The 'managed accounts' program covers more than 10,000 of the 122,000-plus retirement accounts managed by the state.
The front of the Alaska State Capitol in Juneau is seen on Wednesday, April 12, 2023. the closure of its commonly used managed accounts program after an independent review found workers were being charged high fees and receiving lower-than-expected returns.
“When you’re comparing a managed account to a mutual fund, that’s like an apples-to-oranges comparison,” said Stephen Gawlick, a spokesperson for Empower. Excluding the value of that management is “a disservice to the plan participants who actually need advice,” Gawlick said. That appears to have compounded problems for many employees. The managed account system is designed around a “funding ratio” based on retirement age and the amount saved in the account. If someone has less than required by the ratio, the system constrains their investment options, reducing returns.
He joined his union’s retirement committee and began advocating for a change. The retirement management board began investigating the issue in 2022, resulting in the release of the third-party report this year and the recommendation to close the program to new entries.
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