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ASEA News
ASEA Statement on Deferred Compensation Plan Continued
On October 14, 2009, Great West was selected by the State Personnel Board to be the service provider for the 457 Deferred Comp Plan effective December 15, 2009. Mercer Investment Consulting, Inc., of Richmond, Virginia ( Mercer ) was the consultant hired by the State Personnel Board to analyze the bids and assist in the selection of the service provider. Due to the State Personnel Boards failure to respond to ASEAs requests and recommendations, ASEA was unable to recommend a service provider for the 457 Deferred Comp Plan.
On August 21st and August 25th, ASEAs tax attorneys sent requests and recommendations concerning the 457 Deferred Comp Plan to the State Personnel Board. The requests and recommendations were made by ASEA pursuant to a time line established by the State Personnel Board. The requests and recommendations by ASEA included the following:
1. ASEA recommends that the State Personnel Board provide ASEA with (i) any analysis or data the State Personnel Board or its consultants have compiled concerning services provided by Nationwide, (ii) any analysis or data indicating the differences, if any, between the bids evaluated by Mercer and what was previously provided by Nationwide, and (iii) any analysis of the additional costs to be incurred as a result of terminating Nationwide. This information has been previously requested.
2. ASEA recommends that Mercer provide a comparison of the evaluated bids to the services currently provided by Nationwide.
3. Since the Deferred Compensation Plan receives no state funding to defray the cost of administering the plan, ASEA recommends that Mercer provide an analysis of the asset fees and expense reimbursements that should be charged by ASEA in order to continue to provide the current funding options under the plan and in order to provide the current marketing, program oversight, advertising, administrative support, due diligence and education/informational services provided under the plan and for the benefit of both the plan and the plan participants.
4. ASEA recommends that the service provider appoint a plan director and a minimum of 9 full-time licensed representatives to service the plan.
5. ASEA recommends that the service provider be required to meet enrollment goals of 1,250 new participants a year, education seminar goals of 1,200 per year and increase transaction goals of 2,250 per year and that the service provider be required to pay liquidated damages if such goals are not met.
6. ASEA recommends the retention of at least one third party plan consultant and the preparation of annual plan surveys.
7. ASEA recommends the continuance of the current structure of marketing the plan to participants and prospective participants utilizing a combination of personal interviews, group presentations, educational seminars, advertising and promotional materials.
8. ASEA recommends that Mercer make a presentation to the State Personnel Board and the ASEA deferred compensation committee about the preparation and evaluation of RFPs, with special emphasis on (1) the establishment of a benchmark of the current services with those available in the market, (2) contract enhancement offers from incumbent providers and (3) alternative service offerings from other providers.
9. ASEA recommends that the State Personnel Board provide the ASEA deferred compensation committee and Mercer with the model the State Personnel Board desires concerning marketing, program oversight, advertising, administrative support, due diligence and education/informational services.
10. ASEA recommends that the State Personnel Board provide the ASEA deferred compensation committee and Mercer with the performance goals the State Personnel Board desires with respect to plan participation, educational seminars and increase transactions.
11. ASEA recommends that Mercer provide the ASEA deferred compensation committee with copies of any surveys it has conducted, or data it has compiled, concerning revenue, expenses and disclosure with respect to 457 plans.
12. ASEA recommends that the State Personnel Board provide it with a copy of the great-improvements kit.
13. ASEA recommends that the State Personnel Board provide it with the names of any all consultants it has used in connection with the development of the consultant and service provider RFPs, including copies of any and all contracts involving such consultants.
14. ASEA recommends that Mercer make a presentation to the State Personnel Board and the ASEA deferred compensation committee concerning the costs of administering deferred compensation plans and the revenue sources that pay for such services. This should be easy to accomplish since Andrew Ness is a featured speaker on this topic at the 2009 NAGDCA annual conference.
15. ASEA recommends that Mercer provide ASEA with the source and calculations for the current fee determination for Nationwide made in its handout to the evaluation presentation. With respect to the handout we request that Mercer identify which portion of the fee they consider to be an asset fee, which portion they consider to be expense reimbursements (revenue sharing), and which portion they consider to be gross expense ratios (percentages payable for fund, not plan, operating expenses).
16. ASEA recommends that a chart of fees be prepared by Mercer for each service provider bidder which indicates the amount of fees that would be charged if such service provider provided the exact same investments as those provided by Nationwide. In order to clarify this request, the chart for each service provider should contain the same list of investments provided to ASEA on August 21, but include that service providers fee as opposed to Nationwides.
On October 12, 2009, ASEA forwarded to the State Personnel Board the following statement concerning the selection of a service provider:
The State Personnel Board has taken unilateral action to amend the plan and terminate the current service provider. The State Personnel Board has not responded to previous ASEA recommendations provided in August, 2009, and has refused to allow ASEA to discuss these recommendations or the administration of the plan with the plan consultant, Mercer. Also, the State Personnel Board has refused to identify the consultant it utilized to develop the RFPs for the plan consultant and the service provider. Since ASEA has not been provided an opportunity to have its recommendations or concerns addressed, it is not currently in a position to respond to, or recommend, the selection of a service provider for the deferred compensation plan or the 401(a) plan.
The Deferred Compensation Plan has been very successful over the years due to the thousands of hours rendered to State employees by ASEA and the ASEA Deferred Compensation Committee. Not only has the Plan been an outstanding plan, but the services provided to State employees have been among the best in the country.
The State Personnel Board has selected Great West as the provider for the Deferred Compensation Plan and ASEA wishes Great West and the Plan the very best. If ASEA can be of any assistance to Great West, it is willing to do so in order to aid the employees of the State of
Alabama. We look forward to seeing what type of fees and services will be provided by Great
West as it takes over the Deferred Compensation Plan.
State employees throughout the State of Alabama are concerned about converting from Nationwide to Great West in mid-December of 2009. We have received a number of calls and we suggest if you have any questions, please contact the State Personnel Board at (334)
242-3389. Since the State Personnel Board is working directly with Great West, they are in the best position to direct your call to the appropriate person.
ASEA News
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