Following the recommendation of Bloomfield Township’s financial sustainability committee, the board of trustees on Monday, January 8, unanimously approved consolidating the township’s pension and health savings accounts for employees under a single record keeper, Empower Retirement, to manage under the auspices of Gregory Schwartz & Co., for a savings of over $100,000.
Township treasurer Brian Kepes explained that the financial sustainability committee had asked Schwartz & Co., which the township had recently chosen has their investment company of record, to send out a request for proposal (RFP) in order to coordinate and streamline their process of managing and overseeing various employee pension and health savings accounts, including 401 and 457 plans. A 401 plan is an IRS-approved defined-contribution pension account where retirement savings are provided by an employer, deducted from an employee’s pre-tax paycheck, and limited to an annual contribution of $18,000, as of 2017. A 457 account is deferred compensation retirement plan available to government employers which operates similarly to a 401K plan.
Kepes said there is about $30 million in various accounts to be managed.
Matthew Whitty, director of institutional services for Schwartz, informed trustees that since November, they have been going through RFPs in order to streamline the process, “to have a much better cost for the township.”
He said all four of the providers who submitted proposals – Voya, Empower Retirement, Mass Mutual and American Funds – were capable of doing the work, however, American Funds does not provide 457 or HRA administrative services.
“Empower and Voya were the two incumbents that separated themselves from the group,” Whitty said. “We then asked them to sharpen their pencils.”
He said that Empower came back at a price of six basis points for the 401 and 457 accounts, and that currently 166 employees have accounts with Empower.
“It’s a one-stop shop for participants for them to manage their retirement and health accounts” he noted. “It was highly sought after to go to just one website to review their accounts. It’s very convenient. Not everyone could offer that. It’s very streamlined and less confusing.”
Kepes and Whitty pointed out that currently, between various accounts and purveyors, the township has been charged between 40 and 60 basis points. “Now we’ll be charged six,” said Kepes. “The total savings from consolidating the four different companies is $109,590 that will be saved annually. It’s pretty confusing with four different vendors.”
Trustees voted 7-0 to approve Empower as the township’s financial record keeper.