To: Board of Supervisors
From: Ann Elliott, Human Resources Director
Report Title: Contract with Empower Annuity Insurance Company of America for Administrative Services for the 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan, and Agreement with Empower Trust Company, LLC for Benefit Trust Fund
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
APPROVE and AUTHORIZE the County Administrator, or designee, to execute a contract with Empower Annuity Insurance Company of America for recordkeeping and administrative services for the 457(b) Deferred Compensation Plan & 401(a) Plan for the period January 1, 2025, through December 31, 2027, subject to approval as to form by County Counsel; and
APPROVE and AUTHORIZE the County Administrator, or designee, to execute a Trust Agreement between Contra Costa County and Empower Trust Company, LLC, for the period January 1, 2025, through December 31, 2027, to administer an exclusive benefit trust fund for the assets of the 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan, subject to approval as to form by County Counsel.
FISCAL IMPACT:
The contract is funded by fees charged to participants’ 457(b) Deferred Compensation Plan & 401(a) Defined Contribution Plan accounts. 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) and 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) Defined Contribution Plan Recordkeeper Services was issued in April 2024. Empower Annuity Insurance Company of America (“Empower”) was determined to be the best match for the County’s requirements. The anticipated contract with Empower sets forth the specific administrative and recordkeeping services that Empower will provide in connection with the Plan including administration of the new 401(a) Defined Contribution Plan for PDOCC employees.
Pursuant to the contract, Empower will provide enrollment support to the County and its employees. Empower will also provide initial and ongoing education for those who choose to participate in the Plan ("Participants"), including face-to-face group sessions and one-on-one consultations. Participants will be provided with access to a participant website that is customized to their needs and will provide Plan Participants with powerful tools that they can use 24/7. Among other options, Participants will be able to do the following on the participant website:
• make beneficiary designations;
• calculate estimated health care expenses based on individualized information; calculate estimated monthly retirement income and goals based on Participant's financial data;
• access information about investment options, such as prospectuses.
Through Empower's services, Participants will be able to contact Empower through various means:
• Through the participant website, Participants will be able to have real time conversations with customer service representatives using Live Chat.
• By phone, Participants will be able to contact Empower service representatives through a toll-free number. To make it easier for employees to receive assistance, Empower's toll free customer service hours will include evenings and Saturdays.
• By a toll-free automated voice response system, Participants will be able to inquire or make account changes from a touch-tone telephone. Inquiry services available from the automated voice response system will use share prices, unit values, and account balances that are as of the last calculated unit value/share price.
Empower's customer service representatives and field onsite representatives are required to hold Financial Industry Regulatory Authority Series 6 and 63 licenses, meaning that, when authorized, they have the capacity to provide professional financial advice to Plan Participants.
Empower will also provide educational and communication materials to Participants regarding financial investing, retirement options, and planning tools pursuant to the Plan. It will also make quarterly benefit statements available to Participants, including on the participant website, and circulate Plan notices.
In addition, Empower will offer fully automated loan administration, making it easy for Participants to monitor as well as apply for loans. It will also provide distributions to Participants, process Participant rollover contributions and provide Participants with transaction and investment statements.
Empower will also provide an annual report to the County concerning the services it has provided, investment information and benefit payments, among other information. It will also create a recordkeeping system online via Empower’s website for the County acting as Plan Sponsor that permits Plan Sponsor to communicate inquiries or changes while administering the Plan.
A Trust is maintained in connection with the Plans to which Plan contributions are made and held by a trustee. The Trust Agreement with provides that it will establish and operate the exclusive benefit trust fund for the Plan, which includes Plan contributions and assets. Empower Trust Company, LLC will serve as the Trustee under the Trust Agreement and will manage and invest the trust fund for the exclusive benefit of Plan participants and their beneficiaries. The Trust Agreement sets forth the general duties and powers Empower Trust Company, LLC. Such duties and powers include but are not limited to: receiving contributions; administering the exclusive benefit trust fund; making payments from the trust; transferring and accepting property for eligible rollovers; and various ministerial acts.
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 a contract in place, the County will not have access to Empower’s recordkeeping and administrative services and many of the favorable terms and conditions of the current contract will be lost.