Based on ICMA-RC's proposal for Winston Salem, North Carolina dated November 30, 2011 which states "based on a full plan take over of approximately $20 million in plan assets with 1,149 participants... ICMA-RC's minimum annual revenue requirement is 0.34% of assets with a five year contract term."
$20 million x 0.34% = $68,000, which was ICMA-RC's minimum annual Record Keeping revenue requirement for 1,149 participants.
$68,000 / 1,149 = $59.18 per participant, let's say $60 for record keeping for each Charlotte participant.
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Per ICMA-RC's Q1 2014 Plan Service Report, as of the 1st quarter of 2014, Charlotte had $44,774,547 in its ICMA-RC 457 plan with 961 participants. (page 51)
961 x $60 = $57,660
Per ICMA-RC's Q1 2014 Plan Service Report, Charlotte was paying an annualized $109,093 for Record Keeping (page 78).
$109,093 / 961 = $113.52 per participant
$109,093 / $44,774,547 = 0.24% for Record Keeping
$57,660 / $42,996,037 = 0.001341 = what could be, let's say 0.14% for Record Keeping
$109,093 - $57,660 = $51,433 potential savings for Charlotte's employees
If Charlotte asked ICMA-RC to match Winston Salem's pricing, Charlotte could save about $51,433 per year for Charlotte's employees invested in ICMA-RC's 457 plan.
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Charlotte's ICMA's VT PLUS [Stable Value] Fund, had $8,765,071 invested by Charlotte's participants as of 2014's first quarter (page 79).
Winston Salem's consultant said ICMA's VT PLUS's base cost, which may be relatively high, is 0.48%.
0.14% Record Keeping Fee + 0.48% fund cost could = 0.62% instead of 0.82%, which Charlotte employees were paying as of Q1 2014.
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$8,765,071 Stable Value Fund - $44,774,547 total assets = $36,009,476 not in ICMA's VT PLUS [Stable Value] Fund.
By mirroring the rest of Charlotte's assets with the Federal Government's Thrift Savings Plan, designed by federal employees for themselves, the City could dramatically lower the cost to employees and increase returns via low cost index funds, whose expense ratios could be a bit lower if assets in each are larger than $5 million;
Vanguard Intermediate-Term Bond Index Fund Admiral Shares
Expense Ratio = 0.10% + 0.14% = 0.24%
Vanguard Extended Market Idx Signal
Expense Ratio = 0.10% + 0.14% = 0.24%
Vanguard FTSE All-World ex-US Index Fund Admiral
Expense Ratio = 0.15% + 0.14% = 0.29%
Vanguard 500 Index Fund Admiral Shares
Expense Ratio = 0.05% + 0.14% = 0.19%
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The total cost for Charlotte's $36,009,476 in bond and equity funds should be at most 0.24%, about the average of the funds above including Record Keeping fees.
$36,009,476 Fund and Record Keeping x 0.24% = $86,423
$8,765,071 Stable Value Fund and Record Keeping x 0.62% = $54,343
$86,423 + $54,343 = $140,766 total annual cost for Investment and Record Keeping
$140,766 / $44,774,547 = 0.314% total potential annual fee for Charlotte's employees.
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As of 2014's 1st quarter, Charlotte's comparable estimated annual cost was $358,557
(page 78)
$358,557 / $44,774,547 = 0.80%
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$358,557 - $140,766 = $217,791 in total potential annual savings for everyone invested in the Charlotte's ICMA-RC 457 plan.
$217,791 / 961 participants = about $227 more per participant in year one.
In 30 years, another $227 per year per employee compounded at 7% should leave another $22,943.58 for each Charlotte employee by mirroring the federal government's Thrift Savings Plan.
$22,943.58 x 961 = $22,048,780.40 potential savings for Charlotte's employees invested in ICMA-RC's 457 plan over the next 30 years compounded at 7%.
Please help retain more money in our state by reallocating and renegotiating Charlotte's 457 plan's funds and fees.
It's the right thing to do.
George Hartzman.
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Please help save $35,122,520 for City of Greensboro employees
http://hartzman.blogspot.com/2015/01/please-help-save-money-for-city-of.html
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