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SR 12-15-2020 3K City Council Report City Council Meeting: December 15, 2020 Agenda Item: 3.K 1 of 3 To: Mayor and City Council From: Lori Gentles, Chief People Officer, Human Resources Department Subject: Approval of 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 first modification to the agreement with Nationwide Retirement Solutions, Inc. (Nationwide), for deferred compensation plan administrator services, to extend the agreement for a period of two years with one additional one-year renewal option, on the same terms and conditions, for a total ten-year contract period (including the optional renewal). Summary 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. Assets of the combined plans, which serve both active and inactive employees, totaled more than $280 million as of November 2020. As the current plan administrator, Nationwide provides plan administration and recordkeeping services, as well as extensive educational services, which include on-site, one-on-one sessions with City employees. Pending expiration of the current agreement, the City requested updated plan fee pricing from Nationwide. The revenue requirement for the new term is 0.035%, a reduction of 0.005% from the current revenue requirement of 0.04%, resulting in reduced participant fees. Many staff members are working differently, be it in-person, or virtually. Enabling these services to continue to be delivered by Nationwide will provide continuity and familiarity during a time when transitioning to a new administrator would create confusion and an additional burden on staff. Based on Nationwide’s industry and customer service experience, proven ability to perform appropriate recordkeeping and administration services, as well as meeting the needs of a now mostly virtual workplace, 3.K Packet Pg. 213 2 of 3 staff recommends a first modification of the contract to extend its term for two years, with one one-year renewal option (for a total 10-year contract), which will enable these services to continue to be provided by Nationwide. Discussion In 2013 the City issued a Request for Proposal (RFP) for deferred compensation plan administrator services including 457, 401, OBRA, and PEHP plans. The City then retained the services of Benefit Funding Service Group (BFSG), an independent consultant, to assist in evaluating the responses to the RFP. BFSG conducted a thorough review and evaluation of the RFP responses received and presented its analysis to the City’s selection committee 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 City’s selection committee voted unanimously to recommend Nationwide as the best firm to provide deferred compensation administrator services to the City. Nationwide continues to manage, the 457, 401, OBRA, and PEHP plans, providing plan administration and recordkeeping services, and extensive educational services, including on-site and one-on-one sessions with City employees. During the transition to a mostly virtual workplace, Nationwide has continued to meet the needs of plan participants by transitioning paper-based processes to fully electronic workflows, augmenting self-service options, and revamping their City specific website to be more user friendly. The Nationwide online systems also provide Human Resources’ staff with a secure mechanism to assist in the administration of the plan. At a time when the majority of staff are working virtually, continuing to deal with the strain caused by the restructuring, and managing the extra stress the pandemic has created (both personally, and professionally) a transition to a new administrator would be difficult. Taking these challenges into consideration, and as contract #9848 and all available modifications were expiring, staff requested information from Nationwide on a first modification to the contract, extending it an additional two years with one, one-year renewal option, for a total contract period of 10 years. 3.K Packet Pg. 214 3 of 3 Based on Nationwide’s continued ability to provide the full scope of services needed to maintain continuity in HR operations, the plan participant experience, and a reduction in participant fees, staff recommends a first modification to the contract to extend its term by two years with one one-year renewal option (for a total 10-year contract) to enable these services to continue to be provided by Nationwide. Past Council Action 12/13/2013 (Attachment A) Authorize agreement with Nationwide Retirement Solutions, Inc. for Deferred Compensation Plan Administrator Services Financial Impacts and 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 will be credited to a plan expense reimbursement account, which will be used to offset administrative expenses associated with the Plan and/or distributed to participants’ accounts within the Plan. Prepared By: Amanda Elek-Truman, Senior Human Resources Analyst Approved Forwarded to Council Attachments: A. 12.17.2013_Staff Report re. Nationwide 3.K Packet Pg. 215 City Council Report City Council Meeting: December 17, 2013 Agenda Item: 3-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 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 3.K.a Packet Pg. 216 Attachment: 12.17.2013_Staff Report re. Nationwide (4366 : Nationwide) 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 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: Forwarded to Council: Donna C. Peter Director, Human Resources Rod Gould City Manager 3.K.a Packet Pg. 217 Attachment: 12.17.2013_Staff Report re. Nationwide (4366 : Nationwide)