CITY COUNCIL AGENDA ITEM
Memo Date: May 3, 2021
Agenda Date: May 11, 2021
Prepared By: Tammy B. Gemmati, Administrative Services Director
Through: Stockton Whitten, City Manager
Requested Action:
title
Approve City Staff's recommendation to consolidate recordkeepers for the City's 457(b) and 401(a) providers from three providers to one provider, ICMA-RC. Providing termination notice to Nationwide and Empower Retirement. Approve Staff to work with City Attorney to negotiate a new plan agreement between the City of Cocoa and ICMA-RC.
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BACKGROUND:
In January 2021, City Council approved the agreement with SageView Advisory Group as the City's financial advisor and to provide fiduciary oversight for the City's 457(b) and 401(a) plans. At the City's request, in an effort to reduce participant fees, increase employee retirement education, and provide better plan administration, SageView sent a Request for Information (RFI) to nine (9) qualified Retirement Plan Administrators, including the current providers, Empower, ICMA-RC, and Nationwide. SageView consolidated all RFI responses, including an analysis of current plan expenses and fees.
A summary of the current plan fees and expenses by provider includes:
Plan Provider
Plan Assets
Total Cost Inc.
Investment Expenses
Vendor Revenue
Nationwide 457(b) Plan
$5,500,000
1.18%
$22,752
or
0.88%
Empower DC Plan (grandfathered plan)
$2,002,000
0.95%
$5,300
or
0.26%
ICMA 401(a) Plan
ICMA 457(b) Plan
$6,628,897
1.30%
$68,092
or
1.03%
Total
$14,130,897
1.20%
$96,144
0.68% (weighted)
The fees of these plans are not paid by the City but built into individual retirement accounts. An advantage of consolidating these plans into a single recordkeeper is the ability to lower the investment expenses and the revenue paid to the providers from the employee's retirement accounts. Additionally, it enables for the City to streamline plan administration of the retirement plans.
SageView provided a recordkeeper...
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