The purpose of this Mayor and Council Communication (M&C) is to seek authorization to enter into a new agreement with TIAA to be the Third-Party Administrator for the City's 457 Deferred Compensation (Agreement). Participants in the plan will pay all costs and fees contemplated by the Agreement. TIAA has operated as the third-party administrator for the City's 457 Deferred Compensation Plan since 2013. The City has experienced positive feedback from participants regarding TIAA's management of their respective 457 accounts and wishes to continue the relationship. On June 18, 2018, a RFP was issued for the administration of the 457 Deferred Compensation Program. A committee of members from the 457 Deferred Compensation Committee as well as human resources staff was formed to evaluate the proposals. Ten companies responded to the RFP. With the assistance of our 457 Deferred Compensation Consultant, the proposals were evaluated and narrowed to three finalists. The proposals were evaluated based on the total fees for services, administration and services and experience and qualifications. The three finalists were given the opportunity to submit best and final offers. Based on the best and final offer review, the 457 Deferred Compensation Committee unanimously voted to recommend that TIAA continue to serve as the sole Third-Party Administrator for the City's 457 Deferred Compensation Plan. While TIAA did not have the lowest expense overall on a fee basis (8 basis points), other finalists had additional costs such as higher annual loan maintenance fees as well as higher loan origination fees that would cost participants $49,000.00 to $95,000.00 more, annually. The total cost differential on a fee basis was approximately $20,000.00 lower than TIAA, but estimated IT and other costs to change vendors would exceed this amount. Currently, approximately 41% of City employees participate in this retirement savings option. A concerted education effort will occur during the information sessions regarding pension reform. Term: the Agreement will begin on April 9, 2019 and end on April 8, 2024 for an initial term of five (5) years. Renewal Options: the Agreement may be renewed, at the City's option, for two (2) renewal periods of one (1) year each. |
