December 13, Addendum #1. Re: Deferred Compensation Plan Services RFP 05-X

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1 State of New Jersey DEPARTMENT OF THE TREASURY JAMES E. MCGREEVEY DIVISION OF PURCHASE AND PROPERTY JOHN E. MCCORMAC, CPA Governor P. O. BOX 230 State Treasurer TRENTON, NEW JERSEY December 13, 2004 Addendum #1 Re: Deferred Compensation Plan Services RFP 05-X Bid Proposal Due Date: January 4, 2005, 2:00 P.M. Dear Potential Bidders: This letter and its attachments form Addendum #1 to the Deferred Compensation Plan Services RFP, 05-X The addendum is composed of three (3) parts: Part I - Questions, Answers and Comments Part II - Changes to the RFP Part III - New Appendices to the RFP The Bid Proposal due date remains scheduled for January 4, 2005 at 2:00 P.M. Bidders should continue to check the Bidding Opportunities web page to check for additional addenda should any be issued between now and the bid due date. It is important for bidders to review and cross-reference this addendum to the RFP prior to preparing a bid. You should direct any additional questions or comments about the RFP to me at or at the web address below. Sincerely, Edward T. Cotterell Edward T. Cotterell Contract Procurement Specialist ed.cotterell@treas.state.nj.us New Jersey Is An Equal Opportunity Employer Printed on Recycled Paper and Recyclable

2 Part I Questions (Q), Answers (A) and Comments (C) in Response to the Questions Submitted # Page, 1 Page 1 Q. In reference to the shipping of the RFP, will the State's Purchase Bureau office be closed any days in late December or early January? A. Yes. The State holidays in that time period are December 24th and December 31st. The bid due date is January 4, Page 1 Q. Please confirm the RFP due date? Page 1 of the RFP Indicates January 1, 2004, Page 3 indicates February 1, 2005 and Page 15 indicates January 4, A. The correct bid due date is January 4, In Part II of this addendum, the 3 Page 3 Cover Sheet erroneous bid submission due dates are corrected. Q. On the Cover Sheet of the RFP (page 3), could you please provide information on what numbers are requested in number 16 and 17? 4 Page 3 Cover Sheet 5 Page 3 Cover Sheet 6 Page A. Lines 16 and 17 may be left blank for this RFP. These lines are geared toward commodity purchases and are not applicable to this RFP. Q. Where do I find my bidder reference number? A. Some firms are so large that they track their bids they submit to various RFPs with their own internally generated bid reference number. If your firm does that, please enter your number here. If not, you may leave that line blank. Q. Please confirm the estimated contract award date? A. The estimated contract award date is the target date for the contract to be awarded and effective. The dates noted at the top of page 3 are unofficial estimates based on the information available to the State at this time. In Part II of this RFP those dates shall be deleted. Q. How many State of New Jersey employees in the pension division who are dedicated to the deferred compensation program will be impacted or assigned new positions within the pension division as a result of the outsourcing of recordkeeping & administration as requested in the RFP? A. None. The proposal leaves in place the current investments and recordkeeping systems and all administrative functions that are incumbent upon the maintenance of those accounts. Additionally, staff will have the obligation to oversee the performance of the TPA and mediate on behalf of members if a complaint is received involving service delivery by the TPA. Staff will also coordinate the transfer of funds from the legacy investment options to the TPA s investment products upon the member's request. Staff will also continue to provide authorization for distributions from member accounts maintained by the TPA in the event of an approved emergency withdrawal, in-service withdrawal or termination of employment. 2

3 7 Page 9 and 13 8 Page Page Page Q. Please confirm the target plan implementation date? Page 13 indicates April 1, 2005 but page 9 indicates that the vendor selected will have 4 to 6 months to transition the program. A. There will be a 4 to 6 month transition period after contract award. The target implementation date on page 13 will be deleted and will be replaced with four (4) to six (6) months after contract award. See Part II of this Addendum. Q. What current services or processes are the State employees, or the plan administration team, dissatisfied with and would like to improve upon? A. The NJ State Employees Deferred Compensation Board is attempting to expand the services and investment options available to Plan participants. s 1.1 and 1.2 of the RFP disclose the deficiencies in the current service delivery model. Q. Are the Map Funds valued daily? A. Map funds and all other investment options offered by the contractor shall be valued at the frequency stated in the accompanying prospectus for that investment option. The State will assume all investment funds will have daily valuations unless another valuation schedule is proposed by the bidder and is disclosed in the proposal. Q. Are there departments or areas that have access to another defined contribution plan for their employees (i.e. a 403(b) for hospitals or universities)? A. Yes. Several groups of employees have access to IRC 403(b) products offered through the Alternate Benefit Program (ABP), the Additional Contributions Tax Sheltered Program (ACTS) and/or the Supplementary Annuity Collective Trust (SACT). Employees of the Department of Education have access to these programs. Also, certain employees of the Office of Student Assistance have access to these programs. Additionally, employees of the following state colleges and universities have access to ABP, ACTS and/or SACT 403(b) products: 1. Rutgers University 2. University of Medicine & Dentistry of NJ 3. New Jersey Institute of Technology 4. The College of New Jersey 5. Ramapo College of New Jersey 6. Rowan University 7. William Paterson University of New Jersey 8. Thomas Edison State College 9. Kean University 10. Montclair State University 11. Stockton State University of New Jersey 12. New Jersey City University 3

4 11 Page Page Q. How many employees are currently dedicated to the recordkeeping and administration functions of the deferred compensation plan? A. Recordkeeping and administrative functions are performed by the same staff charged with communication and education functions within the Division of Pensions and Benefits. Staff assignments are on an as needed basis with no staff person assigned exclusively to the recordkeeping and administration functions of the deferred compensation plan. However, historically, if the staffs work effort were converted into a full time equivalent number of employees, working a normal 7 hour day with breaks, the number needed for recordkeeping, administrative, communication and education functions would be approximately 5½ employees. Q. How many employees are currently dedicated to the communication & education functions of the deferred compensation plan? A. Communication and education functions are performed by the same staff charged with recordkeeping and administrative functions within the Division of Pensions and Benefits. Staff assignments are on an as needed basis with no staff person assigned exclusively to the recordkeeping and administration functions of the deferred compensation plan. However, historically, if the staffs work effort were converted into a full time equivalent number of employees, working a normal 7 hour day (with breaks), the number needed for recordkeeping, administrative, communication and education functions would be approximately 5½ employees. 4

5 13 Page and Page Page Q. 2) 1.2 Background: Would the NJSEDCP be willing to consider a flat dollar amount charged to participant s accounts to cover recordkeeping cost? A. No, as stated in 1.2, Background, the State s plan, including requirements crafted into the RFP would: 2)Retain recordkeeping and administration services from a third party providing technological and customer service features common in the industry. These services include daily valuation, automated transaction initiation and processing for participants, and improved communication and education capabilities through use of on-line tools. Asset fees charged on institutional or retail mutual funds offered through the third party would cover recordkeeping costs. Also, , Potential Contract Modifications, states, The fees proposed by bidders may only be asset-based charge. But this section goes on to state, However, bidders shall indicate in the bid proposal if the bidder would provide fee reductions if certain asset breakpoints are reached. Those asset break points are $500 million, $750 million, $1 billion, and $1.25 billion or more. These fee estimates shall not be considered as part of the price evaluation but as part of the technical evaluation. In addition, bidders may propose alternative cost proposal structures (e.g., a per-participant instead of an asset-based Additional Administrative Fee) or lower cost investment options. Full details on these alternatives should be provided. Therefore, though a flat dollar amount charged to member accounts to cover recordkeeping costs will not be considered as part of the initial cost evaluation to determine best price, it may be invoked as a Contract Modification if offered by the contractor as part of the response to However, bidders should not assume that such a proposed fee structure will be approved by the NJSEDCP board or the New Jersey Division of Investment. Bidders should be prepared to manage the contract in the manner and with the fee structure specified in the RFP. Q. Please clarify the State s expectations with regard to the following statement, Offer through a third party between one (1) and four (4) stable value funds. Does stable value include the opportunity to propose a General Account, Money Market Fund, etc.? A. The bidders are required to provide a stable value fund as Map Fund for the current Money Market Fund investment option. The stable value fund is defined as a separate or commingled account, not a general account (See ). The stable value fund, as a Map Fund for the current Money Market Fund investment option, is defined as a separate or commingled account, not a general account (See ). 15 Page Q. Please provide a copy of the plan documents and any amendments that have occurred. A. The Plan is governed by its enabling legislation (Ch. 39, P.L. 1978, effective June 19, 1978) which supplemented Title 52 of the New Jersey Revised Statutes. Attached to this Addendum as new Appendix 24 is a copy of the Statutes (N.J.S.A. 52: 18A-163 et. seq.). The New Jersey State Employees Deferred Compensation Plan Information Statement is added to the RFP as new Appendix 22 5

6 16 Page Page Page Page Q. How many people are currently servicing the plan in a call center/employee capacity? Administratively/employer capacity? Education capacity? A. Call center/employee services are performed by the same staff charged with administrative/employer support and education functions within the Division of Pensions and Benefits. Staff assignments are on an as needed basis with no staff person assigned exclusively to the call center/employee services, administrative/employer support or education functions of the deferred compensation plan. However, historically, if the staffs work effort were converted into a full time equivalent number of employees, working a normal 7 hour day with breaks, the number needed for call center/employee services, administrative/employer support or education would be approximately 5½ employees. Q. If possible, could you please provide statistics on the level of participant account balances based upon age and years of service with the State? A. Statistics based upon years of service are not maintained. Age based account balance information is contained in table Account Balance By Age Group, which is attached to this Addendum as new Appendix 19. Q. Is beneficiary data held in paper or on electronic media? A. Currently information from source documents is keyed into the record keeping system and then backed up on the Filenet imaging system. The original documents are then stored off-site. Q. Please confirm that the Plan Sponsor will provide demographic data that includes hire, re-hire, and separation dates. 20 Page and 3.17 A. Under the current operation, termination information is not being provided by the pay centers. However, as it may be possible to obtain this information it may be dependent upon the capabilities of the individual pay centers. The largest member group s payroll is services by the Office of Management and Budget s Centralized Payroll Office. That office is capable of providing demographic information on a periodic basis including hire and termination dates; rehires are treated as new hires in that system with the new hire date overlaying the old hire date. Q. The bid submission due date is January 4, 2005 with the target implementation date of April 1, If the expected implementation timeline is four to six months, is the target implementation date flexible? A. What is noted as the target implementation date is actually the target contract start date. April 1, 2004 is the target start date for the contract. The expected deferral cut over date, is expected to be four to six months thereafter. See 3.17 for more clarification. 6

7 21 Page Q. Is the TPA responsible for any coordination between call centers, automated IVR's or websites? A. The Plan will not provide the contractor's call center, automated IVR's or websites with access to account information maintained by the State. However, the contractor's call center must transfer calls to the NJSEDCP call center if questions relate to funds being held by NJSEDCP. Also, there must be a link to take visitors from the contractor's website to the State's website. 22 Page Q. May the TPA automate distributions through the TPA's Call Center, IVR and website? 23 Page A. No. The State wishes to continue the current distribution processes utilizing a paper form based system. Q. Please confirm the annual number of distributions and dollar amount of distributions as well as other cash outflows. 24 Page A. There were 27,593 distributions during fiscal year 2003 for a total of $58,415, Of these distributions there were: Installments: 26,310 Rollovers: 355 Service Credit Purchases: 192 Lump Sums: 736 Q. Please provide the number of calls annually to the Call Center and visits to the website. 25 Page A. The call center staff answered 21,277 calls during the year ended June 30, The Plan s Website recorded 29,811 visits during the year ended June 30, Q. The mailing address provided in the RFP is a P.O. Box which cannot accept the delivery of overnight or express mail packages. Can you please provide a street address that can be used to express mail packages to State s Purchase bureau? A. The delivery address is provided on page 15 of the RFP. Note, if you use the US postal service, you must provide the PO Box number, or the bid will not be delivered. 7

8 26 Page ) i) 27 Page 21, 3.0 And Page Page Page Item 3) 30 Page Item 4) Q. The Scope of Work states that Plan administrative services include necessary trustee/custodial services ; does the State currently have a Trustee arrangement? A. A trustee is currently performing services for the State with regard to the existing investment options. That relationship will continue into this contract period. However, the State is interested in consolidating Plan trust/custody services. As part of the bidder s response to the questions in , Potential Contract Modifications, the implications of the bidder offering consolidated trust/custody service for all plan assets, for both Frozen Account Assets and contractor provided investments, should be described, including but not limited to cost implications. Q. Have you considered the merits of consolidating the money market option into the stable value option to create a single more competitive cash option? A. The required investment services needed under this proposal ask the Contractor to make available an array of investment options. The Contractor is also asked to provide four (4) investment options that are similar to the four (4) investment options currently offered and referred to as the Map Funds. One of these Map Funds will be a Stable Value Fund which will be the depository for elective deferrals after the deferral cutover date for those funds previously directed to the Money Market Fund (frozen account) if the member does not choose to redirect that deferral elsewhere. All assets in frozen accounts will remain within the management control of the New Jersey Division of Investment and are not to be considered for consolidation into a single stable value option. Q. Under what circumstances would you consider more than one stable value option? A. Only one stable value option will be considered. Please see revised RFP section 1.2 in the second part of this addendum. Q. Will there be a single or separate trust and custody arrangement for both Plans and is the TPA bid to reflect both or just the new Plan trust/custody? A. A trustee is currently performing services for the State with regard to the existing investment options. That relationship will continue into this contract period. However, the State is interested in consolidating Plan trust/custody services. As part of the bidder s response to the questions in , Potential Contract Modifications, the implications of the bidder offering consolidated trust/custody service for all plan assets, for both Frozen Account Assets and contractor provided investments, should be described, including but not limited to cost implications. Q. Please confirm if contribution data is submitted via transmission, CD format and paper. A. Contribution data may be provided in all of these formats. The method will depend upon the capabilities of the individual pay centers. 8

9 31 Page Item 3) Q. Are fund assets held in omnibus accounts or registered under the name of the plan? A. Assets are currently registered under the name of the plan and shall continue to be registered in that manner. 32 Pg. 22, Page Page Page Q. How many employees are currently dedicated to the computer and systems related functions of the deferred compensation program? A. For software development and maintenance there are approximately two fulltime employees dedicated to the program within the Office of Information Technology (OIT). For operations and other related support services there are no statistics available to provide the requested information since resources are shared over the operations of all retirement programs administered by the Division of Pensions and Benefits. Q. Does the plan have any preferences in regard to the ideal staffing levels of the field representatives that will be assigned to the plan? There are 38 employer groups in the State s plan, could you please identify approximately how many individual worksites there are in the State s plan? A. No, the bidder is to determine the ideal staffing level to provide the required services under the contract. The State s Administrative, Judicial and Legislative branches operate from over 700 individual worksites. Over 500 of those worksites have fewer than 50 employees. Fewer than 40 worksites employ 500 or more individuals. Additionally, 37 state colleges, universities and agencies participate in the NJSEDCP with each maintaining at least one worksite, see Appendix 3 for a listing of those organizations. Q. What is your system readiness to accept a file (data transmission) that will affect frozen balance transfers? A. None. This functionality would need to be developed and would be accomplished following contract award and is contingent upon the requirements of the contractor. Any limitations or mandatory requirements of the bidder must be detailed within the bid proposal. Q. What are your current capabilities related to the transmission of data via a monthly file (i.e. file format, data content, etc)? A. None. This functionality would need to be developed and would be accomplished following contract award and is contingent upon the requirements of the contractor. Any limitations or mandatory requirements of the bidder must be detailed within the bid proposal. 9

10 36 Page Page 52 Q. Page 26, 3.2.3, Page 52, 5 Please clarify the conflicting statements with regard to the States determination of the appropriate number of enrollment staff and the number of individual meetings to be conducted. The Scope of Work indicates, The State has made no determination as to the appropriate number of enrollment staff or the number of group and individual meetings to be conducted. however, the Contract Management section regarding in-person education indicates, the State has made a determination as to the minimum number of appropriate enrollment staff and number of meetings to be conducted.. Has the State made a determination? 37 Pg Page Page A , item 5, contained a typographical error. Please refer to the revised text shown in the section Changes to the RFP in this document. Q. Will the State of New Jersey be providing space for a local office at 50 West State Street? If so, how much space can be made available? A. Space is available for one individual in the space utilized by the Division of Pensions and Benefits Client Services group. The area is located at 50 West State Street, Trenton, New Jersey, on the first floor of One State Street Square. The area is approximately 70 sq. ft. (11 x 6) and equipped with a telephone and computer with internet access, L shaped desk space with seating for two visitors, storage for supplies in two vertical file drawers and six feet (approximately 20 cubic feet) of horizontal overhead storage. No promotional materials shall be permitted to be displayed within this space without prior written approval from the contract manager and must be appropriate to the servicing of this contract. If the bidder believes additional space is required it should be so indicated in the bid proposal but the physical location of the additional space must be ADA accessible and within a ½ mile radius of the office at 50 West State Street. Any additional space must be secured at the bidder s expense without separate reimbursement by the State. Q. With regard to ongoing on-site staffing, what are the State s expectations? Based upon current service model does the State anticipate the need for a full-time dedicated resource on-site? A. Yes. It is anticipated that there will be a heavy volume of visitors to the Division to discuss the new products and services. Therefore, full-time staff will be needed into the future. However, the State is willing to re-evaluate these needs should it be seen that a full-time, on-site representative is not necessary, as stated in Q. Could you please provide statistics on the number of participants that use paper to make changes to their account (enrollment, allocation, deferral, hardship) versus participants that make changes via a customer service representative, voice response unit, or Web site? A. Currently all account activity is initiated with the use of a paper document. No activity is authorized via a customer service representative, voice response unit, or Web site. 10

11 40 Page Q. On page 29, the RFP indicates that the contractor shall contact and meet with all payroll offices and arrange the method the contractor will interact with each payroll office during the payroll period. Is it expected that the meetings will be onsite with each location or can teleconferences be conducted with the 37 payroll offices that are not part of the centralized payroll office? A. Meetings may be held onsite with each of the 38 payroll offices. Teleconferences are a reasonable alternative with the approval of the State and the individual payroll office, with the exception of the centralized payroll office. An onsite meeting is required with staff from centralized payroll. 41 Page Q. Will the Contractor be responsible for participant communication between the award date and the cutover date? (RFP 3.4.2, page 29). A. The contractor will be the primary source of information between the award date and the cutover date. Please refer to 3.1.4, Implementation Education And Participant Support Services, for more detailed information. 42 Page Q. Please clarify the process for participant transfers of the frozen account balance. Based upon the description it would appear to work in this manner. A participant requests a balance transfer on June 15th through the Contractor. The Contractor communicates this request and all others received in June to the State on or about July 1st. The State transfers the participant s frozen account balance to the Contractor on or about July 21st. (RFP 3.7.3, page 33) A. This is a correct timeline of the transaction process. 43 Page Q. What is the annual transactional volume? A. Statistics concerning Suspense Items And Error Correction are not maintained. 11

12 44 Page Q. Please clarify by example the reference to the suspense process in RFP 3.8.2, page 33. Is this is referring to errors made during enrollment or remittance? For example, a remittance error may be that an individual requests a deferral amount of $50 per pay and the payroll deducts $25 per pay, who is responsible for the lost earning on the $25 that should have been deducted? If the payroll office deducts $100 per pay instead of the $50, who is responsible for catching the error? How will the Contractor know the actual amount of intended deferral? A. This is referring to any administrative error, i.e. enrollment, deferral election change, investment election change, etc. In the example, if the administrative error was the result of a contractor error or delay, the contractor is responsible for the lost earnings. If the administrative error was the result of a payroll office error or delay, the payroll office is responsible for the lost earnings. The contractor will not be responsible to detect errors in payroll deferral other than those affecting annual maximum limitations. The contractor will maintain employee deferral election for each plan participant but is not responsible to detect errors in payroll deferral other than those affecting annual maximum limitations. 45 Page Q. Is the asset fee to be taken as a periodic transaction or calculated into a unitized price? 46 Page A. The asset fee shall be calculated into the unitized price. Q. Please explain the monthly asset fee reports for participants making catch-up contributions. (RFP 3.9.2, page 34) A is revised to correct this typographical error. See the attached Changes to the RFP. 47 Page Page Q. Can you provide a sample statement? A. Yes. It is attached as a PDF file entitled Member Statement. The form measures 13½ by 9¾ and folds into a self-mailing envelope that permits the insertion of up to two folded documents of an original size 8½ by 11. The member statement is added as new Appendix 18. Q. What is the average employee turnover over the past couple of years for the State of NJ? A. Average employee turnover is not available. 12

13 49 Page Page Page Page Page Page Page Q. Could you please define what electronic fund transfer means on page 36 paragraph five? A. The term "electronic fund transfer" means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account. Q. ON-LINE SYSTEM ACCESS: Can you please provide additional information on the type of software the NJSEDCP is looking to run in the contractor s computing environment? A. All NJSEDCP application software is to be provided by the contractor but will be accessed by the NJSEDCP staff through an internet browser (Microsoft Internet Explorer, version 6.0 or higher). Therefore, there is no need for the Contractor s software to be installed on NJSEDCP s computers. Q. The State allows eligible participants to purchase service credits, approximately how many purchases are requested annually? Please provide the total amount of assets transferred in 2003 and Can the State provide an estimate of anticipated future distributions? A. The State cannot provide estimates of anticipated future distributions. However, the total assets transferred for service purchases for the years noted are as follows: Calendar Year $1,085,650 Calendar Year 2004 (as of 11/19/04) - $2,473,640 Q. How will the purchase of service credits work? (RFP , page 37) A. The purchase of service credit in a governmental defined benefit pension plan will be processed by the contractor utilizing its available processes. The bidder must describe that process in its proposal. Included in that description should be any limitations imposed by that system or benefits that the New Jersey Division of Pensions and Benefits, as the State s principal administrator of governmental defined benefit pension plans, may realize. Q. Do you want the frozen account balance to appear on the new DC statement? A. No. The current recordkeeping system will continue to operate and produce quarterly statements. The requested services do not include the consolidation of this information for member statement purposes. Q. How many participants are invested in each of the existing investment options? A. As of September 30, 2004, 17,672 of the Plan s membership were invested in the Bond Fund; 27,696 were invested in the Equity Fund; 14,569 were invested in the Money Market Fund; 18,455 were invested in the Small Cap Equity Fund. Q. Do you have a preference towards mutual funds or institutionally designed vehicles? A. No preference. 13

14 56 Pages 38 and 40 s and Q. The RFP describes the Small Cap Equity Map Fund and describes the other variable investment offering criteria. Are bidders required to pick investments that meet all of these criteria, or can we provide an investment option that is slightly outside of the listed criteria? Is the maximum market capitalization fixed at a specific amount or a range and, if so, what is that amount or range? A. Bidders are required to provide investment options that meet all stated criteria. Also, the maximum market capitalization is fixed for the bidding process. After contract award, as part of the Board's ongoing oversight, there may be a need to modify investment offerings as described in , Final Selection of Funds by the NJSEDCP, of the RFP is also modified. Please refer to the "Changes To RFP" section of this addendum. 57 Page 39, Page Page Q. Would the State like the vendor selected to administer custom designed lifestyle/lifecycle allocation fund of funds or would the State prefer prepackaged asset allocation funds. A. The State does not have a preference toward either alternative. The goal would be to provide the product that would meet the employees retirement goals in the most cost effective way possible without sacrificing investment returns. Q. Would you consider model portfolios based upon age and risk to retirement? A. Yes, if the model portfolio based upon age and risk to retirement meets the requirements for Lifecycle or Lifestyle funds as described in the RFP , Variable Investment Offering Array, asks for an investment array that includes risk-based or target date asset allocation funds (lifecycle or lifestyle funds). 2.2 includes a definition of Lifecycle and Lifestyle funds. Q. IMPLEMENTATION EDUCATION AND PARTICIPANT SERVICES: How many on-site locations will require coverage during the implementation and ongoing service of the plan? A. The location of any on-site meeting is at the discretion of the contractor and must be described in the proposal. The state expects that the contractor will provide on-site services at each of the worksites maintained by the State of New Jersey. Additional information concerning worksites is contained in 3.2.3, Educational Approach, and Appendix 8, Total Eligible Employees By Geographic Region. The State s Administrative, Judicial and Legislative branches operate from over 700 individual worksites. Over 500 of those worksites have fewer than 50 employees. Fewer than 40 worksites employ 500 or more individuals. Additionally, 37 state colleges, universities and agencies participate in the NJSEDCP with each maintaining at least one worksite, see Appendix 3 for a listing of those organizations. 14

15 60 Page Page Q. Please clarify the State s process for evaluating proposed investments and services. (RFP section , page 41) A. The answer to this question will appear in a follow-up addendum. Check the web site for this addendum. Q. What restrictions, if any, exist with respect to transfers among competing fixed income funds or any brokerage window options( for example, equity washes)? 62 Page Page A. The Plan maintains no brokerage window. The Plan maintains no fixed income options other than what will be offered through the contractor. Q. While the TPA is to report on and monitor contribution and annual limits, who determines if an excess deferral distribution is required and who calculates the amount? A. The TPA is to report on and monitor contribution and annual limits. Incumbent upon these activities, the TPA is expected to calculate the amount and determine if an excess deferral distribution is required. The TPA must also explain the process for making the excess deferral distribution. Q. With respect to the RMD, who compiles the information between the TPA new plan and the Frozen plan? 64 Page A. Since there will be dual administration of accounts, with the State administering the Frozen Account Balances and the contractor administering the new accounts, each will be performing RMD functions upon the assets under their administration. By adhering to the RMD for each account balance the member with funds in both a Frozen Account and an account with the contractor is able to satisfy the RMD requirements by requesting distribution from each account separately. Q. Is the TPA responsible for consolidation of any information from the two plans? (i.e., statements, annual statement of benefits or website) 65 Page A. No. The TPA will only provide participant account and annual information on funds for which it manages. Q. Is there any TPA responsibility to consolidate information at the Plan Level for the Plan Sponsor? 66 Page A. No. Information will only be required from the TPA related to accounts and funds managed by the TPA. This information will then be used to compile financial reports and statements for the Plan. Q. How many rehires are processed per year? A. Rehire information is not available. 15

16 67 Page Q. What kinds of restrictions are in place in the current plan to handle market timers? 68 Page A. None. However, under the current plan administration, participants can only transfer balances as of the last day of the calendar month. Investment election changes become effective on the 1st pay date in the month following the month in which the request is received. The State realizes these restrictions will no longer be in place for accounts managed by the TPA and other restrictions may be necessary to prohibit this activity. Q. Is the TPA is responsible for following up with payroll providers/centers if payrolls are late or not funded appropriately. 69 Pg Page #1 71 Page Page #2 A. The contractor is not required to follow-up with payroll providers/centers if payroll data is late but the bidder should describe any services it intends to provide in this regard. The contractor is required to follow-up with the payroll providers/centers if payroll deferrals are not funded properly. As with other suspense and error correction items (see 3.8.2), these corrections must be reported immediately to the payroll providers/centers and resolved within (3) business days or less. Q. 1) AFFIRMATIVE ACTION: With Regards to the Affirmative Action requirement in the RFP, will the AFFIRMATIVE ACTION EMPLOYEE INFORMATION REPORT become public information? A. All information submitted in a bid proposal is public information. Q. Question asks us to list "all implementation milestones scheduled for the last 12 months." Is this meant to be a listing all clients with a live date in the last 12 months? A. The actual statement is, List all implementation milestones scheduled for the next 12 months and the scheduled completion dates. The purpose of the question is to determine what potential conflicting projects will be competing for the bidder s resources. Q. Who will perform consolidated regulatory monitoring/reporting? A. The State is not aware of any required consolidated regulatory monitoring. Q. Who will be responsible for maintaining the plan document(s)? A. Ultimate responsibility rests with the State as plan sponsor. However, as part of the contractor s requirements for providing communication materials, it is expected that the contractor will develop a revised plan document and maintain that document for the duration of the contract. Please refer to s 3.3.1, #43 and of the RFP for additional information. 16

17 73 Page Page #9, bullet 6 75 Page #19 76 Page #31 77 Page Page Page Q. May we receive the questionnaire and required forms in Word format? A. No. Q. What languages other than Spanish are of interest to the Board? A. None required, but additional services may be given additional consideration during the evaluation process. Q. Please describe any non-english product/services that the State requires. A. None required but additional services may be given additional consideration during the evaluation process. Q. Would the State be open to automating the distributions where applicable? A. Not required, but additional services may be given additional consideration during the evaluation process. Q. Will the [bidder s] contract be the sole funding vehicle for the Stable Value option? If yes, skip to question number 12. A. Yes. Q. Will existing contracts be discontinued before conversion? If yes, please answer the following questions: Is there a market value adjustment or surrender charge? What is the dollar amount of the adjustment or surrender charge? Is the adjustment amount fixed or does it vary by market interest rates? A. N/A. The Plan does not offer a stable value fund. There are no existing contracts. Q. What rate/return is currently being credited to the stable value fund? A. N/A. The Plan does not offer a stable value fund. 17

18 80 Page Q. The RFP states: "Indicate the price implications if, at some time in the three years after the contract effective date, the State transfers all plan member level recordkeeping for the four internally managed investment products remaining in the State-operated 457(b) plan accounts to the contractor to manage." Would these four internally managed investment products continue to be valued monthly? Can you give us more information about how these funds are processed? A. Answers to these specific questions are not available at this time. Items addressed in reflect potential contract modifications that may not be implemented during the term of the contract. Bidders are to provide responses to these scenario change examples using the assumptions they feel would be appropriate for each situation. Assumptions made by the bidder should be disclosed in the response to section Page Q. The RFP states: "Indicate the price implications if, at some time in the three years after the contract effective date, the State transferred 100% of plan assets remaining in the State-operated 457(b) plan accounts to the contractor." Would these assets then be invested in the Map Funds? If not where would they be invested? Would the election be on a participant basis? Or on a fund-by-fund basis? A. Any transfer of funds from Frozen Accounts to the contractor would first be at the direction of the participant. Lacking participant direction, the transfer would be to the related Map Fund administered by the contractor. 82 Page Page Page Q. What percentage of a plan participant s total assets can be allocated to a Self- Directed Brokerage Account? A. The Plan maintains no Self-Directed Brokerage Account. There are no immediate plans to offer a Self-Directed Brokerage Account. As stated in section , Potential Contract Modifications (page 70-71), it is possible that over the time of this contract that the NJSEDCP may request that the awarded contractor perform work that is not specified in the Scope of Work. It is possible a Self- Directed Brokerage Account, or brokerage window, may be added under this provision of the contract. Q. Are all plan assets participant directed? A. Yes. Q. If all performance standards are met by the Contractor during the contract term would it be possible to extend the contract term for an additional three years as opposed to three additional one-year periods? (RFP 5.5, page 80) A. No. The extension times will remain three additional one year periods. 18

19 85 Page Page Page Q. On page 86 and 87 of the RFP and page 2 of Appendix 1 ( 2.3 in appendix 1 and Insurance-Professional Liability Insurance in the RFP) the insurance requirements are outlined. Are we required to submit these insurance policies with our RFP response or do we only have to secure these policies after the contract has been awarded? A. The awarded contractor must obtain the required insurance and provide certificates of insurance after receipt of a Notice of Intent to Award a contract. Failure to produce a certificate of insurance may lead to rescission of the contract award. See 6.6 Q. Under the Evaluation Criteria : How will each section of the evaluation criteria be weighted and scored? A. The final weighting and scoring criteria have not been determined. Prior to the submission of bids, the Evaluation Committee will meet and determine how each of the evaluation criteria noted in this section will be weighted and scored. Point scores are not the ultimate determination for contract award. The final award determination shall be in conformance with 6.0 of the RFP. Q. What is the timing of some of the key milestones of the decision making process? A. Here is a rough timeline. 1. Bid Opening - January 4, 2005, 2:00 PM 2. Bids rejected for automatic bid rejection items. 2-3 days after bid opening. 3. Committee evaluation of bids through approval by the Director of the Division of Purchase and Property (timing unknown months or more) 4. Issuance of Notice of Intent to Award (all bidders notified of intent to award). 5. End of protest period (10 business days after receipt of the Notice of Intent to Award). Awardee submits insurance and other final submissions concurrently with the protest period. 6. Resolution of protests (timing unknown) 7. Final contract award - Director of Division of Purchase and Property or designee signs Notice of Acceptance. 19

20 88 Page 92 Attachment 1 Q. On Attachment 1 (Ownership Disclosure Form, page 92), could you please provide clarification on the group of officers we should list? Should we provide the list of officers of the bidding entity, or should we provide the list of officers of our parent company? The bidding entity is 100% owned by another entity, which is 100% owned by a third entity. A. The officers listed must be from the firm that is the bidder. On this form or attached to it should be a disclosure of all the firms that own 10% or more of the bidder. In response to your question, the bidding entity is ultimately owned by the third entity. The line of ownership must be disclosed. For the ultimate owner, the bidder must disclose all owners that have 10% or more interest in the parent. If no one person or entity owns 10% or more of the ultimate parent, the bidder must say "None" or some equivalent statement to show that no one person owns 10% or more of the ultimate parent. 89 Q. Pages contain attachment 4 (Subcontractor set aside forms). Page 50 ( Set Aside Contracts) states that they are not applicable to this procurement. Can you please let me know if attachment 4 is required to be submitted as part of this RFP? If the subcontractor set aside forms are required, do we have to use Subcontractors in order to satisfy procurement? If not, will we be penalized if we check box 2 on page 99 indicating that at this time we do not intend to engage subcontractors to provide any services? Also, if we check box 2 on page 99, am I right to assume that we do not have to return page 100? A. The contract itself is not set aside for small businesses. However, all bidders must disclose all subcontractors that it intends to use in conjunction with this RFP and disclose if any of those subcontractors are registered with the New Jersey Commerce and Economic Growth Commission as a small business. For example, if your firm is providing all services internally, you just submit page 99 indicating that your firm will not utilize subcontractors. If your firm intends to utilize subcontractors, then complete pages 99 and 100 and indicate if any subcontractor is a small business in New Jersey. There is no penalty for not proposing small business subcontractors for this RFP and contract. 90 Page 172 Attachment 7 91 Page 186 Attachment 9 Q. Is Attachment 7 (Reciprocity Form) only required to be submitted if the out-of- State bidder s State or locality maintains a preferential practice for their bidders? A. Yes. As stated in Attachment 7. Q. We have printed off a copy of our New Jersey Business Registration by accessing the Web site provided on page 186 of the RFP. Does submitting this printed copy satisfy this requirement? A. Yes. 20

21 92 Appendix 4 Q. How many eligible and active plan participants are there? What proportion of the Stable Value fund is controlled by retired and terminated employees? If fund level information is not available, what proportion of the total Plan is controlled by these participants? 93 Appendix 5 A. The number of eligible employees is 140,927 and is shown in Appendix 8, Total Eligible Employees By Geographic Region. This information was gathered using available payroll information for periods from December 2003 through June 2004 and should be treated as an estimate; fluctuations from this amount should be expected. Active plan participant counts are shown in Appendix 4, Number Of Participants By NJSEDCP Employer Group. As of July 31, 2004, there were 27,581 participants actively deferring compensation into the Plan; 3,743 were participating in the Plan but had suspended making deferrals. The Plan does not offer a stable value fund and there are no statistics available which identify the assets controlled by retired and terminated employees. Q. Please detail the current contribution allocation amounts by individual investment option? A. See table Asset Allocation QNA. This is added to the RFP as new Appendix Appendix 5 Q. Projected first year net cash flow to the contract: Amount and date of lump sums or rollovers: Amount of net recurring cash flow: A. In the 12 months ending on June 30, 2004, employees contributed approximately $129,000,000 to the NJSEDCP. The State is not making any guarantee, estimate or projection as to the net or gross amount of any cash flows into or out of accounts managed by the contractor. Historical contribution information is contained in Appendix 5, Financial & Transaction Information. Historical contribution and withdrawal information is contained in the table Net Plan Cash Flows. 21

22 95 Appendix 6 96 Appendix 7 Q. Could you please detail the amount of information the State will provide on the frozen asset report? Will the report contain information on total assets along with the investment percentage in each of the four frozen investment options? A. The State is able to provide any information it currently maintains within the electronic member record. Available information is shown in the Deferred Compensation System Data Dictionary, Appendix 6. The State will provide to the contractor any information contained within the electronic member record which is deemed necessary for the contractor to provide the required services under the contract. At a minimum the State will provide the following information for each member: 1. Member Name 2. Member Address 3. Member SSN 4. Member Date Of Birth 5. Employment Status Flag 6. Pension System Flag (to determine the members DB pension system and the individual s normal retirement age for catch-up eligibility) 7. Member Investment Percentage Allocation (for each of the four frozen investment options) 8. Member Deferral Percentage Election 9. Member Year-To-Date Deferral Amount 10. Member Catch-Up Amount Available (as of the end of the previous fiscal year) 11. Catch-Up Indicator Flag (to identify those members utilizing catch-up currently or who have utilized it in the past and are prohibited from future use)) Catch-Up Periods Used (to indicate the period of time catch-up has been used) Q. In Appendix 7, the form titled New Jersey State Employees Deferred Compensation Plan, Paragraph 15 states, "I understand I am responsible to advise the Division of Pension's Deferred Compensation of my separation of service and fill out an irrevocable request for distribution within two full calendar months." The Economic Growth and Tax Reconciliation and Recovery Act of 2001 (EGTRAA), provided participants in a 457 plan with the flexibility to defer this decision and change this decision at the participant's discretion. Is it the intent of the State to give its participants the same level of flexibility when making a distribution decision? A. Appendix 7 shows image samples for a member. The image is from a form in use during the 1980 s. The Plan has adopted rules that permit the member terminating employment to defer payment to the future. Attached is a copy of Fact Sheet # 7, New Jersey State Employees Deferred Compensation Plan Distribution Options, and the New Jersey State Employees Deferred Compensation Plan Information Statement for more details. Fact sheet # 7 is added as new Appendix #