The City of Rocklin maintains a section 457(b) Deferred Compensation Plan and a section 401(a) Defined Contribution Plan. ICMA-RC administers two 457 plans (one of which is for part-time employees), plus the 401(a) plan, while Nationwide Retirement Solutions also serves as a 457 Record Keeper. ICMA-RC and Nationwide provide basic administration, enrollment, participant communication and education, investment management, and record keeping services.
In 2019, the City’s consultant, Ned Taylor of the Hyas Group, reviewed the City’s deferred compensation plans and recommended the City engage in a competitive bidding process for the City’s Retirement Plan Administration and Record Keeping Services. The City subsequently issued a Request for Proposals, and received proposals from nine vendors including: AIG, Empower, ICMA-RC, MassMutual, Nationwide, OneAmerica, Prudential, Transamerica, and Voya. Each of the responding vendors had a high degree of capability and a substantial presence in governmental markets. A City sub-committee, including the City Manager, Assistant City Manager/Chief Financial Officer, and Director of Human Resources with advice from the City’s Consultant, reviewed the proposals and interviewed two firms. Following the competitive process, City staff determined MassMutual provided services in the best interest of plan participants, and recommend MassMutual as the City’s Retirement Plan Administrator and Record Keeper. Several factors leading to the recommendation include:
· User interface – MassMutual’s participant web experience was the most intuitive and focused on a holistic financial health picture.
· On-site service – The representative from MassMutual was interviewed and thought to be a good fit for Rocklin employees (minimum on-site 1 day per month).
· Fees – MassMutual’s fee provides the best value for the cost at $40 per participant annually. The current weighted average expense to participants for recordkeeping is over $450 per participant. This fee reduction equates to approximately $219,000 (over $400 per participant) in annual savings.
· Stable Value – MassMutual’s option entails the best combination of management cost, net crediting rate, and liquidity. Stable Value constitutes approximately 25 percent of total assets and is the only asset class where the investment option specified depends on the vendor.
· Investments – The Plan will transition to low cost, institutional fund offerings rather than relying on high cost, revenue share funds to subsidize administration cost. The investment menu will be streamlined from over 100 funds to less than 30 funds. Currently, 30 funds have 85 percent of total Plan assets.
· Transparent fees – The Plan will adopt an explicit fee arrangement whereby all participants pay the same fee for administration.
If the City Council approves MassMutual as the City’s new deferred compensation administrator and record keeper, transition would occur in late January to early February 2021, and would include robust communication with plan participants. Both tax deferred and Roth 457 plans will be available to Rocklin employees. To facilitate the transition, the City Council is requested to authorize the City Manager to sign agreements with MassMutual for the deferred compensation and defined contribution plans. In addition, for the transition to occur, it is necessary to adopt a resolution appointing Reliance Trust Company as Successor Trustee, and MassMutual as the agent for the Trustee.