Fund Revenue EqualizationSM

For Plan Sponsor and Financial Professional Use Only Emerging Markets

Overview

Experience tells us that retirement plan participants are more likely to fully utilize

the benefits of their retirement program when they have a thorough understanding

of their plan and the administrative fees, if any, that they are paying.

With this in mind, Transamerica Retirement Solutions has been leading the

industry toward a level system of recognizing the fees associated with the

administrative costs of a retirement plan to ensure all participants are paying a

similar proportion of the general plan administrative fees based on their account

balance in each of the plan’s core funds.

Transamerica calls this Fund Revenue Equalization.

What is Fund Revenue EqualizationSM?

Fund Revenue Equalization is related to the expense ratio of an investment

fund that is offered under the plan and the component of the expense ratio

that the fund company pays to the retirement plan recordkeeper (Transamerica

or its affiliates). Many, though not all, fund companies provide such revenue

to retirement plan recordkeepers, which is intended to compensate service

providers like Transamerica for administrative services such as transaction

processing, statement production, and call center staffing.

Because these payments usually vary from one fund to another or from one

fund company to another, each participant’s selected funds may be supporting

a different percentage of administrative expenses based on the funds the

participant chooses and how much the participant has invested in these funds.

While plan participants receive full information about the expenses of each plan

investment option, a closer look at the revenue component may reveal that

a participant who selects higher-fee funds that make greater administrative

revenue payments to Transamerica is effectively bearing a larger portion of a

plan’s administrative expenses than others who select lower-fee funds that pay

little or no revenue toward the administrative costs. This is particularly prevalent

with investors who use actively managed funds versus investors who use passive

index funds.

Transamerica’s Fund Revenue Equalization method is designed so that all

participants bear a similar percentage charge for the plan’s administrative

services, no matter which investment funds they choose.

Transamerica has been leading the industry toward a level system of recognizing the fees associated with the administrative costs of a retirement plan.

PS 11098-EM (4/13)

© 2013 Transamerica Retirement Solutions Corporation

440 Mamaroneck Avenue, Harrison, NY 10528888-401-5826 | trsretire.com

With Transamerica’s Fund Revenue Equalization, all

participants share levelized costs of plan administration.

Transamerica compares the plan’s administrative fees with

the actual revenue received for each fund:

• If the revenue Transamerica collects from a fund provider

is greater than the administrative fee negotiated with the

plan sponsor, we refund the difference to the participants

invested in the fund as a plan service credit.

• If the revenue Transamerica collects from a fund provider

is less than the negotiated fee, we collect the difference

by deducting an administrative fee from the participants

invested in the fund.

The expense ratio is the sum of operating fees charged by the investment fund providers who manage the fund and include the fee paid to the fund’s investment manager, taxes, legal expenses, and accounting and auditing fees.

1. PlanSponsor, “How Much Do Your Participants Think They Pay for Their Retirement Plan?,” August 2011

Transamerica or Transamerica Retirement Solutions refers to Transamerica Retirement Solutions Corporation.

To learn more about this powerful service, contact your Transamerica Retirement Solutions representative today.

How does Fund Revenue EqualizationSM work?

With regard to disclosing these costs, Transamerica

discloses these credits and/or administrative fees

on the participants’ account statements. Considering

a recent PlanSponsor survey1 showing that more

than 65% of plan sponsors believe their participants

don’t know how much they’re paying in fees, this

reporting could help them better manage their

retirement savings.