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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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Department of Housing
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DATE:
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July 25, 2008
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BOARD MEETING DATE:
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August 12, 2008
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors (Sitting as the Board of Commissioners of the Housing Authority)
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FROM:
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Duane Bay, Director, Department of Housing
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SUBJECT:
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Resolution Authorizing Execution of Service Provider Agreement and Associated Documents with AIG Retirement Services Company
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RECOMMENDATION:
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Adopt a Resolution authorizing the Director of the Department of Housing to enter a Service Provider Agreement and associated documents with AIG Retirement Services Company to provide 401(a) and 457 retirement plan administrative services for the employees of the Housing Authority of the County of San Mateo (HACSM) for the period starting September 24, 2008 through September 30, 2012.
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VISION ALIGNMENT:
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Commitment: Responsive, effective and collaborative government.
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Goal(s): #20. Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.
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BACKGROUND:
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The HACSM employs forty-five staff as a separate and distinct employer within the County’s Department of Housing. The HACSM retirement system is composed of two defined contribution plans: a mandatory participation 401(a) plan which receives contributions from both the employer and employees per arrangements contained in the union MOU and a 457 plan in which employees participate on a voluntary basis. The 401(a) plan has approximately $3.9 million in assets and the 457 plan has approximately $1.1 million in assets.
The 401(a) plan has not been regularly reviewed for legal compliance and financial performance; therefore, a labor-management committee was formed in 2007 to comprehensively review the current plans’ administration and performance. As a result of the review, a new retirement plan administrator was selected through a Request for Proposals process.
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DISCUSSION:
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At its introductory meetings, the labor-management committee recommended that a retirement plan consultant be engaged to aid with the analysis of existing plan conditions, current legal requirements and in the selection of a new plan administrator. The Housing Authority contracted with SST Benefits Consulting and Insurance Services, Inc. to assist with its process because of their extensive experience and their familiarity with County of San Mateo plans.
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A Request for Proposals was issued and three competitive responses were received. After extensive analysis, the labor-management committee recommended that all assets of the 401(a) plan be managed by AIG Retirement. The 457 plan is currently managed by AIG Retirement and will remain with them under the new agreement covering both plans.
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The new plan completely meets the objectives set by the labor-management committee as follows:
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• It provides a fee structure that is very beneficial to employees, even when the conversion charges required by the existing plan are included
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The contract term is for four years. This term is the minimum amount of time necessary for a provider to absorb existing plan conversion charges and still significantly improve the fee structure borne by participants.
County Counsel has reviewed the Service Provider Agreement and associated documents.
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FISCAL IMPACT:
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There is no Net County Cost associated with this action. All expenses associated with this contract and with the retirement plan administration, including expenses for legal services and the consulting services of SST, are absorbed by the plan.
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