Florida Officials Reconsider Forced Retirement Fund Transfers

February 26, 2003 (PLANSPONSOR.com) - City of Tallahassee, Florida officials are rethinking their proposal to force employees to move their retirement plan balances from most Prudential mutual funds to those offered by Fidelity Investments and ING.

The reconsideration move comes as employees and a police union expressed concerns about transferring their 401(k) and 457 plan money out of everything but a Prudential “general investment account,” according to a story in the Tallahassee Democrat. Some 40% of the city employee retirement funds are in that fund.

The effort was based on worries by City Commissioner Allan Katz that there might be a conflict of interest in keeping Prudential as both recordkeeper and investment manager. Prudential currently invests five of 10 mutual funds for city employees.

However, officials’ pledges that the new funds would be comparable to the existing Prudential offerings have not quieted worker concerns. “The consternation and concern among employees continues,” said Commissioner Debbie Lightsey. “Whatever was conveyed to employees did not allay their concerns and it is their money.”

The Florida Police Benevolent Association is also protesting the February 12 vote to make the investment fund changes.   “Forcing members to terminate these investments with Prudential (or cease investing with it) and transferring them will harm many of the unit employees we represent,” police union attorney G. “Hal” Johnson wrote in a letter to the city’s human resources office.