Service Update for TIAA-CREF Participants

TIAA-CREF continues to take steps to offer you a wider range of financial products and services that broaden your investment choices and help you make sound financial decisions. We also continue to improve our service infrastructure to increase our capability, flexibility and speed in meeting your needs. To deliver these and other benefits, we are shifting to a more modern and flexible plan-based retirement record-keeping system rather than continuing to use a more rigid, outmoded one. Throughout this complex transition, some individuals have experienced delayed transactions and other service shortfalls. We apologize for any issues or problems this transition may have caused.

Today, thanks to our work to improve customer service, we are consistently completing most client transactions on the day they are received. While some individuals may continue to experience delays, overall customer service continues to improve. With this in mind, we have posted below some frequently asked questions about service issues and the actions TIAA-CREF is taking to uphold our historic mission of meeting your financial needs on the best terms practicable.

What has caused the transaction delays and other service issues?

The transition itself is complex. We needed to move quickly to the new platform while carefully adhering to hundreds of specific rules in tens of thousands of different retirement plans for the approximately 15,000 institutions we serve. We undertook detailed and careful advance planning for the transition as well as for an ongoing series of enhancements. Overall, the transition has gone as planned and we anticipated and managed a number of potential problems ahead of time.

However, the complexity of this undertaking lent itself to unforeseen issues. In some cases, delays have resulted from the strains placed on our existing processes and staff. In other cases, our tradition of accommodating institutional retirement plan remittances in a variety of formats has, at times, required substantial effort to correct before processing.

Over the past year, we have redesigned our processes to allow us to more consistently and efficiently complete transactions in a timely manner. As part of this effort, we have been working with institutional clients to help ensure the data they send to us is in a form that will allow for processing without delay. By ensuring that all transactions meet these new guidelines, we expect to offer plan participants faster transaction processing and improved service overall.

Where there have been shortfalls, what are you doing to fix the problems?

We have taken steps to help ensure that all participants can rely on their transactions being processed in a timely manner, their account statements accurate, and queries or complaints responded to and resolved quickly and completely. These steps include redesigning our processes, reallocating and prioritizing processing personnel and other resources, adding and training new employees in our pension and IRA areas, implementing new data management systems, correcting errors and fixing their root causes, working with our institutional clients to enhance procedures for conveying remittance data and contributions, and improving the systems that tie together our back-end operations with our front offices.

We also are adding capacity to our overall customer service initiatives. We have upgraded our telephone switches and networks, and added enhanced call routing capabilities in our Charlotte, Denver and Dallas facilities. We also implemented new technology that provides participants with call-back options designed to reduce telephone hold times.

What guidance can you give clients who have a service problem?

If you experience a problem with your transaction or account, please contact a TIAA-CREF customer service representative at 1 800 842-2776. Representatives are available Monday through Friday from 8 a.m. to 10 p.m. (ET), and Saturday from 9 a.m. to 6 p.m. (ET). See additional ways to contact us. We will work to resolve your problem as quickly as possible.

When do you expect these issues to be resolved?

While we are completing most client transactions on the day they are received, we continue work to accelerate service improvements and then to attain even higher standards. Of course, we will continue compensating individuals for economic loss as a result of delays we have caused.

Companies update technology all the time. Why has it appeared to be such a challenge for TIAA-CREF?

This is an unprecedented transformation for TIAA-CREF and essential to meeting our clients' financial needs. For us, the update encompasses moving to a modern plan-based system and away from an individual contract-based system, demanding careful adherence to hundreds of specific rules in tens of thousands of different retirement plans for about 15,000 institutions. In some cases making improvements to our service infrastructure has entailed replacing 30-year-old systems and the software that runs them. It is a complex undertaking, but one that is already benefiting clients by allowing us to deliver expanded choices of funds and accounts, personalized advice and other advantages on a single, reliable platform.

What benefits can TIAA-CREF clients expect as result of the company's transformation?

We believe the combination of capabilities we offer surpasses what is available from many other full-service financial services providers, none of whom focus expressly on solutions to help meet the financial needs of individuals and institutions in the nonprofit fields. Even as we work aggressively to improve service delivery and complete the transition to our new system, we have made progress on our participants' behalf in other areas:

• TIAA-CREF's proprietary fund/account offering has expanded from 19 in 2003 to 73 today, in addition to institutional separate accounts and nearly 300 funds from other companies.
• 70 percent of our mutual funds and variable annuity accounts exceeded their Morningstar median over the past three and five years (as of 3/31/08).ⁱ
• TIAA-CREF consultants receive no sales commissions as part of their compensation.ⁱⁱ
• The fees on TIAA-CREF's actively managed funds and accounts are typically in the lowest quartile of comparable products.ⁱⁱⁱ
• TIAA-CREF has maintained effective risk management that has helped it to largely avoid losses that other financial firms have experienced in the debt markets.
• According to Forbes magazine, "the 3.2 million employees of colleges, hospitals and other not-for-profits whose retirement plans TIAA-CREF serves have access to the most extensive personalized workplace advice."^iv
• Over three-quarters of clients who have received TIAA-CREF's retirement planning and advice consider it to be superior to what is offered by other financial services providers.^v
• TIAA is one of only three U.S. insurance company groups to receive the highest ratings from the nation's four leading rating agencies.^vi
• With nearly $8.7 billion in assets as of March 31, 2008, the CREF Social Choice Account is the largest socially screened investment vehicle for individual investors in the United States. On March 10, we expanded the Account's screening to include both U.S. and non-U.S. companies.

We aim to deliver participants a range of advantages, including continued strong investment performance and service in response to their needs.

All TIAA-CREF investment products are subject to market risk and other risk factors, which can be found in each product's prospectus. Past performance is no guarantee of future results.