To: Board of Supervisors
From: Ann Elliott, Human Resources Director
Report Title: Contract with Empower Trust Company, LLC for the Collective Investment Trust for the 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
APPROVE and AUTHORIZE the County Administrator, or designee, to execute a contract with Empower Trust Company, LLC for the Collective Investment Trust for the 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan to provide the Empower Stable Value Fund as the stable value investment option, for the period January 1, 2025, through December 31, 2027, subject to approval as to form by County Counsel.
FISCAL IMPACT:
The contract is funded by fees charged to participant 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan accounts. The annual administrative fee per participant is $12.50. There is no fiscal impact beyond overhead administrative support costs, which are partially offset through the Contra Costa County Deferred Compensation Plan (I.R.C. § 457) 401(a) Defined Contribution Plan (I.R.C. § 401(a) (“the Plan”).
BACKGROUND:
A Request for Proposals (RFP) for the 457(b) Plan & 401(a) Plan Recordkeeper Services was issued in April 2024. Empower Annuity Insurance Company of America was determined as the best match for the County’s requirements. The Participation Agreement appoints Empower as the Trustee for the Empower Trust Company, LLC Stable Value Fund.
The Empower Stable Value Fund is one investment option under the Plan. It is a capital preservation investment in the form of an investment fund. The Stable Value Fund maintained by Empower has two objectives: 1) to seek to provide safety of principal; and 2) consistency of returns with minimal volatility, while maintaining a stable credited rate of interest. Empower has retained one of its affiliates, Empower Capital Management, LLC, as Empower’s investment adviser with respect to the Empower Stable Value Fund.
Investments in the Stable Value Fund are insured by Empower through a separate funding agreement. Empower is a solid insurance company with a track record of high credit ratings. Their current ratings are as follows:
|
A.M. Best |
A+: next to top rating & superior ability to meet ongoing obligations |
|
Moody's |
Aa3: high quality and subject to very low credit risk |
|
S&P |
AA-: very strong capacity to meet financial commitments |
Empower’s agreed upon annual administrative fee of $12.50, which is charged to participants, is contingent upon the County’s use of the Empower Stable Value Fund as the sole stable value option in the Plan. By executing the Participation Agreement with Empower Trust Company LLC, the County will designate the Empower Stable Value Fund as the stable value investment option for the Plans and will authorize Empower to perform all authorized acts set forth in the Declaration of Trust.
The contract includes two optional one-year extensions. The Human Resources Director will return to the Board for approval to exercise the optional extensions.
CONSEQUENCE OF NEGATIVE ACTION:
Without the Participation Agreement, there will be no Stable Value Fund option available to Plan Participants and the $12.50 annual fee per participant would increase significantly.