SR-12-17-2013-3FID
City Council Report
City of
Santa Monica
City Council Meeting: December 17, 2013
Agenda Item: S ®f°
To: Mayor and City Council
From: Donna C. Peter, Director of Human Resources
Subject: Professional Services Agreement with Nationwide Retirement Solutions,
Inc. for Deferred Compensation Plan Administrator Services
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a no -cost contract with Nationwide Retirement Solutions, Inc. (Nationwide), an
Ohio -based company for deferred compensation plan administrator services for five
years, with two additional one -year renewal options.
Executive Summary
Nationwide would provide administrative, investment consulting, recordkeeping, and
communication services for the City's 457 Deferred Compensation Plan, OBRA -PST
Deferred Compensation Retirement Plan, Post Employment Health Plans (PEHP), and
a 401(a) Money Purchase Pension Plan (collectively the 'Plans "). Nationwide was
selected through a competitive process to provide these services for a five -year term,
with two additional one -year renewal options. All administrative fees will be borne by
the Plan participants.
Discussion
The City offers a 457 Deferred Compensation plan for full -time employees, an OBRA-
PST Deferred Compensation Plan for part- time /seasonal employees, Post Employment
Health Plans (PEHP), and a 401(a) Money Purchase Pension Plan. Total assets of the
combined plans totaled more than $170 million as of November 2013. Nationwide would
provide plan administration and recordkeeping services, as well as extensive
educational services, which include on -site, one -on -one sessions with City employees.
Contractor /Consultant Selection
The Human Resources Department issued a Request for Proposal (RFP) for deferred
compensation plan administrator services including 457, 401, OBRA, and PEHP plans
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in April 2013. The RFP was posted on the City's online bidding site and sent to nine
firms that provide administration of deferred compensation plans. The City received
three responses from the following vendors:
• Nationwide
• ICMA Retirement Corporation (ICMA)
• Prudential Retirement Insurance and Annuity Company (Prudential)
RFP Analysis
The City retained the services of an independent consultant to assist in evaluating the
responses to the RFP. After a formalized selection process, Benefit Funding Service
Group (BFSG) conducted a thorough review and evaluation of the three RFP responses
received. On September 30, 2013, BFSG presented its analysis to the City's selection
committee which was comprised of staff from the Human Resources Department, the
Finance Department, a member of the Santa Monica Police Officers Association, a
member of the Santa Monica Firefighters local 1109, and two members of the Coalition
of Santa Monica City Employees. The proposals were scored based on the firms'
recordkeeping and administration policies, investment options, education and
communication plans, and cost. After reviewing BFSG's analysis and after in -depth
discussions on many of the provisions, the City's selection committee voted
unanimously to recommend Nationwide as the best firm to provide deferred
compensation administrator services to the City.
Nationwide received the highest scores in the areas of recordkeeping and
administration, investment options, and cost. In the area of recordkeeping and
administration, the selection committee considered Nationwide's industry and customer
service experience and scored Nationwide's proposal high due to their experience in
administering the largest number of 457 Plans and their ability to provide all
administrative services in- house. Nationwide's revenue requirement was the lowest of
all three vendors at 0.04 % for the 457 and 401 Plans. Other vendors fees were more
than 50% higher than those proposed by Nationwide. In total, Nationwide's proposal
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would result in a reduction in participant fees of more than $300,000 per year compared
to current rates.
Financial Impacts & Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action. All administrative fees relating to the services will be borne by the
Plan participants. Any excess revenue would be credited to a plan expense
reimbursement account, which would be used to offset administrative expenses
associated with the Plan and /or distributed to participants' accounts within the Plan.
Prepared by: Grace Quitzon, Senior Human Resources Analyst
Approved:
a
Donna C. Peter
Director, Human Resources
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Forwarded to Council:
Rod Gould
City Manager
Reference:
Contract No. 9848
(CCS)