Title
Stable Value Fund Manager Services - Principal Global Investors, LLC (Ordinance S-52636) - Citywide
Description
Request to authorize the City Manager, or his designee, to execute an amendment to extend Contract 154152 (Contract) with Principal Global Investors, LLC to continue providing Stable Value Fund Manager services in an amount not to exceed $5.3 million over a five-year period. No disbursement of funds from the City Controller is required for this amendment. The administrative costs are paid by plan participants.
Report
Summary
The services provided by Principal Global Investors affect over 20,000 past and current city employees and their dependents. Due to current market conditions, potential cost of service provider transitioning, seamless services to plan participants and fee negotiations, the Retirement Department is asking for a special circumstance award without competition to extend the current contract for five additional years.
Procurement Information
In 2021, a formal procurement process was completed by the Human Resources Department in accordance with Administrative Regulation 3.10, which resulted in awarding the Contract to Principal Global Investors, LLC. The initial contract was for a period of five years.
Principal Global Investors, LLC serves as the fund administrator for the City of Phoenix Stable Value Income Fund. This fund was created in the mid-1990’s to provide City of Phoenix employees and their beneficiaries a savings option that, while exposed to the market, can provide a consistent long-term growth of assets without the volatility of the active market.
The balance in the custom fund as affects the price participants pay to Nationwide. This contract is “wrapped” with our Nationwide service fee which lowers overall fees for plan participants.
Current market conditions would make it extremely difficult to transition vendors without negatively impacting the retirement savings accounts of thousands of members. Certain retirement investment accounts, such as the custom Phoenix Stable Income Fund, would have to be sold and repurchased in order to be transitioned to a new provider. With the current and expected volatility in the market, there would be no guarantee this could be a dollar-for-dollar transfer.
Transitioning vendors can be extremely costly and time consuming. To transition over $200 million in investments as well as the internal programming required to make any required vendor changes to systems could take upwards of one year and hundreds of hours of staff time to complete.
Contract Term
The amendment will extend the contract for 5 years beginning on or about May 21, 2026.
Financial Impact
The aggregate cost for the amendment to extend for 5 years will not exceed $5.3 million. No disbursement of funds from the City Controller is required for this contract. The administrative costs are paid by plan participants.
Concurrence/Previous Council Action
This item was recommended for approval by the City of Phoenix Employees' Deferred Compensation/Post Employment Health Plan Boards at their February 12, 2026, meeting.
Department
Responsible Department
This item is submitted by Deputy City Manager David Mathews and the Retirement Department.