PLANSPONSOR - April/May 2018 - 38

Public Defined Contribution
City of Plano
F
or many retirement plans, the focus on
fees has been relatively recent. But the
457 plan committee for the City of Plano,
Texas, has worked for over a decade to
reduce recordkeeping expenses by a total
of 90%.
During that same time period, the
457 plan of this suburban city, near Dallas,
also has steadily increased its participation,
from 35% in 2005 to 61% currently.
" In my experience, I don't have another
[457] plan client that is even close to that
type of participation, " says the plan's
adviser, Al DiCristofaro, a retirement plan
consultant at AndCo Consulting.
The state does not allow public
employers to do automatic enrollment or
automatic escalation in its defined contribution
(DC) plans, he says. " When you
consider that the increase in participation
was all done organically, and not through
auto-enrollment, it's even more impressive, "
he adds. " Public retirement plans
that are voluntary-only, and where there is
also a defined benefit [DB] plan, usually
struggle to get to 50% participation. "
From 100 Basis Points to 10
Changes to the plan's recordkeeping and
investment menu have helped participation,
DiCristofaro believes. " One of the
most effective things that the City of
Plano has done is to eliminate confusion
in the 457 program, " he says. " It did that
first by eliminating a multi-recordkeeper
environment. And then it did that by
streamlining the investment menu. "
By 2005, leadership in the Plano
government realized " it had somewhat
of a mess, in terms of its plans, " says the
city's director of human resources (HR),
Shante Akafia.
" The city manager, Bruce Glasscock,
and the city staff leadership said, 'If we're
going to do this, we're going to do it right-
we know we don't know everything, so we
need some help,' " says Administrative
Services Manager Andrea Cockrell. The
city hired AndCo Consulting and started
working with DiCristofaro to set up a
stronger governance infrastructure.
" At that point, the city leadership
said, 'We're going to have a retirement
plan committee and develop bylaws, and
have a formal investment policy and look
at the plan's investments quarterly,' "
Cockrell says. " We talk to our peers in
cities in the North Texas area, and we've
come to realize this is not necessarily the
case for many other organizations. "
Plano had three recordkeepers prior
to a 2005 request for proposals (RFP) and
consolidated to one. That reduced recordkeeping
fees from 100 basis points (bps)
to 46 basis points, Cockrell says.
In 2011, based on AndCo Consulting's
suggestion, the city renegotiated pricing
terms with recordkeeper ICMA-RC, as a
38 PLANSPONSOR.com April-May 2018 Art by Chris Buzelli
TOTAL PLAN ASSETS/PARTICIPANTS:
$106 million/1,247
PARTICIPATION RATE: 61%
AVERAGE DEFERRAL RATE: 6.1%
AUTOMATIC ENROLLMENT/ESCALATION: No
EMPLOYER CONTRIBUTION: 0% to 457
plan; contributions to Texas Municipal
Retirement System
contract-extension decision neared. " The
recordkeeper agreed to reduce fee levels
from 46 basis points to 23 basis points, as
an inducement for the city to exercise its
automatic-renewal option, " Cockrell says.
Plan officials decided to do a full RFP
in 2015, as the plan neared 10 years with its
recordkeeper. " The committee agreed that
it owed it to participants to fully explore
the options present in the market, to determine
the best value, " Akafia says. " If you
have ever worked with a governmental
entity, you are aware that the procurement
process is an undertaking, and the city
reached out to numerous recordkeepers to
garner as much competition as possible. "
While the plan had no issues with
its recordkeeper, the committee felt open
to a change if the RFP process led it to
conclude this was the best move for the
plan, Akafia says. The city decided to
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