Social Security Alternative Retirement Plan for Other Personal Services (OPS) Employees RFI NO.: DMS 08/09-080

Transcription

1 Request for Information for Social Security Alternative Retirement Plan For Other Personal Services (OPS) Employees RFI No.: DMS 08/ REQUEST FOR INFORMATION Social Security Alternative Retirement Plan for Other Personal Services (OPS) Employees RFI NO.: DMS 08/ The Department of Management Services (hereinafter Department ) of the State of Florida (hereinafter the State ) is issuing this Request for Information (hereinafter RFI ) seeking information regarding vendors who can provide and administer a Social Security alternative retirement plan for specified Other Personal Services (OPS) employees. The alternative retirement plan would have to be a defined contribution plan that satisfies the definition of a retirement system pursuant to Internal Revenue Code ( IRC ) section 3121, by providing for an allocation to the employee s account of at least 7.5 percent of the employee s compensation during any period under consideration. This plan may be established under IRC sections 401(a) or 457. The plan would consist of only employee contributions of at least 7.5 percent of compensation. To qualify as a retirement system pursuant to section 3121 of the IRC, the defined contribution plan would have to credit participants accounts with a reasonable interest rate, or the accounts would have to be held in a separate trust subject to fiduciary standards and credited with actual earnings. A 401(a) plan is a qualified profit sharing or money purchase plan adopted by a tax-exempt or government employer. A qualified plan is one that meets the requirements of the Internal Revenue Code. Both employers and participants in qualified plans may take advantage of significant tax benefits that include taking a deduction for contribution to the plan (employer) and sheltering income and plan earnings from income tax until distributed. The 457 plan must be a non-qualified, deferred compensation plan established by the state and local governments and tax-exempt governments and tax-exempt employers. Should you need further assistance, please call (850) or your request to lori.anderson@dms.myflorida.com. Reference RFI Number: DMS-08/

2 Request for Information for Social Security Alternative Retirement Plan For Other Personal Services (OPS) Employees RFI No.: DMS 08/ CONTENTS I. INTRODUCTION II. III. IV. BACKGROUND RFI RESPONSE INSTRUCTIONS RESPONSE CONTENTS

3 I. INTRODUCTION The Department is issuing this RFI seeking information from vendors who offer services that provide and administer a Social Security alternative retirement plan for Other Personal Services (OPS) employees. Transition to the alternative retirement plan may occur through implementation of one of the following: Enrollment of all OPS employees hired after the plan implementation date and offering it as an option to OPS employees already employed with the State of Florida at the time of plan implementation; or Enrollment of OPS employees hired after the plan implementation date and automatic transition of current OPS employees six months following the plan implementation date; or Enrollment of all OPS employees on a date certain, giving current OPS employees reasonable advance notice of the change. The intent of this RFI is for the Department to gather information from companies who are qualified and experienced in providing such services. The Vendor shall mean the individual submitting the response to this RFI, such person being the owner or controlling agent of the company described in the RFI response or an individual duly authorized to act on behalf of an entity responding to this RFI. Please note that this is a Request for Information. The Department is seeking to gather information which may or may not be used to pursue the services. Such determination will be the State s sole discretion and be in the best interest of the State. II. BACKGROUND When Social Security was established in 1935, state and local government employees were excluded. However, beginning in 1951, states were allowed to enter into voluntary agreements with the federal government to provide Social Security coverage to public employees. These agreements are authorized by Section 218 of the Social Security Act (known as Section 218 Agreements ). The Florida Retirement System (FRS) mandates that all FRS members be covered for Social Security under the Section 218 Agreement. However, the State s OPS employees are not members of the FRS and have never been covered by the Section 218 Agreement. Effective July 2, 1991, Congress made Social Security coverage mandatory (with certain exceptions) for state and local government employees who are not covered

4 by a Section 218 Agreement and who are not qualified participants in a public retirement system. Since that time, OPS employees have been covered by Social Security except for cases where the law allows exemption. However, federal provisions allow states to provide mandatorily covered OPS employees with membership in a public retirement system as an alternative to mandatory Social Security coverage. By the enactment of Section , Florida Statutes, the Florida Legislature has authorized the State of Florida, through the Department, to establish a retirement system that meets the requirements of 26 USCA 3121(b)(7). As described in the state statute, the retirement system is to be an alternative retirement income security program for eligible temporary and seasonal employees of the State who are compensated from appropriations for other personal services (OPS). Because the Florida Retirement System is available only to those employees filling established positions and not OPS employees, the State is considering providing a Social Security alternative retirement plan for OPS employees. It is the Department s intention that if the Department were to competitively bid for these services, the services would be provided at no cost to the State or the employees participating in the plan and that there would be no payments to the vendor to provide this service. Rather, the vendor would administer the plan without payment of administration fees by the State of Florida. In Fiscal Year , the State Personnel System employed 15,728 OPS employees who were mandatorily covered by Social Security. The average gross annual wage for this population was $10, In Fiscal Year , there were 14,105 such employees with average gross annual wages of $11, For Fiscal Year , ending June 30, 2009, there were 14,545 such employees on the State Personnel System s payroll with wages averaging $12, These figures are estimates and would likely increase with the addition of other state employers outside of the State Personnel System participating in this plan. III. RFI RESPONSE INSTRUCTIONS A. PROPOSAL SUBMISSIONS Complete written RFI responses are due by 2:00 p.m., EST, on January 26, Submissions shall include the original RFI response, and one electronic copy (on CD- ROM in.pdf format) in a sealed envelope (or other suitable package). Submissions are acceptable via US Mail, private courier service, or hand-delivery to the Official Contact Person specified in Section D of Article III. Once received, all RFI responses and attachments shall become the exclusive property of the State of Florida and will not be returned. The Department is not liable for any of the costs incurred by a Vendor in preparing and submitting a Reply.

5 B. QUESTIONS REGARDING THE RFI Any questions concerning clarification of specifications contained in this RFI are to be submitted, in writing (which may include ), to the Official Contact Person specified in Section D of this Article III. Any such questions or request for clarification are to be submitted on or before January 13, C. ANSWERS REGARDING THE RFI Answers to all questions received will be posted on the Vendor Bid System at under the posted solicitation number by 5:00 p.m., EST, on January 20, D. OFFICIAL CONTACT PERSON THE DEPARTMENT Inquires and comments about this RFI should be directed to: Departmental Purchasing Lori L. Anderson, Purchasing Agent II 4050 Esplanade Way, Suite 260 Tallahassee, FL Phone No.: (850) Fax No.: (850) Or via to: lori.anderson@dms.myflorida.com All questions and correspondence regarding this RFI shall be directed to contact person. E. OFFICIAL CONTACT PERSON - VENDOR Each Vendor MUST provide the below contact information with their response: Name: Title: Address: Phone: Fax: F. AMENDMENTS TO THE SOLICITATION DOCUMENTS DMS will post amendments to the RFI on the Florida Vendor Bid System (VBS) at under the posted solicitation number. Each Vendor is responsible for monitoring the VBS for new or changing information.

6 G. SPECIAL ACCOMMODATIONS Any person requiring a special accommodation at Departmental Purchasing because of a disability should call Departmental Purchasing at (850) at least five (5) workdays prior to the scheduled event. If you are hearing or speech impaired, please contact Departmental Purchasing by using the Florida Relay Service at (800) (TDD). IV. RESPONSE CONTENTS A. In response to this RFI, please describe your organization s ability to satisfy the following: Is your organization fully licensed by all federal and state authorities that regulate investment products? Is your organization able to provide a plan under IRC sections 401(a) or 457 that has received an approval letter from the IRS? Is your organization able to provide investment products that have competitive ratings from appropriate rating services, i.e., Best, Moody s, etc.? Does your organization maintain a clear background investigation from SEC, state insurance regulators and other appropriate licensing bodies? Is your organization able to provide a proven record of successfully providing this service for a minimum of five (5) years? Is your organization able to provide means by which employees can contact the provider for assistance and/or questions via a toll-free telephone line, the internet and/or in person upon request of a scheduled appointment? Is your organization able to provide documentation to the employees explaining the plan, i.e., its usage, how to invest, how to withdraw, etc.? Is your organization able to interface with existing software used by the Florida Department of Financial Services, Bureau of State Payrolls, which allows electronic deposit of the money that will be deducted from the employee through payroll deductions? Is your organization able to accept electronic submissions of payroll deductions processed through the Florida Department of Financial Services, Bureau of State Payrolls?

7 Provide a brief history of your organization s experience and success in providing this type of service. Does your organization have experience with Social Security alternative plans with at least 20 other employers having at least 100 participants each? From a plan implementation perspective, please respond with the positive and/or negative aspects of implementing this type of plan under each of the following: 1. Enrollment of OPS employees hired after the plan implementation date and offering it as an option to OPS employees currently employed with the State of Florida. 2. Enrollment of OPS employees hired after the plan implementation date and automatic transition of current OPS employees six months following the plan implementation date. 3. Enrollment of all OPS employees on a date certain with reasonable notice of the change to current OPS employees. Please explain what period of time would be considered reasonable and why. What resources are required of an employer to implement this type of plan? For example: 1. Number of full time positions needed to oversee the plan based on population served (ratio) 2. Other resources (based on historical information) such as payroll system requirements, etc. What would the transition timeline requirements be to implement the plan upon contract approval? What vendor and employer activities would occur during the transition period? For example: advising employees regarding types of services available, etc. What was/is the volume of service provided to previous/current customers? Do you provide this service in more than five states? indicate those states in which you provide this service? If yes, please What vendor resources would be used in providing this type of service: a. Staffing

8 b. Software c. Hardware d. Electronic or software interface or connectivity concerns. e. Internet access f. Communication of service g. Enrollment of participants What (if any) is a normal fee structure for this type of plan? How does your organization derive income from administering services like the one described in this RFI? How does your organization handle de minimis accounts? Does your organization produce such items as brochures, plan documents, etc., along with marketing information to prospective participants? Does your organization offer an address within the United States and have a toll-free telephone number for participant inquiries and claims administration? Please describe your organization s customer satisfaction rating and how is this determined? Describe reporting process to current customers.