Agenda Item AGENDA STAFF REPORT ASR Control 24-000366
MEETING DATE:	05/21/24
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	County Executive Office (Approved)
Department contact person(s):	Kim Derrick (714) 834-2564
	Susie Kim (714) 834-3103

Subject: Approve Contract with Empower Retirement LLC for DC Plan Services

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Discussion

3 Votes Board Majority

Budgeted: N/A

Current Year Cost: N/A

Annual Cost: See Financial Impact Section

Staffing Impact:

# of Positions:

Sole Source: No

Current Fiscal Year Revenue: N/A

Funding Source: See Financial Impact Section	County Audit in last 3 years: No
Levine Act Review Completed: Yes

Prior Board Action: N/A

RECOMMENDED ACTION(S):

Authorize the Chief Human Resources Officer or designee to execute a contract with Empower Retirement, LLC for Retirement Plan Administrative and Investment Services, effective July 1, 2024, through June 30, 2027, with the option to renew for two additional one-year periods.

Authorize the Chief Human Resources Officer or designee as Plan Administrator, to administer the plans on behalf of the County, as authorized by the Plan Documents, and authorize the same to negotiate and execute underlying agreements necessary for the proper function of the Plans and make any changes to the County's Defined Contribution Plans, Retirement Plans and Defined Contribution Plan as required by any regulatory agency, by law or as necessary to be consistent with the County's various Memorandum of Understanding, Personnel and Salary Resolution, and any other Board directives or resolutions as expressed by the Board.

SUMMARY:

Approval of contract with Empower Retirement, LLC will provide Retirement Plan Administrative and Investment Services for the County’s 457(b), 401(a), 3121 Extra-Help plan, the County’s “1.62 Defined Contribution Plans” consisting of a 457(b) defined contribution plan and a 401(a) match plan and the Extra-Help Defined Benefit plan.

BACKGROUND INFORMATION:

Empower Retirement, LLC (“Empower”) is the County’s current provider for retirement plan administrative and investment services for the 457(b), 401(a), 3121 Extra-Help plan, the County’s “1.62 Defined Contribution Plans” consisting of a 457(b) defined contribution plan and a 401(a) match plan, and the Extra-Help Defined Benefit plan. The current contract expires on June 30, 2024, and, in anticipation of the contract expiration, the County issued Request for Proposal (RFP) number 017-202302-MC on November 17, 2023. The RFP closed on January 3, 2024, and the County received two responsive proposals from the following vendors:

-	Empower Retirement, LLC
-	Voya Institutional Plan Services, LLC

RFP EVALUATION PROCESS:

An RFP evaluation committee was established and consisted of one staff member from County Executive Office (CEO) / Finance, two staff members from CEO / Human Resource Services (HRS) / Employee Benefits, one staff member from Treasurer-Tax Collector, and one person from the Retired Employees Association of Orange County. Three of these five evaluation committee members also participate on the County’s Defined Contribution Advisory Committee. A County Deputy Purchasing Agent (DPA) presided over and was in attendance at all committee meetings to monitor the selection process.

The evaluation committee was charged with selecting a proposal that best meets the needs of the County based on the following criteria:

-	Organization, Staff Qualifications and Relevant Experience
-	Participant Communications and Customer Service Capabilities
-	Plan Administrative Services
-	Investment Offerings
-	Cybersecurity
-	Cost

The evaluation process consisted of two phases:

PHASE I:

Each committee member individually evaluated the proposals in accordance with the pre-determined criteria outlined above and independently scored each proposal. The members of the evaluation committee met to discuss their individual observations, comments, and scores for each criteria in the proposals. The DPA documented the committee members’ scores and established a rank order for the proposals.

PHASE II:

All vendors were requested to make an oral presentation to the evaluation committee. Following the oral presentations, the evaluation committee completed the scoring process. See Attachment A for the final scores of each proposal.

In addition, members of the County’s CEO / OC Information Technology (OCIT) / Enterprise Privacy & Cybersecurity office reviewed the cybersecurity compliance questionnaires and third-party audit reports to ensure that all vendors met minimum acceptable standards for cybersecurity.

RFP SCORING:

The table below represents the collaborative scoring effort made by the committee and is the basis for the HRS recommendation included in this Agenda Staff Report. Based on the evaluation results, Empower received the highest overall evaluation score as shown below.

Proposer	Final Score
Empower Retirement, LLC	92.7
Voya Institutional Plan Services, LLC	82.4

Under the Scope of Services for this contract, the recommended provider, Empower, will assist the County in the management and provision of retirement plan administrative and investment services for the County’s defined contribution and defined benefit plans and provide a diverse offering of investment options, monitor investment performance and present timely reports and results to the County. For active employees and retirees, Empower will provide program management, responsive customer service, an on-site and virtual education plan, and a customized website with online tools and investment education. Empower maintains individual participant accounts and ensures that all transactions and activities are in compliance with Internal Revenue Service regulations and the various Defined Contribution and Defined Benefit Plan Documents.

Empower is a Colorado limited liability company authorized to do business in all 50 states, the District of Columbia, Guam, and Puerto Rico. Empower is an indirect, wholly owned subsidiary of Great-West Lifeco, Inc. (Lifeco), a Canadian holding company. Shares of Lifeco are traded publicly on the Toronto Stock Exchange; however, Empower’s direct owner is not a publicly traded company and there are no publicly traded U.S. companies in the ownership chain. Nevertheless, as a result of other U.S. federal securities, laws, rules and regulations, Empower’s direct parent company, Empower Annuity Insurance Company of America (EAICA) files certain reports and financial statements with the U.S. Securities and Exchange Commission.

EAICA (formerly, Great-West Life & Annuity Insurance Company) has been doing business in the United States since 1907 and has over 46 years of public-sector experience. As of June 30, 2023, Empower provided services to approximately 4,765 governmental plans with approximately $215 billion in assets just in the government sector. Empower’s performance under the current contract has been confirmed as satisfactory.

Empower’s proposed contract contains a number of enhancements and pricing reductions from their current contract. The reductions in the fees are generally related to the growth of the County of Orange Defined Contribution program over the last five years ($1.45 billion to $2.45 billion). The proposed contract includes $225,000 per year in administrative funding. The administrative funding will be held in a separate Empower account to reimburse the County for administrative costs incurred in overseeing and maintaining the defined contribution program. The proposed contract also has a number of performance guarantees and customer satisfaction measures, including a quarterly account management report card and account management satisfaction guarantees.

Empower’s proposed contract language is consistent with revisions previously approved by the Board regarding indemnification and insurance provisions that have been reviewed and approved by County Counsel and CEO/Risk Management.

The Orange County Preference Policy (OCPP) was applicable and incorporated into this solicitation. No OCPP qualified proposals were submitted.

This contract includes subcontractors. See Attachment D for information regarding subcontractors and Contract Summary Form.

CONTRACT AND PRIOR BOARD ACTIONS:

Empower is the incumbent provider and therefore, there are Prior Board Actions associated with the contractor. Based on the results of the previous RFP, on May 21, 2019, the Board approved the current contract with Empower effective July 1, 2019, through June 30, 20122, renewable for two additional one-year periods. The Board subsequently approved Amendment One on March 22, 2022, and Amendment Two on May 9, 2023, renewing the contract for two additional one-year terms.

FINANCIAL IMPACT:

There is no financial impact to the County for plan administrative and investment services associated with this Contract. All administrative fees are borne by plan participants.

Empower participant fees, as negotiated under this contract, are very competitive and remain consistent compared to their previous contract. The asset-based fees were reduced from the current contracted 8.5 basis points to 5.2 basis points (a basis point is 1/100th of one percent) with this agreement. Based on the September 30, 2023, plan data, Empower’s asset-based fee will lower annual program administrative expenses by $716,022, or approximately $17 per participant.

In addition to lower participant fees, Empower has guaranteed their annual participant fees for three years with an option for the County to renew at the guaranteed rates for two additional one-year periods. Empower’s contract contains $225,000 in administrative funding annually to reimburse the County for costs it incurs overseeing and maintaining the program.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A – Final Scoring Sheet
Attachment B - Contract with Empower Retirement, LLC
Attachment C - Risk Assessment Form
Attachment D - Contract Summary Form