One who intends to leave others better off for his having existed.

8/12/15

City of Burbank 457 Plan Negotiations; lowered ICMA-RC's fees from $286 to $88.50 per year

"The City of Burbank is currently contracted with three 457 Plan providers: CalPERS, Great-West Retirement Services (Great-West), and ICMA-Retirement Corporation (ICMA-RC). The City’s 457P Plan is currently with Great-West. The following is a breakdown of the City’s 457 Plan participants, assets, and fees (main plan only):

Current Employees Contributing 775
Total Participants as of 3/31/09 (current and separated) 1,335
Plan Assets as of 3/31/09 $79,310,956
Estimated Average Account Balance $ 59,364

CalPERS Current Estimated Weighted Average Fee .40%
ICMA-RC Current Disclosed Weighted Average Fee .43%
Great-West Current Estimated Weighted Average Fee .89%

CalPERS Estimated Average Participant Annual Fee* $123
ICMA-RC Disclosed Average Participant Annual Fee $286
Great-West Estimated Average Participant Annual Fee * $474

* In cases where all of the revenue that a firm receives from a particular investment option is not disclosed, Aon has estimated the value of revenue streams related to those investments based on industry knowledge and experience.

...ICMA-RC presented the second lowest initial fee proposal of 0.1625% for a 5-year contract

The Committee voted to open negotiations with ICMA-RC to see if the proposal could be enhanced to bring the fees down and increase the customer service options. The negotiations were successful and the following is a breakdown of the final contract items:

Final fee proposal for a 3 year + 1 year + 1 year contract: 0.1475%

Any revenue ICMA-RC receives in excess of their 0.1475% revenue requirement will be paid quarterly to the City of Burbank as an administrative allowance to be used solely for 457 plan administration costs or returned to the participants.

...for an average employee account balance of $60,000, the change in the fee structure by contracting with ICMA-RC are:

CURRENT AGREEMENTS

Weighted Average Fee = 0.40% - 0.89%

Average Participant Annual Fee = $240 - $534

ICMA-RC AGREEMENT

Weighted Average Fee = 0.1475%

Average Participant Annual Fee = $88.50

The total assets in the City of Burbank’s employee deferred compensation program were
$78,611,698 as of March 31, 2009 (the date in which data was collected for the RFP issuance).

Averaging the three current provider fees to 0.573%, the total estimated annual fees paid by
employees will decrease from approximately $450,445 to $115,952 by the execution of this
agreement’s fees of 0.1475%. 

http://burbank.granicus.com/MetaViewer.php?view_id=6&clip_id=978&meta_id=73353

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