NEW YORK, NY — The AFL-CIO, the nation’s largest federation of labor unions, announces a groundbreaking collaboration with Wilmington Trust, BNY Mellon, PGIM Fixed Income and AFL-CIO ITC Financial to distribute 12 new target date collective investment trust (CIT) funds, expanding retirement planning options for its 56 unions and 12.5 million members. This product is an important extension of the AFL-CIO suite of branded investment products—bringing the federation’s values to the defined contribution market.
“This suite of target date CIT funds is a welcome addition to the lineup of financial products which carry the AFL-CIO name,” said AFL-CIO President Richard Trumka. “Defined benefit plans remain the bedrock of a secure retirement. However, the Labor Movement’s philosophy that all Americans are entitled to retire with dignity and financial security dictates that we must also ensure that defined contribution investors’ interests are protected. This product provides a cost-effective solution that brings this proposition to life. We are grateful to our partners for sharing our values and making good on that commitment.”
The AFL-CIO target date fund series was developed as a low-cost product for defined contribution plans. Offered in five-year increments, the target date solutions provide democratized pricing—a flat fee of 12 basis points for all investors— that will help foster retirement security for working Americans. Voting proxies for each fund conform with the AFL-CIO’s Proxy Voting Guidelines, per an independent proxy voting fiduciary. Wilmington Trust, a leader in wealth management and corporate and institutional services, will serve as trustee for all 12 funds; BNY Mellon will provide the glidepath and index management for the funds1; PGIM Fixed Income will manage the fixed income component of the products; and AFL-CIO ITC Financial, LLC, the broker-dealer subsidiary of the AFL-CIO Investment Trust Corporation, will handle distribution.
“As a trustee with nearly 120 years of experience successfully managing large, complex transactions, Wilmington Trust’s primary goal with this collaboration with the AFL-CIO is to offer high-quality retirement solutions to millions of American workers,” said Bill Farrell, Executive Vice President, Wilmington Trust. “We’re excited to work with America’s leading federation of labor unions to offer these solutions, and, together, we are confident we can help more U.S. workers effectively prepare for retirement.”
Target date funds offer a diversified investment portfolio that evolves from greater equity exposure to greater fixed income exposure throughout the investor’s working life. More than three-quarters of 401(k) investors use target date funds, and they are a central component of retirement savings for many Americans.
“BNY Mellon is extraordinarily proud to partner with the AFL-CIO on this exciting and important initiative,” said Andy Provencher, head of North American Distribution for BNY Mellon Investment Management. “We have been working together with the AFL-CIO for several years; today’s launch marks a significant milestone in that critically important relationship, and we’re eager for what comes next.” Added Stephanie Hill, Head of Index for Mellon Investments Corporation (“Mellon”), a BNY Mellon investment firm: “Our four decades in index investing has been one of continual evolution and innovation for the benefit of our clients, and we are delighted to be in a position to support AFL-CIO members in achieving their long-term investing goals.”
PGIM Fixed Income—part of PGIM, the $1.5 trillion global investment management business of Prudential Financial, Inc.—will manage fixed income sleeves for the product. With $968 billion in assets under management as of December 31, 2020, PGIM Fixed Income is one of the largest and most experienced fixed income managers in the industry. “We share the AFL-CIO’s commitment to increasing accessibility of quality investment management for American workers,” said Mike Lillard, Head of PGIM Fixed Income. “We have a long history of managing money for Taft-Hartley plans and their beneficiaries, helping them achieve their retirement goals.”
“AFL-CIO ITC Financial is looking forward to being involved in the distribution efforts for the AFL-CIO Target Date Fund series,” said William Little, President of AFL-CIO ITC Financial, LLC. “We are pleased to be working with Wilmington Trust to distribute this product, which is specifically tailored to meet the needs of labor-sponsored defined contribution plans.”
CITs are pooled, tax-exempt investment vehicles sponsored and maintained by a bank or trust company that also serves as the trustee. CITs combine assets from eligible investors into a single investment portfolio with a specific investment strategy. By pooling assets, sponsors of CITs benefit from the economies of scale to offer lower overall expenses.
Wilmington Trust is a leader in the CIT market, with more than $83.4 billion in assets under administration across funds managed by more than 37 Sub-Advisors and available on more than 49 trading platforms as of March 2, 2021. In 2019, Wilmington Trust collaborated with the Nasdaq Fund Network to provide searchable ticker symbols for more than 20 CITs for the first time, addressing the need for transparency with CITs and enabling stakeholders to access information more easily on these vehicles. As a fiduciary, Wilmington Trust collaborates with more than two dozen industry partners to offer access to CITs.
*Glidepath services will be provided by Mellon. Index management will be provided through underlying bank collective investment funds that are maintained by The Bank of New York Mellon (the “Bank”) and managed by employees of Mellon in their capacity as dual officers of the Bank. Mellon and the Bank are indirect subsidiaries of The Bank of New York Mellon Corporation.
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) works tirelessly to improve the lives of working people. We are the democratic, voluntary federation of 56 national and international labor unions that represent 12.5 million working men and women. We fight for keeping good jobs at home by reforming trade rules, reindustrializing the U.S. economy and providing worker protections in the global economy. We stand firm in holding corporations accountable for their actions. We help make safe, equitable workplaces and give working people a collective voice to address workplace injustices without the fear of retaliation. We fight for social and economic justice and strive to vanquish oppression in all its forms.
About Wilmington Trust
Wilmington Trust, N.A. provides corporate and institution services including institutional trustee, retirement plan, agency, asset management, and administrative services for clients worldwide who use capital markets financing structures. Wilmington Trust provides directed trustee, custody, and fiduciary services for retirement plans, companies, foundations, organizations, and financial institutions. Wilmington Trust also provides Wealth Advisory services with a wide array of personal trust, financial planning, fiduciary, asset management, and family office solutions designed to help high-net-worth individuals and families grow, preserve and transfer wealth. Wilmington Trust maintains offices throughout the United States and internationally in London, Paris, Dublin, and Frankfurt. For more information, visit www.WilmingtonTrust.com.
About BNY Mellon Investment Management
BNY Mellon Investment Management is one of the world’s largest investment firms, with US $2.2 trillion in assets under management as of December 31, 2020. Through an investor-first approach, the firm brings to clients the best of both worlds: specialist expertise from eight investment firms offering solutions across every major asset class, backed by the strength, stability, and global presence of BNY Mellon, one of the world’s most trusted investment partners. Additional information on BNY Mellon Investment Management is available on www.bnymellonim.com.
BNY Mellon Investment Management is a division of BNY Mellon, which has US $41.1 trillion in assets under custody and/or administration as of December 31, 2020. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of the Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.
Mellon is a global multi-specialist investment manager dedicated to serving its clients with a full spectrum of research-driven solutions. Mellon is a registered investment adviser and an indirect subsidiary of BNY Mellon.
About PGIM Fixed Income
PGIM Fixed Income, with $968 billion in assets under management as of December 31, 2020, is a global asset manager offering active solutions across all fixed income markets. The company has offices in Newark, N.J., London, Tokyo, and Singapore. For more information, visit pgimfixedincome.com.
About AFL-CIO ITC Financial
AFL-CIO lTC Financial LLC is an indirect subsidiary of the AFL-CIO Investment Trust Corporation incorporated under the laws of Delaware. The Company is a broker-dealer registered with the Securities and Exchange Commission and member of the Financial Industry Regulatory Authority (“FINRA”). AFL-CIO ITC Financial partners with experienced investment managers to distribute investment products to Taft-Hartley and other institutional investors.