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| Medical |
| Dental |
| Vision |
| Tax Advantage Accounts |
| Prescription Drugs |
| Life Insurance |
| LTD |
| AD&D |
| AFLAC |
| Employee Assistance Programs (EAP) |
| 401(k) |
| Retirement Benefits |
| Terms to Know |
| HELP CENTER |
| Farm Credit Foundations 1-800-892-7924 AskBene |
| 24/7Nurse Line 1-800-299-0274 |
MagellanHealth EAP |
| Benefits |
Sept. 26, 2008 |
Market Crisis |
| It has been an unprecedented month on Wall Street – unlike anything that many of us have seen in recent times. Not only has there been a lot of buzz about these events and the effect for Farm Credit, but you are thinking about how these events have impacted you personally – specifically with the 401(k) plan. |
| If you participate in the Farm Credit Foundations Defined Contribution / 401(k) Plan, your account is invested as you direct – and it may or may not be impacted by the recent events. Although the investment market’s problem initially centered on the housing market, we have seen an impact throughout all areas of the financial and capital markets. |
| Asset Consulting Group Monitoring Asset Holdings |
| While we cannot control the market crisis, we can control how we react. The Trust Committee and Foundations staff have been working closely with our investment consultant, Asset Consulting Group (ACG). Together, we have been monitoring the impact of the recent events on every category of our asset holdings. Some of our investment managers hold individual securities, which allows us to directly monitor and measure their investment holdings; while other managers use commingled funds or mutual funds, which don’t give us daily listings of assets held. For this reason, it takes time to thoroughly measure the impact of the market downturn. |
| It is important to remember that we have a disciplined process that is followed by the Trust Committee. An investment consultant has been retained whose role is to provide guidance and expertise to the Committee. The consultant aids in the development of our investment policies, asset allocation strategy, market and economic reviews, and selection of high quality fund managers to provide a diversified line-up of investment choices. In addition, each quarter, the Trust Committee monitors our portfolio and has meetings with many of our fund managers. |
| Overall, our direct exposure to the names making the headlines – AIG, Lehman Brothers (LB), Merrill Lynch, Freddie / Fannie, etc., is limited; however, the events that have impacted these companies have spread into the broader market. |
Below is a snapshot on the exposure in four of the funds in the 401(k) plan:
Note: Mutual fund holdings are as of 6/30/2008 |
| Retirement Benefit Based on Pension Formula |
| With regard to defined benefit plan assets, the retirement benefit you receive is based on a pension formula which considers your length of service times a percentage of your average salary. Investment gains or losses, interest earnings, etc. do not impact your monthly pension amount. These things do impact the cost of the plan over time for the employers. |
| Overall, in listening to our investment managers, economists and consultant – their advice is to avoid making any hasty decisions regarding asset allocation. They also suggest that, in making decisions, each individual needs to consider their own investment horizon (how long they have before spending the assets) as well as their risk tolerance (the levels of ups and downs a person can ‘stomach’). |
| We will continue to monitor our investment managers and asset holdings to best determine the prudent course of action. We will keep you apprised of any significant developments and the potential impact, if any, for the Farm Credit Foundations’ retirement programs. |
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