Resolutions - Human Resources: Consider three resolutions authorizing the Mayor to execute contracts, by and between the City of Lubbock and Voya Financial, MissionSquare Retirement Corporation (rebranded ICMA-RC), and AIG Retirement Services, to provide administrative recordkeeping, education, communications, and investment-related services for the City of Lubbock 457(b) Deferred Compensation Plans.
Item Summary
The City of Lubbock Health and Welfare Benefits packet includes voluntary 457(b) Deferred Compensation plans under Ordinance No. 2007-O0109 and Ordinance No. 2011-O0112. The purpose of the plans is to provide supplemental retirement income, in addition to the mandatory Texas Municipal Retirement System plan and the Lubbock Fire Pension Fund. The current 457(b) contracts are with MissionSquare Retirement, Voya Financial, Brighthouse Financial, New York Life Financial, and Security Benefits.
As of May 2021, the number of active participants and the estimated annual employee contributions by company are:
Company
#Active Participants
Approx. Annual Contributions
MissionSquare Retirement (ICMA)
180
$311,677
Voya Financial
49
$184,160
Brighthouse Financial
224
$529,575
New York Life Financial
19
$33,661
Security Benefits
77
$214,240
On June 22, 2020, City staff issued a Request for Proposal (RFP 20-15374-TF) for administrative recordkeeping, education, communications, investment related services, and other 457(b) Deferred Compensation plan services. The primary goals for the RFP were to enhance participant retirement outcomes, analyze the overall competitiveness of the plans, offering a suitable investment menu, improve participant education and communication services, analyze participant plan expenses, and to provide participants with all-embracing on-line capabilities.
Proposals were received and opened on August 11, 2020. The RFP generated nine responses: Voya Financial, MissionSquare Retirement, AIG Retirement Services, Empower Retirement Services, One America Retirement Services, Wells Fargo, PlanMember Securities Corporation, AXA Equitable Financial Service, and Security Benefits. A committee of City employees evaluated the responses.
Two current vendors, Brighthouse Financial and New York Life, did not respond to the RFP.
Responses were ranked based on 5 criteria: clarity, completeness and comprehensiveness of the proposal - 20%, providing client references to verify service levels and capability - 20%, meeting the mandatory requirements and/or specifications - 20%, providing a product compatible with the City benefit programs - 20%, and proposing the services with the most advantageous and prudent methodology and costs to the City's employees - 20%.
The nine companies received the following rankings:
Company
Score (Possible 300 Points)
Voya Financial
291
MissionSquare Retirement (ICMA)
289
Empower Retirement Services
287
AIG Retirement Services
267
One America Retirement Services – Wells Fargo
264
PlanMember Securities Corporation
225
AXA Equitable Financial Services
222
Lincoln Retirement Services
221
Security Benefits
187
The committee reviewed the initial responses, entertained presentations, and requested best and final offers from the top 5 scoring companies. Based on the fee structures in the best and final offers, it was determined to offer contracts to 3 contenders.
Voya Financial:
Number 1 in government markets and have the knowledge and expertise to administer the plan and common remitter system capabilities
Proven track records in multiple and exclusive provider arrangements
Competitive fund fees on an open architecture platform to offer proprietary and external products
MissionSquare Retirement:
Superior service to public employees
Presence of the plan representative who increased participation from 13 participants to 220 participants over a five-year period
Competitive fund fees on an open architecture platform to offer proprietary and external products
AIG Financial Services:
Large presence in the 457 governmental market
Two local agents to service the City's account
Competitive fund fees on an open architecture platform to offer proprietary and external products
AIG Financial Services is recommended over third ranked Empower Retirement Service because Empower's final multi-provider fee requirement was greater than the AIG Financial fee requirement.
The RFP asked respondents to provide service performance guarantees. Each of the recommended companies pinpointed at-risk dollars, based on unsatisfactory performance criteria such as suitability and timeliness of services, quality of customer service, and website availability. The awarded contracts will be for a 5-year period with annual renewal options.
Staff and the evaluation committee recommend awarding contracts to Voya Financial, MissionSquare Retirement (ICMA), and AIG Retirement Services.
The contract for each company is available for review in the Office of the City Secretary.
Fiscal Impact
The 457(b) Deferred Compensation Plan is 100% employee funded, so there is no fiscal impact to the General Fund.
Staff/Board Recommending
Bill Howerton, Deputy City Manager Clifton Beck, Director of Human Resources
Attachments
Resolution - Voya Financial, 457 Plan
Resolution - ICMA Retirement Corporation, 457 Plan