City Council
Report
City Council Meeting: September 12, 2023
Agenda Item: 5.A
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To: Mayor and City Council
From: Lori Gentles, Chief People Officer, Human Resources Department Subject: Approval of Professional Services Agreement with Nationwide Retirement Solutions, Inc. for Deferred Compensation Plan Administrator Services Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines; and
2. Authorize the City Manager to negotiate and execute an agreement with Nationwide Retirement Solutions, Inc. (Nationwide) for deferred compensation plan administrator services for a period of five years with two additional one-year renewal options. This recommended award is made as an exception to the competitive bidding process pursuant to Section 2.24.250 (b). .
Summary
The City offers a 457(b) Deferred Compensation plan for permanent employees, an OBRA-PST (Omnibus Budget Reconciliation Act - Part-time, Seasonal, Temporary) Deferred Compensation Plan for as-needed / temporary employees, Post Employment Health Plans (PEHP), and a 401(a) Money Purchase Pension Plan through Nationwide Retirement Solutions, Inc. (Nationwide). The OBRA-PST plan provides a retirement alternative to Social Security for non-benefited as-needed / temporary workers.
Discussion
Nationwide has provided these plans to City staff since 2008. As of July 2023, 5,542 full and part time employees and retirees participate in the supplemental retirement plans.
Current employees have the option to contribute a percentage or flat dollar amount 2 of 4
each pay period. Retirees and separated employees may continue to have funds on deposit and manage their investment options.
As the current plan administrator, Nationwide provides plan administration, recordkeeping, and extensive educational services. Educational services include on-site and one-on-one sessions with City employees. Pending expiration of the current agreement on December 31, 2023, the City requested that Nationwide update and reduce their fees. As a result of these efforts, the City successfully negotiated a 34% reduction in participant administration fees from 0.035% to 0.023%.
Executing a new agreement with Nationwide will provide service continuity and administrative ease for staff and participants. Nationwide is a leader in the industry and has a proven ability to cost effectively meet the City’s complex needs. 3 of 4
Vendor Selection
Exception to Competitive Bidding
Staff recommends Nationwide to provide deferred compensation plan administrator services as an exception to competitive bidding per Santa Monica Municipal Code Section 2.24.250 (b). Competition does not reasonably exist because Nationwide possesses the unique capability to meet the particular requirements of the solicitation.
Nationwide currently provides deferred compensation, PEHPs and Money Purchase Pension Plans to 5,542 full- and part-time employees and retirees and has been providing such services since 2008. Extending the term with Nationwide will maintain continuity in service for the over 5,000 current and past employees that utilize these plans. Further, it is unlikely that completing a competitive procurement process would result in cost-competitive proposals from other sources, particularly given that Nationwide agreed to a 34% reduction in participant administration fees, and Nationwide has agreed to continue to provide extensive educational services, including on-site and one-on-one sessions with City employees.
Based on Nationwide’s continued ability to successfully provide the full scope of services needed to maintain a positive plan participant experience, continuity in HR operations, and a 34% reduction in participant fees, staff recommends a contract with a five-year term with two one-year renewal options (for a total 7-year contract).
Environmental Impact
The agreement for a deferred compensation plan administrator is exempt pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines, which states that CEQA does not apply, where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. The agreement would provide administrative services to the City and would not result in physical effects. No further environmental review is necessary.
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Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. All fees relating to the services are borne by plan participants, not the City.
Prepared By: Mark Brower, Deputy Director
Approved Forwarded to Council
Attachments:
A. OAKS Signed 8-22-23