CC MEETING: July 12, 2016
DATE: July 5, 2016
TO: Leonard Martin, City Manager
FROM: Chrystal Davis, Director of Workforce Services and Bob Scott, Assistant City Manager/CFO
Title
Consider Authorizing The City Manager To Enter Into A Contract With ICMA-RC For Administration Of The City's Deferred Compensation, Retiree Health Savings, and Social Security Substitute (OBRA) Investment Plans.
Body
BACKGROUND:
Since the early 1980's, the city has offered its employees the opportunity to save for retirement through an IRS Code Section 457 deferred compensation plan which is similar to the private sector's 401(k) plans. Over the years the city also added a 401(a) plan-which is no longer active- and two retiree health savings (RHS) plans, one now closed to new investment due to changes in IRS regulations and one serving as a defined contribution substitute for any employee with less than 20 years of service as of January 1, 2009. This defined contribution RHS plan replaces the defined benefit retiree health benefit plan that is now closed to new participants. In addition, changing IRS regulation required the city to establish a social security substitute plan for temporary and non-benefitted contract employees. These various plans are currently administered by ICMA-RC and Nationwide. ICMA-RC administers a 457, both RHS plans and the 401a plan. Nationwide administers a 457 and the social security substitute plan.
While effectively outsourcing the administration of these plans to the two providers, applicable statutes and related case law create a fiduciary responsibility on the part of the city to ensure that only appropriate investments are offered to plan participants and that the plan administrators are acting appropriately. In performing these fiduciary responsibilities, the city determined that it would be in both the City's and plan participants best interest to consolidate administration of the participant's approximately $86 million of inv...
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