LOS ANGELES — The Los Angeles City Council on Sept. 14 voted to investigate the hiring of Nationwide Retirement Solutions Inc. by the $1.8 billion City of Los Angeles Deferred Compensation Plan.
The council sent the issue to its personnel committee, which has scheduled a hearing for Sept. 29. The full council is expected to discuss the results of the hearing Oct. 5.
The move follows an outcry over the vote by the plan's board of trustees that replaced Great-West Retirement Services despite the recommendation of the plan's staff and investment consultant to retain the firm. Great-West's contract is due to expire Dec. 31.
The plan's consultant, Mercer Investment Consulting, Richmond, Va., and staff recommended Great-West over Nationwide, which was selected in a 4-2 vote of the board Aug. 17.
Plan officials have received more than 1,000 messages from active and retired plan participants asking that the board change its decision and rehire Los Angeles-based Great-West, according to Steven Montagna, senior personnel analyst for the plan. Most of those participants, along with the two board members who opposed Nationwide's hiring, are most concerned about the Columbus, Ohio-based firm's fees, which are 25% higher than Great-West's, according to reports of the numbers submitted in the firm's bids. All fees are paid by plan participants.
Great-West, which had been administrator since 1999, actually proposed making a small cut in its fees, according to reports about its proposal.
Nationwide officials, in a statement, said the firm was hired "on the basis of our superior education and service model."