(Jim Keeler, Nationwide Retirement Solutions, Program Director)

An agreement and resolution with Nationwide Retirement Solutions to provide the Arizona State Retirement System Supplemental Salary Deferral 457 Plan.

ADOPT RESOLUTION NO. 2021-2193 ESTABLISHING THE ARIZONA STATE RETIREMENT SYSTEM SUPPLEMENTAL SALARY DEFERRAL PLAN; DESIGNATING THE CITY MANAGER AS THE AUTHORIZED AGENT; PROVIDING AUTHORIZATION AND DIRECTION AND PROVIDING AN EFFECTIVE DATE. (Jeanni Ruddy, Total Compensation and HRIS Manager)

There is no financial impact to the city.

As part of the city's comprehensive benefits package, the city offers several retirement plans. Eligible employees are required to participate in one of two defined-benefit pension plans through the Arizona State Retirement System (ASRS) for non-sworn personnel or the Public Safety Personnel Retirement System (PSPRS) for sworn public safety personnel.  The city also offers two post-tax Roth Plans and two 457 deferred compensation plans administered by MissionSquare Retirement (formerly ICMA-RC) and Nationwide Retirement Solutions (NRS). A 457(b) deferred compensation plan is a voluntary, supplemental, tax-deferred retirement savings plan much like a 401(k) offered in the private sector.


 

Nationwide Retirement Solutions has partnered with the Arizona State Retirement System (ASRS) to offer the Supplemental Salary Deferral Plan (SSDP) 457 Plan.  As a participating employer of ASRS, we have the ability to offer this program to all benefit-eligible employees, including employees covered by the Public Safety Personnel Retirement System.  By transitioning from the city's standard Nationwide 457 Plan to the ASRS Supplemental Salary Deferral 457 (b) Plan, participants have access to a quality, lower fee plan that allows individual management of accounts or a self-directed brokerage option through Charles Schwab for those do it yourselfers.  The primary advantage of the ASRS SSDP plan over the city's current Nationwide 457 Plan, is the fees associated with the ASRS SSDP plan are considerably lower.  A number of things factor into why the ASRS fees are lower, with the main reason being that ASRS is utilizing the State of Arizona's Deferred Compensation Plan 10-year contract which became effective in January 2017.  By using the economy of scale of the State plan at $2 billion in assets under management, ASRS was able to significantly lower their SSDP 457 plan administrative and record keeping fees, as well as utilize institutional level share class mutual funds.  By offering a master level plan for public sector entities to adopt and participate in utilizing these significant enhancements, municipalities can now participate in the ASRS SSDP 457 plan instead of only a standard 457 plan based on our individual city deferred compensation pricing tiers. 

With Council approval of Resolution 2021-2193, the 400 participants and over $23M of assets in the city's standard Nationwide 457 Plan will be moved to the ASRS SSDP 457 Plan effective January 3, 2022 with an implementation date of April 2022.  Nationwide's Investment Management Group will put together a mapping schedule to move participant investments to like investments in the new plan (i.e. large cap growth to large cap growth).  Participants will receive a communication letter prior to the conversion with a mapping sheet of the changes.  Plan participants can make investment changes within their plan prior to or immediately following the completion of the conversion process. 

The city will continue to offer the MissionSquare Retirement 457 deferred compensation plan.