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HomeMy WebLinkAbout4.11 Agreement ICMA-RC or 19 82 STAFF REPORT CITY CLERK CITY COUNCIL File #600-30 DATE: January 20, 2015 TO: Honorable Mayor and City Councilmembers FROM: Christopher L. Foss, City Manager " SUBJECT: Approval of Agreement with ICMA-RC to Administer the Ci Y's Deferred Compensation Plan Prepared by Colleen Tribby, Director of Administrative Services EXECUTIVE SUMMARY: The City Council will consider a contract renewal with International City Management Association Retirement Corporation (ICMA-RC) to administer its deferred compensation plan. FINANCIAL IMPACT: Approval of the contract will have no financial impact to City funds. Applicable fees are paid from employee contributions held in trust. RECOMMENDATION: Staff recommends that the City Council adopt the Resolution Authorizing the City Manager to Execute a Contract Renewal With International City Management Association Retirement Corporation to Provide Third Party Administrator Services for the City's Deferred Compensation Plan. Reviewed By Assistant City Manager DESCRIPTION: Since August 1988, the City has contracted with International City Management Association Retirement Corporation (ICMA-RC) to provide administrative services of the City's deferred compensation plans (401(a) and 457 plans). In addition to investment advisory, ICMA-RC's range of services includes account maintenance, account recordkeeping, investment and tax reporting, transaction processing, benefit disbursement, and asset management. Page 1 of 2 ITEM NO. 4.11 The current agreement between the City and ICMA-RC was amended in February of 2011, with a five-year contract term and administration fees of 0.15% per year of the amount of plan assets invested. With the City Council's approval, the City Manager will execute a new contract with ICMA-RC (Attachment 2) that will effective for seven years (ending in January 2022), and which eliminates the 0.15% annual fee after the first two years. In October 2014, a representative of ICMA-RC presented to the City of Dublin Employee Committee the terms of the proposed agreement, and discussed the various member benefits that the contract provides for, including financial planning, estate planning, pre-retirement planning, on-line enrollment, and self-directed accounts. The Employee Committee recommended that the City proceed with the new seven-year mutually exclusive agreement. NOTICING REQUIREMENTS/PUBLIC OUTREACH: None. ATTACHMENTS: 1. Resolution authorizing the City Manager to Execute a Contract Renewal with International City Management Association Retirement Corporation to provide Third Party Administrator Services for the City's Deferred Compensation 2. Administrative Services Agreement with ICMA-RC Page 2 of 2 RESOLUTION NO. XX - 15 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN * * * * * * * * * * * AUTHORIZING THE CITY MANAGER TO EXECUTE A CONTRACT RENEWAL WITH INTERNATIONAL CITY MANAGEMENT ASSOCIATION RETIREMENT CORPORATION TO PROVIDE THIRD PARTY ADMINISTRATOR SERVICES FOR THE CITY'S DEFERRED COMPENSATION PLAN WHEREAS, On August 22, 1988 the City Council of the City of Dublin adopted Resolution 116-88 Establishing a Deferred Compensation Plan to be administered by the International City Management Association Retirement Corporation (ICMA-RC); and WHEREAS, the current agreement between ICMA-RC and the City of Dublin was amended on February 14, 2011; and WHEREAS, the City of Dublin has affirmed the continued need to contract with a third party for administrative services of the City's deferred Compensation Plan; WHEREAS, the City of Dublin desires that the investment of funds held under its deferred compensation plan continue to be administered ICMA-RC under a new contract that provides for a reduction to the City's administration fee and a seven year contract term. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin hereby authorizes the City Manager to execute a contract agreement with ICMA-RC for Third Party Administrator Services. PASSED, APPROVED AND ADOPTED this 20th day of January, 2015, by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mayor ATTEST: City Clerk ATTACHMENT 1 i ADMINISTRATIVE SERVICES AGREEMENT Between ICMA Retirement Corporation and City of Dublin Type: 457 Account#: 302959 Type: 401 Account#: 106040 GS/RS Plan numbers 302959, 106040 ADMINISTRATIVE SERVICES AGREEMENT This Administrative Services Agreement("Agreement"),made as of the day of ,2014 (herein referred to as the"Inception Date"), between the International City Management Association Retirement Corporation("ICMA-RC"), a nonprofit corporation organized and existing under the laws of the State of Delaware, and the City of Dublin ("Employer"), a City organized and existing under the laws of the State of California with an office at 100 Civic Plaza,Dublin, California 94568. RECITALS Employer acts as public plan sponsor of a retirement plan("Plan"), and in that capacity,has responsibility to obtain administrative services and investment alternatives for the Plan; VantageTrust is a group trust established and maintained in accordance with New Hampshire Revised Statutes Annotated section 391:1 and Internal Revenue Service Revenue Ruling 81-100, 198 1-1 C.B. 326,which provides for the commingled investment of retirement funds held by various state and local governmental units for their employees; ICMA-RC acts as investment adviser to VantageTrust Company, LLC,the Trustee of VantageTrust; ICMA-RC has designed, and VantageTrust offers, a series of separate funds (the "Funds") for the investment of plan assets as referenced in VantageTrust's principal disclosure document, "Making Sound Investment Decisions: A Retirement Investment Guide" and the accompanying VantageTrust Fund Fees and Expenses document ("Retirement Investment Guide"). The Funds are available only to public employers and only through VantageTrust and ICMA-RC. In addition to serving as investment adviser to VantageTrust, ICMA-RC provides a range of services to public employers for the operation of employee retirement plans including, but not limited to, communications concerning investment alternatives, account maintenance, account recordkeeping, investment and tax reporting,transaction processing,benefit disbursement, and asset management. 2 Plan numbers 302959, 106040 AGREEMENTS I. Appointment of ICMA-RC Employer hereby appoints ICMA-RC as Administrator of the Plan to perform all nondiscretionary functions necessary for the administration of the Plan. The functions to be performed by ICMA-RC shall be those set forth in Exhibit A to this Agreement. 2. Adoption of Trust Employer has adopted the Declaration of Trust of VantageTrust Company and agrees to the commingled investment of assets of the Plan within VantageTrust. Employer agrees that the investment,management, and distribution of amounts deposited in VantageTrust shall be subject to the Declaration of Trust, as it may be amended from time to time and shall also be subject to terms and conditions set forth in disclosure documents (such as the Retirement Investment Guide or Employer Bulletins) as those terms and conditions may be adjusted from time to time. 3. ExclusivL Agreement Employer agrees that for the initial or succeeding term of this Agreement specified in Section 10, so long as ICMA-RC continues to perform in all material respects the services to be performed by it under this Agreement,Employer shall not obtain plan administration from anyone other than ICMA-RC. Employer acknowledges that ICMA- RC has agreed to the compensation to be paid to ICMA-RC under this Agreement in the expectation that ICMA-RC will be able to offset costs allocable to performing this Agreement with revenues arising from Employer's exclusive use of ICMA-RC at the rates provided herein throughout the initial or succeeding term. 4. Employer Duty to Furnish Information Employer agrees to furnish to ICMA-RC on a timely basis such information as is necessary for ICMA-RC to carry out its responsibilities as Administrator of the Plan, including information needed to allocate individual participant accounts to Funds in VantageTrust, and information as to the employment status of participants, and participant ages, addresses, and other identifying information(including tax identification numbers).Employer also agrees that it will notify ICMA-RC in a timely manner regarding changes in staff as it relates to various roles. This is to be completed through the online EZLink employer contact options.ICMA-RC shall be entitled to rely upon the accuracy of any information that is furnished to it by a responsible official of the Employer or any information relating to an individual participant or beneficiary that is furnished by such participant or beneficiary, and ICMA-RC shall not be responsible for any error arising from its reliance on such information. ICMA-RC will provide reports, statements and account information to the Employer through EZLink,the online plan administrative tool. 3 Plan numbers 302959, 106040 Employer is required to send in contributions through EZLink,the online plan administration tool provided by ICMA-RC. Alternative electronic methods may be allowed,but must be approved by ICMA-RC for use. Contributions may not be sent through paper submittal documents. To the extent Employer selects third-party funds that do not have fund profile information provided to ICMA-RC through our electronic data feeds from external sources (such as Morningstar)or third party fund providers,the Employer is responsible for providing to ICMA-RC timely fund investment updates for disclosure to Plan participants. Such updates may be provided to ICMA-RC through the Employer's investment consultant or other designated representative. i Failure to provide timely fund profile update information, including the source of the information,may result in a lack of fund information for participants, as ICMA-RC will remove outdated fund profile information from the systems that provide fund information to Plan participants. 5. Certain Representations and Warranties ICMA-RC represents and warrants to Employer that: (a) ICMA-RC is a non-profit corporation with full power and authority to enter into this Agreement and to perform its obligations under this Agreement. The ability of ICMA-RC to serve as investment adviser to VantageTrust is dependent upon the continued willingness of VantageTrust for ICMA-RC to serve in that capacity. (b) ICMA-RC is an investment adviser registered as such with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended. (c)(i) ICMA-RC shall maintain and administer the Plan in accordance with the requirements for eligible deferred compensation plans under Section 457 of the Internal Revenue Code and other applicable federal law;provided, however,that ICMA-RC shall not be responsible for the eligible status of the Plan in the event that the Employer directs ICMA-RC to administer the Plan or disburse assets in a manner inconsistent with the requirements of Section 457 or otherwise causes the Plan not to be carried out in accordance with its terms. Further, in the event that the Employer uses its own customized plan document,ICMA-RC shall not be responsible for the eligible status of the Plan to the extent affected by terms in the Employer's plan document that differ from those in ICMA-RC's standard plan document. ICMA-RC shall not be responsible for monitoring state or local law or for administering the Plan in compliance with local or state requirements unless Employer notifies ICMA-RC of any such local or state requirements. 4 Plan numbers 302959, 106040 (c)(ii) ICMA-RC shall maintain and administer the Plan in accordance with the requirements for plans which satisfy the qualification requirements of Section 401 of the Internal Revenue Code and other applicable federal law;provided,however, ICMA-RC shall not be responsible for the qualified status of the Plan in the event that the Employer directs ICMA- RC to administer the Plan or disburse assets in a manner inconsistent with the requirements of Section 401 or otherwise causes the Plan not to be carried out in accordance with its terms;provided, further,that if the plan document used by the Employer contains terms that differ from the terms of ICMA-RC's standardized plan document, ICMA-RC shall not be responsible for the qualified status of the Plan to the extent affected by the differing terms in the Employer's plan document. ICMA-RC shall not be responsible for monitoring state or local law or for administering the Plan in compliance with local or state requirements unless Employer notifies ICMA-RC of any such local or state requirements. Employer represents and warrants to ICMA-RC that: (d) Employer is organized in the form and manner recited in the opening paragraph of this Agreement with full power and authority to enter into and perform its obligations under this Agreement and to act for the Plan and participants in the manner contemplated in this Agreement. Execution, delivery, and performance of this Agreement will not conflict with any law,rule, regulation or contract by which the Employer is bound or to which it is a party. (e) Employer understands and agrees that ICMA-RC's sole function under this Agreement is to act as recordkeeper and to provide administrative, investment or other services at the direction of Plan participants,the Employer, its agents or designees in accordance with the terms of this Agreement. Under the terms of this Agreement, ICMA-RC does not render investment advice, is not the Plan Administrator or Plan Sponsor as those terms are defined under applicable federal, state, or local law, and does not provide legal,tax or accounting advice with respect to the creation, adoption or operation of the Plan and its related trust. ICMA-RC does not perform any service under this Agreement that might cause ICMA-RC to be treated as a"fiduciary"of the Plan under applicable law. (f) Employer acknowledges and agrees that ICMA-RC does not assume any responsibility with respect to the selection or retention of the Plan's j investment options. Employer shall have exclusive responsibility for the Plan's investment options, including the selection of the applicable mutual fund share class. Where applicable,Employer understands that the VT Retirement Income Advantage Fund is an investment option for the Plan and that the fund invests in a separate account available through a group variable annuity contract. By entering into this Agreement,Employer acknowledges that it has received the Important Considerations document 5 Plan numbers 302959, 106040 and the Retirement Investment Guide and that it has read the information therein concerning the VT Retirement Income Advantage Fund. (g) Employer acknowledges that certain such services to be performed by ICMA-RC under this Agreement may be performed by an affiliate or agent of ICMA-RC pursuant to one or more other contractual arrangements or relationships, and that ICMA-RC reserves the right to change vendors with which it has contracted to provide services in connection with this Agreement without prior notice to Employer. (h) Employer acknowledges that it has received ICMA-RC's Fee Disclosure Statement,prepared in substantial conformance with ERISA regulations regarding the disclosure of fees to plan sponsors. (i) Employer approves the use of its Plan in ICMA-RC external media, publications and materials. Examples include press releases announcements and inclusion of the general plan information in request for proposal responses. 6. Participation in Certain Proceedings The Employer hereby authorizes ICMA-RC to act as agent,to appear on its behalf, and to join the Employer as a necessary party in all legal proceedings involving the garnishment of benefits or the transfer of benefits pursuant to the divorce or separation of participants in the Plan. Unless Employer notifies ICMA-RC otherwise,Employer consents to the disbursement by ICMA-RC of benefits that have been garnished or transferred to a former spouse, current spouse, or child pursuant to a domestic relations order or child support order. 7. Compensation and Payment (a) Plan Administration Fee. For years one (1) and two (2) of this j Agreement,the amount to be paid for plan administration services under this Agreement shall be 0.15%per annum of the amount of Plan assets invested in VantageTrust. Such fee shall be computed based on average daily net Plan assets in VantageTrust. For years three(3)through seven (7) of this Agreement,the amount to be paid for plan administration services under this Agreement shall be 0.00% per annum of the amount of Plan assets invested in VantageTrust. ICMA- RC's compensation under this Agreement shall be as set forth in subsection (c)below. (b) Mutual Fund Services Fee. There is an annual charge of 0.00%assessed against average daily net Plan assets invested in VantageTrust's Trust Series funds,which are a group of funds each of which invests 6 Plan numbers 302959, 106040 substantially all of its assets in a third-party mutual fund not affiliated with ICMA-RC. . (c) Compensation for Management Services to VantageTrust, Compensation for Advisory and other Services to The Vantagepoint Funds and Payments from Third-Party Mutual Funds. Employer acknowledges that, in addition to amounts payable under this Agreement, ICMA-RC receives fees from VantageTrust for investment advisory services and plan and participant services furnished to VantageTrust. Employer further acknowledges that certain wholly owned subsidiaries of ICMA-RC receive compensation for advisory and other services furnished to The Vantagepoint Funds,which serve as the underlying portfolios of a number of Funds offered through VantageTrust. For a VantageTrust Fund that invests substantially all of its assets in a third-party mutual fund not affiliated with ICMA-RC, ICMA-RC or its wholly owned subsidiary receives payments from the third-party mutual fund families or their service providers in the form of 12b-1 fees, service fees, compensation for sub-accounting and other services provided based on assets in the underlying third-party mutual fund. These fees are described in the Retirement Investment Guide and ICMA-RC's fee disclosure statement. In addition,to the extent that third party mutual funds are included in the investment line-up for the Plan, ICMA-RC receives administrative fees from its third party mutual fund settlement and clearing agent for providing administrative and other services based on assets invested in third party mutual funds; such administrative fees come from payments made by third party mutual funds to the settlement and clearing agent. 1 (d) Redemption Fees. Redemption fees imposed by outside mutual funds in which Plan assets are invested are collected and paid to the mutual fund by ICMA-RC. ICMA-RC remits 100%of redemption fees back to the specific mutual fund to which redemption fees apply. These redemption fees and the individual mutual fund's policy with respect to redemption fees are specified in the prospectus for the individual mutual fund and referenced in the Retirement Investment Guide. (e) Payment Procedures.All payments to ICMA-RC pursuant to this Section 7 shall be made from Plan assets held by VantageTrust or received from third party mutual funds or their service providers in connection with Plan assets invested in such third party mutual funds,to the extent not paid by the Employer. The amount of Plan assets held through VantageTrust shall be adjusted by VantageTrust as required to reflect any such payments as are made from Plan assets invested in VantageTrust. In the event that the Employer agrees to pay amounts owed pursuant to this Section 7 directly, any amounts unpaid and outstanding after 30 days of invoice to the Employer shall be withdrawn from Plan assets held by VantageTrust. The compensation and payment set forth in this Section 7 are contingent upon the 7 Plan numbers 302959 106040 Employer's use of ICMA-RC's EZLink system for contribution processing and submitting contribution funds by ACH or wire transfer on a consistent basis over the term of this Agreement. The compensation and payment in this Section 7 will take effect in the calendar quarter following receipt of one fully executed copy of this Administrative Services Agreement based upon the following schedule: • Agreement received by February 20—Effective April • Agreement received by May 20—Effective July • Agreement received by August 20—Effective October • Agreement received by November 20—Effective January Employer further acknowledges and agrees that compensation and payment under this Agreement shall be subject to re-negotiation in the event that the Employer chooses to implement additional funds not on ICMA-RC's mutual fund platform. 8. Contribution Remittance Employer understands that amounts invested through VantageTrust are to be remitted directly to VantageTrust in accordance with instructions provided to Employer by ICMA- RC and are not to be remitted to ICMA-RC. In the event that any check or wire transfer is incorrectly labeled or transferred to ICMA-RC, ICMA-RC may return it to Employer with proper instructions. 9. Indemnification ICMA-RC shall not be responsible for any acts or omissions of any person with respect to the Plan or its related trust, other than ICMA-RC in connection with the administration or operation of the Plan. Employer shall indemnify ICMA-RC against, and hold ICMA- RC harmless from, any and all loss, damage,penalty, liability, cost, and expense, including without limitation,reasonable attorney's fees,that may be incurred by, imposed upon, or asserted against ICMA-RC by reason of any claim,regulatory proceeding, or f litigation arising from any act done or omitted to be done by any individual or person with respect to the Plan or its related trust, excepting only any and all loss, damage, penalty, liability, cost or expense resulting from ICMA-RC's negligence, bad faith, or willful misconduct. i 10. Term This Agreement shall be in effect and commence on the date all parties have signed and executed this Agreement ("Inception Date"). The term of this Agreement will commence on the Inception Date and extend seven (7) years from that date. This Agreement will be renewed automatically for each succeeding year unless written notice of termination is provided by either party to the other no less than 60 days before the end of such Agreement year. The Employer understands and agrees that, in the event the Employer terminates this Agreement (or replaces the VT PLUS Fund as an investment option in its 8 Plan numbers 302959, 106040 investment line-u p), ICMA-RC retains full discretion to release Plan assets invested in the VT PLUS Fund in an orderly manner over a period of up to 12 months from the date ICMA-RC receives written notification from the Employer that it has made a final and binding selection of a replacement for ICMA-RC as administrator of the Plan (or a replacement investment option for the VT PLUS Fund). 11. Amendments and Adiustments (a) This Agreement may be amended by written instrument signed by the parties. (b)ICMA-RC may amend this agreement by providing 60 days' advance written notice to the Employer prior to the effective date of such proposed amendment. Such amendment shall become effective unless, within the 60-day notice period, the Employer notifies ICMA-RC in writing that it objects to such amendment. (c) The parties agree that enhancements may be made to administrative and operations services under this Agreement. The Employer will be notified of enhancements through the Employer Bulletin, quarterly statements, electronic messages or special mailings. Likewise, if there are any reductions in fees, these will be announced through the Employer Bulletin, quarterly statement, electronic or special mailing. 12. Notices All notices required to be delivered under this Agreement shall be in writing and shall be delivered, mailed, e-mailed or faxed to the location of the relevant parry set forth below or to such other address or to the attention of such other persons as such party may hereafter specify by notice to the other parry. ICMA-RC: Legal Department, ICMA Retirement Corporation, 777 North Capitol Street,N.E., Suite 600, Washington,D.C., 20002-4240 Facsimile; (202) 962-4601 Employer: at the office set forth in the first paragraph hereof, or to any other address, facsimile number or e-mail address designated by the Employer to receive the same by written notice similarly given. Each such notice, request or other communication shall be effective: (i) if given by facsimile, when transmitted to the applicable facsimile number and there is appropriate confirmation of receipt; (ii) if given by mail or e-mail, upon transmission to the designated address with no indication that such address is invalid or incorrect; or (iii) if given by any other means,when actually delivered at the aforesaid address. 13. Complete Agreement This Agreement shall constitute the complete and full understanding and sole agreement between ICMA-RC and Employer relating to the object of this Agreement and correctly 9 Plan numbers 302959, 106040 sets forth the complete rights, duties and obligations of each party to the other as of its date.This Agreement supersedes all written and oral agreements, communications or negotiations among the parties.Any prior agreements,promises,negotiations or representations,verbal or otherwise,not expressly set forth in this Agreement are of no force and effect. 14. Titles The headings of Sections of this Agreement and the headings for each of the attached schedules are for convenience only and do not define or limit the contents thereof. 15. Incorporation of Schedules I All Schedules (and any subsequent amendments thereto), attached hereto, and referenced herein, are hereby incorporated within this Agreement as if set forth fully herein. 16. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of California, applicable to contracts made in that jurisdiction without reference to its conflicts of laws provisions. 10 Plan numbers 302959, 106040 In Witness Whereof,the parties hereto certify that they have read and understand this Agreement and all Schedules attached hereto and have caused this Agreement to be executed by their duly authorized officers as of the Inception Date first above written. CITY OF DUBLIN By Date Signature Name and Title (Please Print) INTERNATIONAL CITY MANAGEMENT ASSOCIATION RETIREMENT CORPORATION By t An j ela C.Montez Assistant Corporate Secretary Please return fully executed contract to: New Business Services ICMA-RC j 777 North Capitol Street NE Suite 600 Washington DC 20002-4240 r I 3 11 Plan numbers 302959, 106040 Exhibit A Administrative Services The administrative services to be performed by ICMA-RC under this Agreement shall be as follows: (a) Participant enrollment services, including providing a welcome package and enrollment kit containing instructions and notices necessary to implement the Plan's administration. Employees will enroll online or through a paper form. ICMA-RC will provide an enrollment link through the general ICMA-RC web site as appropriate.. Employer will also make available the online enrollment link in their Intranet site or via email to new employees. Employer can also enroll employees through EZLink. (b) Establishment of participant accounts for each employee participating in the Plan for whom ICMA-RC receives appropriate enrollment instructions. ICMA-RC is not responsible for determining if such Plan participants are eligible under the terms of the Plan. (c) Allocation in accordance with participant directions received in good order of individual participant accounts to investment funds offered under the Plan. (d) Maintenance of individual accounts for participants reflecting amounts deferred, income, gain or loss credited, and amounts distributed as benefits. (e) Maintenance of records for all participants for whom participant accounts have been established. These files shall include enrollment instructions (provided to ICMA-RC through Account Access,EZLink or form), beneficiary designation instructions and all other and documents concerning each participant's account.Provision of periodic reports to the Employer through EZLink Participants will have access to account information through Investor Services,Voice Response System, Account Access and k through quarterly statements that can be delivered electronically through Account Access or by postal service. (17 Communication to participants of information regarding their rights and elections under the Plan. (g) Making available Investor Services Representatives through a toll-free telephone number from 8:30 a.m.to 9:00 p.m.Eastern Time,Monday through Friday(excluding holidays and days on which the securities markets or ICMA-RC are closed for business(including emergency closings),to assist participants. 12 Plan numbers 302959, 106040 (h) Distribution of benefits as agent for the Employer in accordance with terms of the Plan. Participants who have separated from service can request distributions through Account Access or via form. (i) Upon approval by the Employer that a domestic relations order is an acceptable qualified domestic relations order under the terms of the Plan, ICMA-RC will establish a separate account record for the alternate payee and provide for the investment and distribution of assets held there under. (j) Loans may be made available on the terms specified in the Loan Guidelines, if loans are adopted by the Employer. Participants can request loans through Investor Services or Account Access. (k) Guided Pathways—Participant Advice and Guidance may be made available through a third party vendor on the terms specified on ICMA- RC's website. (1) ICMA-RC will determine appropriate delivery method(electronic and/or print) for plan sponsor/participant communications and education based on a number of factors (audience, effectiveness, etc.). i I I I 13