In an email to participating RIAs in North Carolina’s Total Retirement Plan 403(b) Program on Sept. 16, the State Treasurer’s office announced that it is terminating its contract with TIAA for record-keeping services. It will instead negotiate with Prudential, which means that Prudential will soon be the single vendor for the state’s 401(k), 403(b) and 457 plans.
The Treasurer’s office claims “participants and school district leaders will notice enhanced customer service from economies of scale” and that Prudential “operates a fully-staffed call center with retirement education counselors who will become available to NC 403(b) Program participants and employers.” Further, “rather than fees calculated as a percentage of the balance on individual accounts, as is the case now with TIAA, Prudential will assess a single, annual fee per account, of $31.”
North Carolina began its single-provider, low-cost, low-service 403(b) plan in 2012, and it has failed to compete with other local 403(b) options. By the end of 2014, only 544 of the state’s 80,876 eligible public education employees were contributing. It remains to be seen whether the state plans to fix that problem with Prudential and its call center. Regardless, don’t be surprised if legislators elsewhere watching the Tarheel State’s consolidation initiative start adopting that $31 per participant fee as a new talking point. And a new benchmark.
NTSA will continue to monitor the program.
Ray Harmon, Esq is government affairs counsel to NTSA.
The Treasurer’s office claims “participants and school district leaders will notice enhanced customer service from economies of scale” and that Prudential “operates a fully-staffed call center with retirement education counselors who will become available to NC 403(b) Program participants and employers.” Further, “rather than fees calculated as a percentage of the balance on individual accounts, as is the case now with TIAA, Prudential will assess a single, annual fee per account, of $31.”
North Carolina began its single-provider, low-cost, low-service 403(b) plan in 2012, and it has failed to compete with other local 403(b) options. By the end of 2014, only 544 of the state’s 80,876 eligible public education employees were contributing. It remains to be seen whether the state plans to fix that problem with Prudential and its call center. Regardless, don’t be surprised if legislators elsewhere watching the Tarheel State’s consolidation initiative start adopting that $31 per participant fee as a new talking point. And a new benchmark.
NTSA will continue to monitor the program.
Ray Harmon, Esq is government affairs counsel to NTSA.
- Log in to post comments