201 S. Anaheim Blvd.
Suite #501
Anaheim, CA 92805
Tel: (714) 765-5111
Fax: (714) 765-5215
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
HUMAN RESOURCES DEPARTMENT
DATE: APRIL 8, 2025
FROM: HUMAN RESOURCES DEPARTMENT
SUBJECT: PROFESSIONAL SERVICES AGREEMENT WITH EMPOWER
RETIREMENT, LLC FOR DEFINED CONTRIBUTION
PROVIDER, EFFECTIVE JULY 1, 2025
ATTACHMENT (Y/N): YES ITEM # 10
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion, approve an agreement with Empower Retirement, LLC (Empower) as the Defined Contribution Plan Provider for a five (5) year period effective July 1, 2025, with two (2) optional one-year extensions, and authorize the Human Resources Director to execute and administer the agreement.
DISCUSSION:
The City of Anaheim offers four (4) types of defined contribution plans—457(b), 401(a), Part-Time Seasonal (PTS), and Retiree Health Savings (RHS) Plans—collectively holding $608 million in participant assets as of December 31, 2024. These plans serve both active and retired employees, independent of the California Public Employees Retirement System (CalPERS) Defined Benefit Plan.
The City’s current record keeper for these plans is MissionSquare (formerly ICMA-RC), and their contract is set to expire on June 30, 2025.
The Human Resources Department administers the Plans in coordination with the Deferred Compensation Committee, comprised of active and retired employees who serve as Trustees in addition to the Hyas Group who consults the Committee as an independent co-fiduciary.
On September 30, 2024, the City issued a formal Request for Proposal (RFP) to provide retirement plan administration, recordkeeping, education, communications, and investment-related services for the City’s current Plans.
The City received proposals from six (6) Defined Contribution industry vendors:
Corebridge, Empower, Lincoln, MissionSquare, Nationwide, and Voya. The proposals were evaluated based on several key factors, including experience managing multi-plan defined contribution structures similar to Anaheim’s, strategies to improve plan asset Professional Services Agreement with Empower for Defined Contribution Provider, effective July 1, 2025 April 8, 2025
retention/participant savings, cybersecurity - protection of participant accounts, and the ability to provide integrated, conflict-free financial planning services.
After detailed evaluations, three finalists (Empower, MissionSquare, and Voya) were invited for interviews. Each finalist was then asked to submit their best and final offers for further consideration.
Following a comprehensive review, Empower was unanimously recommended as the sole provider for the City of Anaheim’s defined contribution plans. The recommendation was based on Empower’s superior financial benefits, participant service enhancements, and overall cost-effectiveness. Notably, Empower’s proposal cuts recordkeeping fees in half for the 457(b), 401(a), and PTS plans and lowers fees for RHS plan, which is expected to save participants approximately $159,425 annually, and $1,115,975 over the full contract term. Participants will also benefit from a more competitive interest rate on the capital preservation option—3.97% with Empower compared to 3.15% with the current provider—which is expected to generate an additional $720,831 annually, and $5 million over the life of the contract. When combining fee reductions and improved investment returns, the total estimated financial benefit exceeds $6.1 million.
Additionally, Empower offers lower fees for managed accounts services, returns an estimated $36,750 per year in float revenue, provides free access to certified financial planners (CFP) for all participants, and includes Anaheim in its Client Advisory Board, ensuring Anaheim’s needs are represented in industry trends. The contract is set for an initial five (5) year term, with two (2) optional one-year extensions, beginning July 1, 2025.
The Deferred Compensation Committee approved the recommendation to make Empower the sole provider for the City of Anaheim’s defined contributions plans at a special meeting on February 18, 2025.
IMPACT ON BUDGET:
There is no impact to the budget. The cost of the contract is based on a not-to-exceed
0.01% basis points (457(b), 401(a), and PTS Plans) and not-to-exceed 0.095% (RHS), for participants.
Respectfully submitted,
Linda N. Andal
Human Resources Director
Attachment:
1. Agreement with Empower for Defined Contribution Plans and Health Reimbursement Arrangement Plan