10-26-018 Addendum 1.docx

Addendum to Solicitation

City of Tempe Financial Services Procurement Office 20 E. 6th Street Tempe, AZ 85281

The following are the City’s responses to vendor questions in blue.

The RFP due date remains August 21, 2025, 3:00 PM Local Arizona Time.

Should the City of Tempe select an offer of a “make whole” of the negative market value of the Prudential and Nationwide Stable Value fund, would the City be open to a five-year contract term for amortization purposes of the make whole amount?

City Response: Currently we do not anticipate the need for a make whole arrangement. At the time of release of the RFP no there was no market value adjustment for Nationwide Fixed Account and with the Prudential Stable Value Fund available as an investment only product, the City is requesting that respondents make the product available on their platform. Should the situation arise where a make whole agreement may be needed the City would be open to a five year amortization period.

Regarding the "Fees & Expenses Questions," Pricing Scenario 2, can you please confirm/clarify - can a proprietary stable value option be included in the offer on all plan types (457(b), 401(k) and PEHP) or is the proprietary stable value option limited to the PEHP plan only for this scenario?

City Response: With the Prudential Stable Value Fund available as an investment only product, the City is requesting that respondents make the product available on their platform for use in the 457(b) and 401(k) as it currently is. A proprietary product may be proposed for the PEHP plans in pricing scenario 2.

Please provide the following information.

5. The current total amount held in Stable Value/Fixed products, broken down by plan type As of 6/30/2025 there was $25,980,242.29 in the 457(b) plan, $14,094,536.72 in the 401(k) plan, $13,386,343.75 in the Pre-Medicare plan, and $8,274,860.30 in the Group Three plan.

6. The total contributions to Stable Value/Fixed products over the past two years, segmented by plan type.

See Attached

7. The total distributions from Stable Value/Fixed products over the past two years, segmented by plan type.

See Attached

8. The number of participants in each of the following PEHP plans:

9. What is the current participation rate for each plan (457, 401(k), and PEHP)? Please see Page 24, Plan Information

City Response: See Above

Please provide copies of the plan documents, as well as any applicable amendments and/or attachments for each plan. Is it your intention to use the recordkeeper’s preapproved plan document(s)?

City Response: See Attached

It is noted that Galloway currently provides educational services. Are you requesting that the new vendor assume full responsibility for this service, with no further involvement from Galloway? Please clarify your expectations

City Response: Galloway will continue to provide services. They work as a supplement to our recordkeeper. Please see further explanation noted in another question.

What is the preferred date for transfer of assets?

City Response: This has not been determined yet.

Who will be calculating the eligibility?

City Response: The City will be calculating eligibility.

Does the sponsor and/or payroll provider calculate the employer contributions?

City Response: The City calculates employer contributions.

Is payroll contact centralized to a single point of contact? If not, please detail how many contacts.

City Response: Yes

Will company email addresses be provided on the payroll file. If not, will there be consideration to include?

City Response: At this time City email addresses will not be provided. There can be a consideration to include them in the future.

What is the current percentage of participants using e-delivery for required notices and statements?

City Response: 81%

Please provide a fund listing of plan assets for each plan by investment with tickers/CUSIPs.

City Response: See Attached

Please provide the current fund line-up by asset balance and provide investment identifiers such as ticker symbols or CUSIPs.

City Response: See Attached

Can you explain the arrangement the City of Tempe has with Galloway? Do they perform all on-site education for all participants at their own separate expense?

City Response: The City has an agreement with Galloway to provide the following services outlined below. They work in tandem (as a supplement) with our recordkeeper at their own separate expense.

Please provide the amount of contributions that are being directed into the Stable Value Funds.

City Response: See Attached

Please confirm if contributions are flowing into the Prudential Stable Value Fund.

City Response: Yes, contributions are flowing into the Prudential Stable Value Fund.

Please describe the current fixed account or stable value options offered by the providers for both products. Please include current crediting rates, minimum guarantees, withdrawal restrictions, market value adjustments, surrender charges, required put notices or any other encumbrance to liquidation.

City Response: As noted in the RFP, please see the following exit provisions for the withdrawal restrictions, market value adjustments, surrender charges, required put notices or any other encumbrance to liquidation. We do not feel that the current crediting rates are pertinent to your response to the RFP minimum guarantees.

Prudential Stable Value Fund Exit Provisions If retaining the Assets in the Investment Account at Market Value, Empower requires advance notice of termination with a termination date that is at least 30 days later than the date of the termination notice. At the termination date, the Contract holder retains the Assets in the Investment Account at Market Value.

If converting to a “Fixed Maturity Schedule”, The City of Tempe contract currently has a “Duration + 1 year Lumpsum Book Value Payout” structure. This scenario will occur if the Market Value of the assets is below the Book Value of the contract (84.95% as of 4/24/25) and the client chooses not to have a market value termination option. If this occurs, under the terms of the contract, the contract will convert from a Constant Duration Structure to a Fixed Maturity Structure. Prior to the Conversion Date to a Fixed Maturity Structure, the Contract holder will enter into an agreement with an investment manager, acceptable to Empower, to establish a segregated account that will be managed according to the Fixed Maturity Structure of the Investment Guideline Schedule. Under a Fixed Maturity Structure, a Fixed Maturity Withdrawal Amount is withdrawn from the Investment account which is the amount of the Book Value as determined as of the Maturity Date. The Maturity Date is a business day that is either the larger of the date that is 3 years from conversion date to a Fixed Maturity Structure or the Duration of the Assets in the Investment Account. Empower may extend the Maturity Date by one additional year if the Market Value is less than the Book Value 45 days prior to the Maturity Date.

Nationwide Fixed Account Exit Provisions Ninety (90) days after the effective date of the termination of the Contract by the Owner or immediately after termination of the Contract by the Company, the Company shall determine the Contract value and make payments as follows:

(a) Payments due from the accumulation unit value of the Separate Account shall be made within 7 business days; and

(b) Payments due from the Fixed Account value may be deferred up to six months and will be less the amount of the market value adjustment. The market value adjustment is the amount which the Company determines, in accordance with its then current procedures applicable to all contracts of this type and class, would be the net capital loss, if any, resulting to the Company if investments were liquidated to make the withdrawal. The then current Company procedures for determination of the market values adjustment will be provided to the Owner on request.

Payments of any amounts upon termination by the Owner will be subject to any applicable Contract Surrender Charge.

Please provide the most recent market to book valuation of the Prudential Stable Value Fund.

City Response: The market to book ratio on 4/24/2025 was 84.95%.

Please provide the current total assets in the Nationwide Stable Value Fund.

City Response: As of 6/30/2025 there was $13,386,343.75 in the Pre-Medicare plan and $8,274,860.30 in the Group Three plan

Please provide the current total assets in the Prudential Stable Value Fund.

City Response: As of 6/30/2025 there was $25,980,242.29 in the 457(b) plan and $14,094,536.72 in the 401(k) plan

Health Retirement Account Offering:

Do you have a census of participants available? We can provide census information for current Pre-Medicare Group 2 and Group 3 that are receiving monthly HRA fundings – more specifics would be needed Are any increases or decreases in annual contributions contemplated? Yes, there are annual increases Are any increases in participants anticipated? Yes, as more active employees retire and/or qualify for contributions at 10 years of service How many participants are in claims eligible status? Pre-Medicare Approximately 829; Group 3 - ≈ 339 What were the annual benefits payments for the last 3 years? Annual contributions to participants = 7/1/2024 – 6/30/2025 = $11,455,297.00; 7/1/2023 – 6/30/2024 = $10,537,171.00; 7/1/2022 – 6/30/2023 = $10,422,834

City Response: See Above

Please provide the number of participants enrolled in the self-directed brokerage services for each plan.

City Response: 294 in the 457(b) plan and 135 in the 401(k) plan.

What is the average annual employee turnover rate?

City Response: Over the last 3 years average has been 11.44%

Please provide copies of the plan documents, as well as any applicable amendments and/or attachments for each plan. Is it your intention to use the recordkeeper’s preapproved plan document(s)?

City Response: See Attached

It is noted that Galloway currently provides educational services. Are you requesting that the new vendor assume full responsibility for this service, with no further involvement from Galloway? Please clarify your expectations.

City Response: Galloway will continue to provide services. They work as a supplement to our recordkeeper. Please see further explanation noted in another question.

Please provide a breakdown of the current value of plan assets by investment option by provider or vendor offered under the plan(s). Please include ticker symbols/CUSIPS.

City Response: See Attached

Please provide the claims active participants for the PEHP plans.

City Response: Please see Page 24, Plan Information

Please provide a breakdown of the number of participant accounts with a balance by active vs. inactive accounts.

City Response: Please see Page 24, Plan Information

Is there employee overlap among the plans? If so, please provide the number of unique participants are across the tax codes?

City Response: Yes, please see Page 24, Plan Information

Please ensure that you sign and submit this addendum by due date shown above

The balance of the specifications and bid solicitation instructions to remain the same. Bidders/Proposal Offerors are to acknowledge receipt and acceptance of this addendum by returning of signed addendum with bid/proposal response. Failure to sign and return an addendum prior to bid/proposal opening time and date may make the bid/proposal response non-responsive to that portion of the solicitation as materially affected by the respective addendum.

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