Florida Chooses More Choice – Again

August 17, 2001 (PLANSPONSOR.com) - The Florida State Board of Administration has reopened the bidding for its new defined-contribution pension plan, just a week after having cut the list down to five finalists.

Earlier this week the Florida State Board invited the original 16 respondents to its manager search to clarify and/or amplify their responses following a vote to include more “choice” in the bundled lineup. That decision followed a threatened legal challenge from Valic, Horace Mann and Sun America, providers that failed to make the cut to the short-list of five.

High Stakes

At stake is access to the nation’s fourth largest public pension fund as it offers some 600,000 public employees the option of transferring from their traditional pension plan to a defined contribution arrangement, which it calls PEORP, for Public Employee Optional Retirement Plan.

While transition to the new program will be phased, and participants will have the option to change their mind, consultants have estimated that some $13 billion will eventually transition to the new participant-directed arrangement.

Best of Both Worlds

The Florida plan will offer choices of both bundled or unbundled arrangements. The unbundled roster was chosen earlier this year, including Citistreet as recordkeeper and education provider, with Ernst & Young offering face-to-face employee seminars and Financial Engines offering online investment advice (see Sunshine State Picks Financial Engines Forecast ). Each of the selected bundled providers will offer up to nine investment options.

Since the announcement, the three firms threatening a challenge have withdrawn their notices. A new selection timetable is expected by mid-next week.

The new responses will be re-scored by the state’s board of trustees, which include Governor Jeb Bush, Insurance Commissioner and Treasurer Tom Gallagher, and Comptroller Robert Milligan.

The five finalists initially chosen were: Fidelity, Prudential, ING-Aetna, Nationwide, and TIAA-CREF.