of building sufficient retirement assets for participants. These funds are the default investment fund for the Plan: the “easiest to use” investment option for most participants in building toward a successful retirement.

The largest Fund within Plan A remains the Stable Value Fund with 16.8% of total assets. During 2015, the Fund earned 2.0%. This outperformed all but two of Plan A’s Funds in 2015. However, over the past five years, its return ranks last among Plan A’s investment options.

There are a few statistics from Plan A of note. The average pre-tax contribution rate at year end was 9.1%, continuing the upward trend over the last several years. 123 participants are now contributing 20% or more of their pay to the Plan. 148 participants are making Roth contributions. Further confirming the success of auto increase, after five years, stats show that 427 participants are now contributing at 10%. 320 participants are now contributing 12. With these successes, the Board of Trustees has decided, effective January 1, 2017 to increase the maximum cap to 15%.

The number of plan loans outstanding remains high which is concerning. Over 20% of active participants have loans outstanding. Research consistently has shown that 401k loans adversely impact account balance growth. Loans should be used only when no other assets are available and for an asset that is as important to you as your retirement.

The 2015 investment results for CBERA’s Group Trust, the investment vehicle for Plan C and the IFS and Adams Defined Benefit Plans, were negative. Interest rates rose. Our fixed income portfolio lost about 4%. Diversifying investments, non-core, non US, underperformed. Our global asset allocation, targeted at 35% of Group Trust assets, also lost 4%. Emerging market debt and equity had double digit losses as the US dollar strengthened, and risky assets were avoided by investors. As a result the total portfolio was down over 4%.

However, longer term Group Trust investment performance numbers remain very favorable. Its gross 5 year return is 8.3%, placing the portfolio in the top 19% of funds tracked by NEPC and the 10 year gross number of 8.6% earns a top 3% ranking. The five year annual return number is 2% above the median fund. These returns also exceed the assumed actuarial return during these different time frames. The portfolio also has outperformed passive index comparisons.

Plan C invested assets were approximately $266M at the end of the year. Combined with Plan A and the pension plans of Institution for Savings in Newburyport and Adams Community Bank, CBERA was responsible for over $698M in assets at year end.

Some current investment comments on Plan C and the Group Trust: During the first quarter of 2016, interest rates have fallen. The dollar has weakened. Each opposite of what happened in 2015. As a result, emerging market debt and equity have performed exceptionally during the first quarter of 2016. For instance, our Emerging Market Debt Fund managed by Mondrian was up almost 13% in the first quarter.

This volatility highlights the significant challenge each year that Board of Trustees face when listening to the actuaries and investment consultants. The goal in 2016, as it has been throughout CBERA’s 70 years, remains to facilitate the accumulation of sufficient assets for individuals in their defined contribution plan, and for employers in their pension trusts. As for the Association, we covered our expenses in 2015 and added to our surplus. 2016 has already been eventful with our move into our new office.

CBERA will be tested to better manage resources, to present the way we build relationships to potential employers, and most importantly continue to provide high value to each of our current participants and banks. We have an experienced, dedicated Staff with exceptional professional advisors, led by NEPC, to continue to make CBERA work well. The MA banking industry will continue to change. I believe we are up to adapting and changing with it.

I would like to thank our Board of Trustees, led by Kevin Tierney as Chairman and Joe Scholl as Vice-Chairman. They work for the benefit of every participant, and help me and Kevin prioritize what we need to do to support you and your banks.

Finally, I would like to thank Staff for everything they do each day to make my job easier and occasionally, fun.

CBERA remains committed to Building Successful Retirements.

Filing Information

Plan A

To view the 2015 Annual Return (Form 5500) for Plan A Click Here

To view the 2014 Annual Return (Form 5500) for Plan A Click Here

To view the 2013 Annual Return (Form 5500) for Plan A Click Here

To view the 2012 Annual Return (Form 5500) for Plan A Click Here

Plan C

To view the 2015 Annual Return (Form 5500) for Plan C Click Here

To view the 2014 Annual Return (Form 5500) for Plan C Click Here

To view the 2013 Annual Return (Form 5500) for Plan C Click Here

To view the 2012 Annual Return (Form 5500) for Plan C Click Here

Institution for Savings

To view the 2014 Annual Return (Form 5500) for Institution for Savings Click Here

To view the 2013 Annual Return (Form 5500) for Institution for Savings Click Here

To view the 2012 Annual Return (Form 5500) for Institution for Savings Click Here

To view the 2011 Annual Return (Form 5500) for Institution for Savings Click Here

Adams Community Bank

To view the 2014 Annual Return (Form 5500) for the Adams Community Bank Plan Click Here

To view the 2013 Annual Return (Form 5500) for the Adams Community Bank Plan Click Here

To view the 2012 Annual Return (Form 5500) for the Adams Community Bank Plan Click Here

To view the 2011 Annual Return (Form 5500) for the Adams Community Bank Plan Click Here

Use this link to view additional years filings.

Pension Plans: The Reward and Challenge

Below are the key paragraphs from an article written by our President, Frank Maloney, that appeared in Massachusetts Banker Magazine 4th quarter 2012.

Community banks have been offering their employees retirement plans since the 1940s. This employee benefit has been valued by many generations of tellers, customer service representatives and officers. As the years have passed, the form of retirement benefits has changed with the industry and the needs of its employees. Before moving to the next generation of plans, this article will argue for maintaining and strengthening the traditional form: the defined benefit plan. The defined benefit is an ideal way to retain and incent those employees critical to each institution’s success.

From the employer’s perspective, the funding of a pension plan is more efficient than a 401k plan in providing benefits to those employees who are most concerned about retirement. The efficiency comes from hiring professional investment managers with instructions to focus on the long term best interest of the plan and its participants. This approach leads to less overreaction to changes in the marketplace and better maintenance of strategic long range asset allocation as compared to a typical 401k investor. Funding costs are spread over working careers of participants. There is opportunity for favorable investment returns and plan census experience to reduce costs. Finally, a well run plan will also have administrative efficiencies.

Employers do have the tools and investment alternatives to address these challenges. As with any employee benefit, its value is derived from the understanding and appreciation by the employee population. Employees must be educated about the value of a benefit that is fully funded by the employer and provided without their responsibility to make good investment choices; is not subject to investment market fluctuations; its value grows more rapidly as time of retirement nears; and will be paid to them for the rest of lives. These strengths will attract and retain talented individuals.

Even as the number of investment tools increase to deal with the challenges of maintaining a well-funded plan, the reality of low interest rates require more employer contributions. Making additional contributions, up to tax-deductible limits, has several advantages. It is an effective way of improving funded status, of using the low earning cash residing on an employer’s balance sheet more strategically, taking advantage of tax planning opportunities, as well as providing future funding flexibility when investing in business ventures may be a more appropriate use of the cash. These contributions would also reduce future PBGC variable premiums. By employing different investment structures in the plan’s portfolio and contributing more, volatile and increasing funding expenses can be better managed.

A well-administered, well-invested and well-funded pension plan can continue to meet the needs of community banks and their employees.

Want More Information?

For information about CBERA and our plans, including requests for benefit estimates - contact CBERA at 781-551-8500.
Click here to submit an online information request form or click here to inquire via email.