Title
Amend Post-Employment Health Plan (PEHP) Contract with Nationwide Retirement Solutions
Description
Request to authorize the City Manager, or his designee, to amend the Post-Employment Health Plan (PEHP) contract 140632 between the City of Phoenix and Nationwide Retirement Solutions, Inc. (NRS) as noted below. No disbursement of funds from the City Controller is necessary for this contract.
Report
Summary
In November 2014, staff received City Council approval to enter into a contract with NRS for plan administration and record-keeping services for the City's Deferred Compensation (457) Plan, Defined Contribution (401a) Plan, and Post-Employment Health Plan (PEHP). Due to differing IRS rules, a separate contract was issued for the PEHP plan. Contract 140632 with NRS for plan administration and record-keeping services for PEHP was entered into on Nov. 20, 2014, for a three-year period with two optional one-year extensions.
At the August 2016 meeting of the City's PEHP Board, the Board approved a recommendation by the City's investment consultant, HYAS Group LLC, to restructure the current underperforming PEHP investment menu. Restructuring would provide better performing funds at a lower cost which would save money for participants. Due to the changes in the investment menu, there will no longer be revenue sharing, which will create a loss of revenue for NRS. In order to recover the loss from the elimination of revenue sharing, NRS will be increasing the administration charge per participant from $0 to $8.00 annually. The investment consultant also recommended the City create an individual PEHP trust and remove itself from the current three-state trust. The individual trust would eliminate the cumbersome approval process by a separate board of trustees, which will give the City more control over the investment menu. NRS has agreed to create the trust at no additional cost.
Financial Impact
No disbursement of funds from the City Controller is necessary for this contract. The administrative cost, which was previously waived by NRS, will now be paid by the plan participants.
Concurrence/Previous Council Action
This contract was initially approved by City Council on Nov. 19, 2014.
Department
Responsible Department
This item is submitted by Assistant City Manager Milton Dohoney, Jr. and the Human Resources Department.