PSNC 2017: Improving Your Plan Through the RFP Process

The time for evaluating a provider can also be opportune for revisiting services, fees and investment options.

By Judy Faust Hartnett | June 15, 2017
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Employees of the University of Massachusetts (UMass) have a choice to participate in either the Commonwealth of Massachusetts defined benefit (DB) plan or a 401(a) plan. While either is a good start toward retirement savings success, UMass, a five-campus public university system, realized that more saving was needed.

State-sponsored 403(b) plans are exempt from the Employee Retirement Income Security Act (ERISA); however, UMass decided that following the act’s best practices was right for its plan—especially if the school hoped to improve participation and success measures, its target income replacement rate being 80%.

Andrew Russell, assistant vice president for the UMass System’s office of human resources (HR), in Shrewsbury, Massachusetts, addressed attendees at the 2017 PLANSPONSOR National Conference last week in Washington, D.C., about how, in keeping with ERISA, the system streamlined its 403(b) plan through the request for proposals (RFP) process.

Up until the passage and effective date of the final 403(b) regulations, in 2007, participants at UMass had 50 recordkeepers to choose from. According to Russell, “We put out an RFP to consolidate recordkeepers, complying with the new regulations and updating the plan structure.” The plan went from 50 recordkeepers to six.

A few years back, also by soliciting RFPs, UMass selected Cammack Retirement Group in Wellesley, Massachusetts, as its adviser/consultant. At the time, UMass wanted help building a 403(b) plan road map. “Looking for an adviser through an RFP was something we weren’t familiar with,” Russell recalled.

The system started by talking to its carriers and providers, peers, and other higher education institutions “to learn which firms were out there,” he said. “We used different industry resources, such as PLANSPONSOR, but you can learn so much from the [RFP] documents. Then you have to look at which providers stand out most. It’s not until the interview that you usually find out how they work, how their team would work with your team.”