McKinney committee recommends Voya as sole 457 deferred-compensation provider, cites large fee savings

A committee advising the City of McKinney recommended selecting Voya as the city’s sole 457 deferred-compensation plan provider, citing lower fees and improved participant tools, HR Director Jim Parrish said during an employee meeting.

The recommendation follows a consultant-led review and a February request for proposals that compared fees, fund performance and participant technology across multiple vendors. Parrish and committee members said the review found current fees charged through the two incumbent providers — MissionSquare and Nationwide — were substantially higher than competing offers.

The committee’s report and presentations, provided to city staff, estimated current combined fees of about $225,000 a year under the two-provider arrangement and projected annual fees near $12,000 if the program is consolidated with a single provider. “We go from $225,000 to $12,000 per year in savings,” said Jim Parrish, HR director. Parrish said those savings are paid from employee contributions and therefore would increase participants’ net investment returns.

Why it matters: lower administrative fees reduce the drag on individual retirement balances because fees are deducted from participant accounts before returns are reported. Committee members also reported concerns about the performance of several proprietary funds on the current plan menu and said consolidating with a single administrator would allow a more actively managed fund menu and clearer performance monitoring.

What the committee did: The city hired a consultant named Mariner to review the city’s 457 arrangements and to help form an 11-member oversight committee. The committee reviewed responses to an RFP, interviewed four finalists and evaluated fund menus, fees, customer service and participant technology. Assistant City Manager Steve Chelten, who served on the committee, said the finalist firms’ pricing was competitive when granted full program management: “All of them were within $1,200 on what the fees would drop to if they solely managed our program,” Chelten said, explaining why cost alone did not make the recommendation.

Why Voya: Committee members and meeting speakers said Voya stood out for participant experience, technology and customer service. Chief Macri, who chaired the committee, said Voya’s participant website aggregates outside balances such as TMRS and Social Security in one view, which helps employees plan for retirement: “It also takes into account some of your outside balances like TMRS and Social Security and it puts it all in one spot on the website,” he said.

Participant options and timing: Officials said the recommended contract would keep a self-directed investment option for participants who want to manage assets outside the standard fund menu; those accounts carry an additional fee based on the account balance. Charles Schwab was mentioned as an existing self-directed custodian that would facilitate movement of self-directed accounts to the new arrangement.

Process and next steps: The committee’s recommendation will be delivered to the city manager, who will forward a recommendation to the City Council. Parrish said council consideration is scheduled for Sept. 2; if council approves, transition mapping would begin in October, with fund mapping through November and an anticipated completion in December. Officials said Voya’s transition teams would contact employees once accounts are established and that further communications and training would follow.

What was not decided: The council had not taken formal action at the time of the meeting. No final contract was in place and no council vote result was reported during the session.

Meeting context: Committee members emphasized the work was intended to balance cost and quality; the RFP attracted multiple respondents and the oversight process included a consultant review, committee deliberations and finalist interviews. Parrish said the city does not contribute employer dollars to the 457 plans; fees are charged against employee account balances.

Contacts and follow-up: Officials said Human Resources and the benefits team will provide additional information to employees if the council approves the recommended change.