HomeMy WebLinkAbout4.A. Authorization to Enter into Contract with Great West Financial General Business
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TO: Mayor and City Council
Mark McNeill,City Administrator
FROM: Kris Wilson,Asst City Administrator
DATE: 02/12/2013
SUBJECT: Authorization to Enter into Contract with Great West Financial(E)
Action Sought
The Council is asked to authorize the appropriate officials to enter into a contract with Great West Financial for
operation of a 457 plan for benefits-eligible employees of the City.
Background
Several months ago the Council authorized a change to the City's deferred comp providers from ICMA and
Nationwide Retirement Solutions to ICMA and the Minnesota State Retirement System(MSRS). This initiated
a required 120-day notification process for the City to end its relationship with Nationwide. However,during this
120-day period numerous new factors arose that have altered our plans,including:
.Several City employees strongly objected to loosing the Nationwide option despite the high fees charged;
.We learned that the move for full-time employee accounts would negatively impact the City's Nationwide
plan for paid-on-call firefighters;
.A fourth plan was added to the mix when the U.S. Conference of Mayors,which previously partnered with
Nationwide on the plan the City had,switched its partnership to a company called Great West. This lead us
to take a look at the Great West option.
Deferred compensation is an optional benefit that allows employees to save for retirement in addition to their
mandatory participation in the City's pension plan. The City does not contribute any funds to employees'deferred
comp accounts,but does have an interest in offering quality benefits and limiting administrative costs.
Recommendation
Based on all of the information available at this time,I am recommending that the City suspend its plans to end its
relationship with Nationwide and also add Great West's deferred comp plan as an option. This will result in a total
of four deferred comp plans being offered: ICMA,MSRS,Nationwide and Great West. In 24 months,we will
re-evaluate all plans and likely consolidate back down to two. Factors that would be taken into account in
narrowing the options in two years include the number of employees actively enrolled, assets invested, fees charged
and administrative burden of each plan.
Budget Impact
There is little to no budget impact to this change other than the staff time during payroll to withhold and transmit to
four vendors instead of two. •
Relationship to Vision
A quality benefits package relates to Goal E: Deliver effective and'efficient public services by a staff of
well-trained, caring and professional employees.
Requested Action
If the Council concurs,it is asked to offer a motion authorizing the appropriate officials to enter into the necessary
contracts with Great West Financial for provision of the U.S.Conference of Mayor's Deferred Compensation
Program.