|City of Independence|
|AGENDA ITEM COVER SHEET|
|BILL NO. 18-717||Res.No: 6298|
18-717 - A resolution authorizing and directing the City Manager to accept the change of terms to the VOYA Financial Agreement dated January 18, 2018.
Staff recommends approval.
VOYA Financial notified the City of changes in the 457 plan design. Staff recommends consenting to the mandatory changes to ensure that employees who choose this plan will be able to make future contributions. This is a strictly voluntary investment option for employees, and the City does not make employer contributions.
The City offers voluntary options through VOYA Financial and ICMA-RC for employees to invest in 457 retirement plans. A 457 plan is a type of deferred compensation retirement plan that is available to governmental employers. The City does not make contributions on behalf of the employee and does not mandate participation. The plans are strictly voluntary for employees who choose them as part of their personal investment strategies.
Each plan offers different advantages and fees. The VOYA Financial option appeals to many employees because it offers a "fixed account" with a guaranteed minimum interest rate of 4%. The City received notification that VOYA Financial is imposing changes to the City’s Group Contract. Effective April 20, 2018, VOYA will no longer accept payments/deposits into the existing 4% fixed account. After April 20, 2018, unless VOYA receives alternate allocation instructions from individuals participating in the VOYA fixed account, future deposits and transfers that are designated to be invested in the existing fixed account will be directed to a new fixed account with a lower interest rate (currently 1.75% with a guaranteed minimum interest rate of 1.00%).
VOYA attempted to implement the changes in late 2017, but the City successfully negotiated for additional time to inform employees of the change and their investment options. All City staff were notified via email on February 1, 2018. A follow-up postal mailing has been sent to all active 4% fixed account holders reminding them of the need to designate a new funding account before April 20, 2018.
If the City does not consent to the changes in terms to the Agreement, VOYA Financial reserves the right to no longer accept new deposits as may be permitted under the existing contract. Staff recommends consenting to the changes to preserve this investment option for employees who voluntarily choose to participate. Employees will continue to have a second 457 plan option through ICMA-RC.
|Department: Finance Department||Contact Person: Brian C. Watson|
|City Managers Office||Approved|
|City Clerk Department||Approved|
|Council Action: ||Council Action: Accepted|