The Need to Prefund Benefits Costs for Credit Unions

Credit Unions play a unique and valuable role in our society. They take in savings and checking account deposits and pay interest on those deposits to their members. They also perform critical lending functions within the communities they serve, offering loans for necessary economic activity such as mortgages and home equity, auto loans, personal loans, and many of the same loan instruments usually associated with banks. But even though they are not banks, they are just as heavily regulated, if not more so -- especially when it comes to the investments they are permitted to make on their own behalf.

There is one area where the regulatory authorities have given Credit Unions more freedom to invest to meet their own obligations and that is to have the assets to meet their future employee benefits obligations (EBO's). These often include employee health plans, life and disability insurance coverage, 401(k) plan and pension plan contributions, and executive benefits plans. Credit Unions are required to determine an asset allocation that is tailored to their specific needs and goals. Typical investment options that Credit Unions can employ to meet these future benefits obligations include managed accounts, mutual funds and exchange traded funds (ETF's), and many types of annuities and life insurance policies. All are premitted under Part 701.19 of the National Credit Union Association guidelines.

Studies show that healthier employees are more likely to be satisfied with their jobs, more likely to want to stay with their current employer, and more likely to be productive employees. But with benefits costs already averaging 30% of total employee expenses, it's more important than ever for Credit Unions to find new investment models that can generate the reults they need to keep pace with their fast growing benefits costs.

Guideboat Financial has assembled a team of three experienced professionals who have joined together to assist Credit Unions with this critical need. Our plan features proprietary software programs and is designed to increase Credit Union earnings, improve equity ratios, protect all important liquidity, and lower investment risks -- all at reduced investment cost. Call or write today to learn more about this new service from Guideboat Financial.