Commissioners not ready to put retirement plan out for bid

Jan. 29--Members of the Whitfield County Board of Commissioners say they will put the management of the county's defined contribution retirement plan for county workers out for bid. Just not this year.

At a board work session Wednesday to discuss plans to close the county's pension system to new employees and place them into a defined contribution system similar to a 401(k), Dalton-based representatives of VALIC asked commissioners to put management of the new system out for bid.

"We think it would be best for county employees and best for county taxpayers to have some competition," said Randy Russell, a senior financial adviser for VALIC, a Texas-based insurance company that specializes in retirement plans.

Locally, VALIC manages defined contribution plans for a number of governments and not-for-profit organizations such as the city of Dalton, Dalton Utilities, Dalton Public Schools, Whitfield County Schools and Hamilton Health Care System.

Board of Commissioners Chairman Mike Babb said VALIC isn't the only company to request the plan be put out for bid, but he said because it is a services contract commissioners are not legally required to put it out for bid and they plan to allow GEBCorp, a company owned by the Association of County Commissioners of Georgia, to manage the plan. GEBCorp manages the county's pension plan.

"We have talked about this long enough," Babb said. "We want to move on this now. It's a matter of timing. It's also a matter of comfort. We are happy with what (GEBCorp) has done for us on the (pension) side. Our people are used to working with them. Now, having said that, after a year or two, after everyone is comfortable with the switch, I believe it is likely that commissioners will (put the plan out for bid). And we have told them (GEBCorp) to expect that."

Commissioners say they want to close the pension plan at the end of this month and place employees hired on Feb. 1 and later into the defined contribution plan.

Commissioner Barry Robbins said the concerns raised by Russell are valid.

"We want to make this change now," he said. "But after we have time to make the change and make sure everyone is used to it, I do think we will put it out for a request for proposals."

Commissioner Roger Crossen said commissioners have been discussing this change for several years and now want to make the switch.

"But somewhere down the road, after a year or two, yes, we will have to put it out for bid. That would be the best thing to do," he said.

The contract with GEBCorp is for one year and can be ended by commissioners with 120 days notice. It calls for GEBCorp to receive management fees from each employee in the plan based on the amount in the plan and the amount in the employee's account. For instance, an employee in a plan with less than $1 million in total assets would pay $200 a year for the first $8,000 he puts in, $175 for the next $5,000, $25 for the next $15,000 and nothing after accumulating $25,000 in the plan.

Russell said he was not happy with the commissioners' promise to put the plan out for bid in the future.

"This sets a bad precedent. I think once you get into the habit of doing something, in this case not putting things out for a proposal, it's easy to stay in that habit," he said.

Babb says he expects to call a special meeting on Monday at 6 p.m. for commissioners to vote on closing the pension plan and creating the defined contribution plan.

The proposed defined contribution plan would require employees to put a minimum of 2 percent of their pay into the plan. The county would match that 2 percent at 100 percent. It would match everything above that at 50 percent up to a maximum of another 2 percent of the employee's pay. That means an employee who puts at least 6 percent of his income into the plan would get a match equaling 4 percent of his income.

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