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PERS moves to implement Tier 5; board approves Empower as initial record-keeper pending contract negotiations
Summary
PERS staff outlined Tier 5 implementation tasks and recommended Empower as the initial third-party administrator/record keeper for the new hybrid plan for hires after the Tier 5 effective date. Trustees approved the recommendation, subject to contract negotiations and standard cancellation provisions.
PERS staff briefed trustees on implementation steps for the recently enacted Tier 5 hybrid plan for new employees and recommended Empower be selected as the initial third-party administrator and record-keeper. Trustees approved the recommendation by voice vote.
The executive staff said several implementation tasks remain, including regulation updates, creation of a plan document for the defined-contribution component, and selection of the investment lineup and adviser network. Staff recommended Empower as the initial vendor because it is a large provider with prior experience administering similar hybrid arrangements, it already has relationships with many employers who will participate, and it can scale a regional adviser network quickly.
Staff asked the board to authorize selecting Empower subject to successful contract negotiations and recommended a multi-year term (staff suggested three to five years with customary cancellation provisions). Trustees asked questions about procurement norms and whether an RFP process should be required; staff said the scale and timeline would make a standard lengthy procurement more difficult and noted legal procurement exemptions that typically apply to the board’s fiduciary functions.
A trustee moved to approve staff’s recommendation and the motion was seconded. The board voted in favor by voice vote. Staff said negotiated contract terms and the procedural details would be brought back to the board for final approval and that work to implement Tier 5 would continue with regulatory, legal and communications tasks on the near-term schedule.
