CITY OF SAN JOSE DEFERRED COMPENSATION PROGRAM CHANGES

1
CITY OF SAN JOSEDEFERRED COMPENSATION PROGRAM
CHANGES

• Jay Castellano
• Human Resources
• [phone]
• jay.castellano_at_sanjoseca.gov

2
GOOD NEWS!

• ING has been selected as the sole provider for
  the Deferred Compensation Plan (457 and PTC), and
  virtually all plan participants stand to make
  more money! Its what participants want to gain
  from the Deferred Compensation Plan!

3
WHAT ARE WE TALKING ABOUT?

• Deferred Comp is the employees 500 million
  supplement to our pension plan
• 7,500 participants are in the voluntary plan,
  including active employees, former employees and
  retirees
• 3,000 participants are in the PTC Plan
• Decision-maker is the DCAC, consisting of 7
  employee participants
• Though appointed by the Council (5) and CM (2),
  DCAC members have undivided fiduciary
  responsibility to plan participants

4
WHAT ARE THE NEW BENEFITS?

• A superior stable value investment option with a
  guaranteed fixed account rate of 5.80 through
  December 2007. Thats 1.3 greater than todays
  best return.
• A new menu of best-of-class investment options
  covering the full spectrum of asset classes
• A variety of ongoing investment and retirement
  planning seminars

5
WHAT ARE THE NEW BENEFITS?

• A new local ING office to enhance customer
  service
• Customized materials branded with the City logo
  and graphics
• On-line investment advice at no added fee through
  Morningstar Advice OnlineTM
• Customized education materials including an
  enhanced custom Plan web site

6
WHAT ARE THE CHANGES?

• ICMA-Retirement Corporations investment options
  will no longer be available after September 29
• INGs new best-of-class investment line-up will
  be available on October 9
• Number of investment options will change from 55
  to 30, and all asset classes will be represented
  in a way that aligns with the Investment Policy

7
WHAT ARE THE CHANGES?

• INGs new stable value option (Stabilizer Fund)
  will be SJ-specific
• New Life-cycle funds
• New Social responsibility fund
• Managed accounts coming Q1 2007

8
WHY ING?

• Other finalists ICMA-RC and Great West
  Retirement Services
• INGs stable value option is superior
• INGs mutual fund line-up is superior
• INGs strategy for maximizing participation and
  ensuring sound investment practices was superior
  (allocation and diversification)

9
PARTICIPANTS LIKELY QUESTIONS

• Arent two providers better than one?
• Why are INGs investments changing?
• Arent 55 investment options better than 30?
• Will I lose any money in the transition?
• What will the transition look like, and what will
  I need to do?

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WHATS NEXT?

• July Participant letter w/QA
• July/Aug Brown bag on-site sessions by
  staff/consultants
• Aug/Sept Brown bag on-site sessions by ING
  investment decisions by participants
• Sept 29-Oct 6 Black-out period
• October 6 Investments out of the market
• October 9 Go-live with ING

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• QUESTIONS?