The Montgomery Advertiser reports that as of December 14,
the state personnel board will switch the plan from Nationwide Financial
Services Corp. to Great-West Retirement Services. Nationwide has been the
provider for the $380-million plan for 30 years.
Last year, the Alabama Securities Commission reported that its probe into “endorsement fee” payments by Nationwide to the ASEA and Public Employees Benefits Corporation (PEBCO), the union’s for-profit subsidiary, found the payments began in 2001 and reduced the amount of interest paid on the fixed option of the plan by 20 basis points (see Ala. Attorney General Takes Over 457 Plan Fee Probe).
“The funds paid to
ASEA/PEBCO do not appear to be justified, and are in fact mostly profits to the
association. It is also certain that it is not disclosed to state employees who
participate in the plan that funds they believe are going into a retirement account
are being used to subsidize the ASEA,” the report said.
The fees totaled more than $11 million, according to the
Montgomery Advertiser. State Personnel Director Jackie Graham said the switch will
be advantageous to employees, providing increased transparency, more stability,
and a better fixed rate of return option.