4609_Addendum_1_FINAL.pdf

June 5, 2023

Deferred Compensation 457 Plan and Retirement Health Savings Plan Administration, Investment and Trust Services Solicitation No. HR3-953-4609

Addendum No. 1

Information: Interested offerors may request the RFP document in Word format by contacting Christina Pryor at christina.pryor@chandleraz.gov.

Information: Interested offerors may request the current contract document by contacting Christina Pryor at christina.pryor@chandleraz.gov.

Clarification, RHS Plans:

The RHS program has been in place since 2005.

Employees with excess vacation leave over 240 hours may make voluntary contributions of up to

95 hours one time per year. This transfer is pre-tax.

At retirement and if vested, the City pays 50% of the retiring employee’s vacation time into their

RHS.

RHS beneficiaries are spouse and/or tax dependent only. If there is no spouse or dependents, the funds are returned to the City.

Question: How many total accounts are in the plan that are under $5,000? Of those, how many of them are active accounts?

Response: 502 and 312

Question: Page 8, Scope of Service, General Information. If the RHS Plan 3 is solely for Retirees who are eligible to Medical Reimbursement, do they transfer from either Plan 1 or Plan 2 upon retirement? Are there other criteria inherent in Plan 3 design that warrants a separate plan for a disbursing account?

Response: There is one RHS plan for active employees where the City makes per pay period ($15 bi-weekly per employee). Employees also have the option to roll over up to 95 vacation hours (if over the max) into this account. At the time of retirement, their status changes to retiree, but funds are not transferred from one plan to another. Plan 2 is for Council Members only, as the City does not contribute $15 per pay period to this account. Plan 3 noted on page 8 is for survivors.

Question: What is the current fee structure for the RHS plans – asset based, per participant or both?

What format does the City wish to implement with a new provider?

mailto:christina.pryor@chandleraz.gov

Response: Employer fees/expenses, and all plan participant fees/expenses associated with the current contract. $25 annual fee charged $7.50 per quarter plus fund expenses. There are no employer fees. The City would like to keep a similar set up, but is open to discussion or other options available.

Question: Are plan documents for the current RHS plans available for review?

Response: Yes, see attachments to this addendum.

Question: There appear to be separate fund lineups between the four plans. Is there an appetite for streamlining one fund lineup for all the plans?

Response: The City is open to hearing options from respondents.

Question: Page 15, Scope of Services, Item 2d, lists biweekly and monthly files sent to the City. Are there two payroll frequencies, biweekly and monthly? Or is this reference only the frequency of receipt of the files?

Response: All regular employees are paid bi-weekly. Council Members are paid monthly.

Question: Are Managed Accounts currently offered? If so, what are the current accounts under management (in $)?

Response: Yes. 135 participants, $10.8M in assets (457 only).

Question: What is the current crediting rate of the MissionSquare PLUS fund?

Response: RHS is S3 @ 2.14%, 457 plan is R10 @ 2.62%

Question: Has the 12 month put notification been submitted on the MissionSquare PLUS fund? If so, when was it submitted?

Response: Yes, it was sent on February 16, 2023.

Question: Are Managed Accounts used today? What number of participants use these and what is the amount of assets? Would the managed account assets be mapped to a new managed accounts product?

Response: Yes, 135 participants, $10.8M in assets (457 only)

Question: How many participants are in the self-directed brokerage account?

Response: 138 (457 only)

Question: We noticed that the City was planning to add a Roth contribution source, would this be added at the same time as the conversion to a new recordkeeper, or has this already been added?

Response: This has already been added.

Question: What is the average annual employee turnover percentage?

Response: For 2022, 14%. Year to date, 11.91%.

Question: The operational information for the 457(b) Plan did not make any reference to contributions being made by the City, but in the 2023 Benefits Guide on the City’s website we saw references to City contributions. Can you please confirm what if any contributions are being submitted to the plan from the City? Who calculates these contributions?

Response:

For general employees, the City contributes 1% of their gross wages if employee are contributing a min of $10.

For director and above, the City contributes:

EE: $120/ER: 2%

EE: $180/ER: 3%

EE: $240/ER: 4%

For Public Safety employees, the amounts may change based on MOU negotiations.

FIRE (FF, FE, FC, FB, AC):

EE: $25/ER: 1%

EE: $50/ER: 2%

EE: $75/ER: 3%

POLICE:

Police Officers:

EE: $30/ER: 1%

EE: $60/ER: 2%

EE: $90/ER: 3%

Police Sergeants, Lieutenant, Commander, Assistant Chief:

EE: $40/ER: 1%

EE: $80/ER: 2%

EE: $120/ER: 3%

The City’s system is set up to automatically calculate these contributions.

Question: Can you please provide the past three years of contributions to and distributions from the 457 plan?

Response: See below.

Year Contributions (Excluding Rollovers) Distributions 2020 $9,557,234 $7,643,977 2021 $10,436,283 $13,745,212 2022 $10,235,622 $9,406,860

Question: It was mentioned that there are insurance premiums for retired public safety officers.

How many participants have an insurance policy and what services need to be provided?

Response: The Secure 2.0 Act of 2022, offers the ability for distributions for qualified public safety employees up to $3000 a year to pay insurance premium payments benefits and can be excluded from gross income. Payments are no longer required to be made directly to insurance companies.

Also, the exemptions for early withdrawal penalty is extended to any public safety officer with 25 years of service, regardless of age. The City would like to explore the option of implementing this.

Question: Are all 3 of the RHS under the same VEBA Trust?

Response: MissionSquare Retirement uses an Integral Part Trust, and the City adopted a separate declaration of trust for each plan.

Question: Do you have an IRS determination letter for the Trust(s)?

Response: Mission Square has received a private letter ruling covering their integral part trust.

Question: Regarding the MissionSquare funds in your current line-ups, are those funds that ICMA compiled? Are they proprietary?

Response: Yes.

Question: Questions in reference to the RHS plans on page 8, section General Information:

What were the annual benefits payments for the last 3 years?

How many participants are in claims eligible status?

Are any increases in participants anticipated?

Are any increases or decreases in annual contributions contemplated?

Do you have a census of participants available?

Response:

Total of all RHS Plans: $4,617,622 (2020-2022) As of 3/31/2023 in all RHS plans = 766 This is something that cannot be predicted. For fiscal year 2023-24 the City has added 29 benefit eligible positions, which includes RHS. There is a vesting period of 5 years in order to be eligible for this benefit.

Effective July 1, 2023, the City RHS contribution at time of retirement is increasing from $800 per year of service to $900 per year of service.

Yes, however it cannot be provided without a secure messaging portal.

Question: Questions in reference to page 8, section General Information (as of 12/31/2022):

Can you please describe the current fixed account or stable value options offered by the provider(s)? Please include current crediting rates, minimum guarantees, withdrawal restrictions, market value adjustments, surrender charges, required put notices or any other encumbrance to liquidation.

If the stable value fund has a 12-month put provision, has the put notification been submitted?

Does the City currently utilize Managed Accounts? If so, how many participants and what is the amount of assets in managed accounts?

Response:

The Mission Square R10 Plus Fund is the current stable option. The 12-month put provision was initiated in February 2023

Yes, notice was sent to February 16, 2023.

Yes. 135 participants, $10.8M in assets (457 only)

Question: Please confirm employer email addresses are provided on the payroll file. What percentage of employees are issued an employer email address?

Response: The current set up for payroll contribution files include employees name, social security, and contribution amount. All benefit eligible City employees have a City email address.

Question: Please confirm all available employer and personal email addresses will be transferred from the prior recordkeeper at conversion.

Response: Confirmed.

Question: Please provide details of e-delivery utilization for required notices and statements.

Response: Notice of statements are sent via secure message from the current vendor to the appropriate City staff. Auto generated notification are set up by group, based on current vendor system set up.

Question: Is day-to-day plan admin and payroll centralized (one office/one person)?

Response: HR day to day plan admin and payroll only submits contributions.

Question: Is Payroll submission (files & contact) centralized (one location/person)?

Response: Payroll submits contributions files. One person is in charge but has a backup in case of an absence.

Question: Can you please confirm the payroll provider? We see references to both TRAC Payroll Software and Oracle EBS.

Response: Oracle EBS.

Question: Item 2.g on page 15 stated employees would have the ability to start a new loan directly through the chosen vendor and have direct connection to the City HRIS system to add, change and update loan amount. Do participants have access to the HRIS system, or is the City looking for the chosen vendor to send a report to payroll at the City to make updates regarding loans?

Response: In the current process, employees start a loan with vendors, and HR manually runs a report to see if there are any new loans or changes. The City is looking at ways to automize this process and remove the need to manually run a report every two weeks.

Question: Item 2.l on page 15 asks for a report to be provided to the City of participant changes. Is the City looking for reports of all participant changes? Or only changes that would have an impact on payroll, such as a contribution rate change or loan changes?

Response: Currently it is a manual process when entering new hires, capturing changes, and terminating employees for 457(b) and RHS accounts.

All benefit eligible new hires are manually entered by the City’s HR Specialists in the current record keeper’s website for both 457(b) and RHS. Because of system limitations, employees enter 457(b) contribution changes in COC employee self-service and Roth changes are captured in a paper form and manually entered by an HR specialist in the HRIS system. Any contribution changes are captured and the City sends an updated contributions file each pay period. For all employees who separate from the City, an HR Specialist needs to manually terminate the 457(b) and RHS account. There is a different entry that needs to be done for RHS if employee is retired, vested, or not vested.

The City is looking for ways to streamline this process a eliminate all the manual entries. An electronic feed was not set up with current vendor.

Question: Please confirm the current education days provided. How many group meetings and how many individual meetings were held in 2022? How many days per year would the City prefer going forward?

Response: Once a month, representative is onsite for new employee orientation. In addition, the City has twice a month onsite visits and four quarterly educational sessions. The current vendor also provides any additional training or visits as needed.

Question: Please provide fund identifiers, such as ticker symbols or CUSIP’s in excel format for the fund line-ups.

Response: The spreadsheets are available to download in the same location as this Addendum

Question: Please provide a copy of the current plan document(s), applicable amendments, SPDs and Loan Policy, if applicable, for all plans in scope for this RFP.

Response: A copy is available to download in the same location as this Addendum

Question:

Response:

Question:

Response:

End of Addendum.

Christina Pryor, CPPO Procurement and Supply Senior Manager

Email: christina.pryor@chandleraz.gov

Employee RHS

City Council RHS