Posted below is a draft copy of Vanderburgh County Commissioners of March 22, 2016 provided to the local media by county employee Linda Freeman concerning the transfer of the Vanderburgh County employees “Retirement Assets” funds. Please take note that the attached minutes provided to the local media by Linda Freeman are NOT OFFICIAL but are in DRAFT form.

President Ungethiem: The last item on the agenda items is Voya Financial. There are four documents that have been, two have been revised and two are new with the Voya contract that was signed back in November, I think, of last year. Mike, is Mike here?
Commissioner Kiefer: Mike Quigley.

President Ungethiem: Mike, do you, would you come to the podium and explain to us what these documents are? State your name.

Mike Quigley: Mike Quigley with Voya Financial.

William Kieffer: William Kieffer with Wells Fargo Advisors.

President Ungethiem: Okay, my understanding is that two of these are just revisions of documents that we already signed.

Mike Quigley: Yes, sir.

President Ungethiem: There was some inconsistencies with the documents that we had to clear up. The other two are additional documents. Can you explain the other two?

Mike Quigley: Well, one is, for no additional cost, to be covered through the Voya Institutional Trust Service. So, instead of the Commissioners being the Trustees of the plan, the Directed Trustee will be Voya Institutional. So, it’s just an additional form of protection for the program. Then, the other document just has to do, in terms of the revisions, within the process of working through your prior provider, Nationwide, we found that there were old life insurance policies that were in force with some of the participants of the program. So, of course, it was your intent for us to continue those coverages. So, we needed to change the documents to reflect that we’re going to do so moving forward.

President Ungethiem: Okay. Any other questions?

Joe Harrison, Jr.: When does it start?

President Ungethiem: Yeah, that’s a good question. What is the timing on this? When does this change over occur? When does the transition period occur?

Mike Quigley: We have a draft communication out to the participants, the draft should be completed the end of this week. So, we should see communications to every participant’s home, let’s say the end of March, maybe spilling over into the first week of April. We’re going to have educational meetings, and within this communication it will relay this information to the participants, we’ll have educational meetings spearheaded by Bill Kieffer and his team at Wells Fargo Advisors on April 13th and on April 14th. The plan is for Nationwide, where the retirement plan assets are currently at, they’ll be liquidated on May 2nd. We plan, the plan is for the plan to go live with Voya Financial on or around May 11th, but, again, within those participant communications we’ll have all those dates laid out for the participants.

President Ungethiem: Okay, so mailings go out sometime this week or next?

Mike Quigley: I would say next week, towards the end of next week.

President Ungethiem: Okay.

Mike Quigley: The draft has been received by everyone, but we’re waiting for our compliance people to proof it.

President Ungethiem: Okay. Now, do we have to approve these new documents, and the revisions to the existing ones?

Joe Harrison, Jr.: Yes, all of the documents referenced. I think, is there four total, or five?

President Ungethiem: There’s two revised and two new.

Mike Quigley: Yeah, four total.

Joe Harrison, Jr.: All need to be considered.

President Ungethiem: Okay, I would entertain a motion to approve.

Commissioner Melcher: So moved.

President Ungethiem: Joe, you’re going to abstain?

Commissioner Kiefer: Correct, I’m abstaining.

President Ungethiem: Okay, I will second. Are there any discussions from the audience?

Linda Freeman: Sorry, but, just looking at the— President Ungethiem: State your name.

Linda Freeman: Oh, Linda Freeman, I live on Boonville-New Harmony Road, a county employee for 30 plus years. I’m looking at the Plan Sponsor Submission Information, and page 8 of 12, the fixed interest investment option, the second paragraph, “based on the previously stated Assumption for Your Plan, the credited interest rate for your contract is three and a quarter through December 31, 2016 and two and a half percent from January 1, 2017 through December 31, 2017, and base plus point two five percent thereafter, currently 2.1 percent. A minimum guarantee rate does apply to this product.” So, what is the minimum guarantee rate? And, this is substantially, I mean, I think we’re currently getting three and a half percent on our guaranteed interest rate. We may be paying fees, but when you look at the compounded interest annually, and some things like that, I’m just really concerned that financially some folks are going to take a hit on this. The other whole question, even though I know you guys have already approved and all that, is understanding that we don’t have an HR Department, but understanding that I don’t think, and I’m not, hopefully, steppin’ too much here, that I’m not a financial advisor or a planner, and I don’t think any of you have that background either. So, I’m just curious why there weren’t Requests for Proposals presented? I know you would have probably gotten a lot of people, you know, a lot of players out there for that, but you could have invited certain parties to the party. We could have had Requests for Proposals, we could have probably done, I mean, this seems like it was kind of a zoom, zoom, bang, bang thing. I’m concerned that we’re going to be paying fees for transfers, fees for commissions, and that some of us are going to take a hit. A lot of us are very concerned about that.

President Ungethiem: Okay. Bill, would you like to answer that?

William Kieffer: I would be glad to. First off, this has happened over a period of a lot of months, going all the way back to last summer. Whenever I looked at the plan to evaluate it, and I looked at the vendors that are available in the State of Indiana, there are only four vendors total. We’re not the only organization, you actually had ourselves and another local professional organization review the plan with the same conclusions that the plan is extremely expensive compared to the competition, as a matter of fact, to the tune of about one percent higher. So, when you look at the size of the plan, we’ll call it about percent by math, about $19 million. The county currently, or the participants are paying about $190,000 a year more than what they should be. Under the new proposed plan, those savings really go right to the participants’ bottom line. When we looked at the plan to evaluate it, we did look at all four players that could actually propose a plan to the county. In the very end, in looking at each of their proposals, because we asked for proposals, the plan that had the lowest cost was truly Voya, in this particular case.

President Ungethiem: Okay.

Joe Harrison, Jr.: What about the interest rate issue?

Mike Quigley: The, that was, you know, a quote in the terms of our proposal. She’s reading that accurately. The savings, there was an extreme amount of savings for the assets that were in the mutual funds, and that’s the majority of the assets in your program. While there is a, you know, a good amount of money there that was in the Nationwide Guarantee Account and will go into the ING Guaranteed Account, the participants always have the choice to move amongst the various investments. There was, as Bill already cited, a tremendous amount of savings for folks who are interested in investing some portion of their money, or all of their money in the mutual funds being offered through a variety of mutual fund companies. But, it’s true that in terms of the interest rate, it’s 25 basis points lower, it’s .25 percent lower versus the current Nationwide program. That’s a true statement.

President Ungethiem: Okay. What I’m understanding is a lot of this information that Linda is concerned about and other folks in the county are concerned about will be addressed with the mailing that’s going out in the next week or so. Is that correct?

Mike Quigley: That is correct. If not addressed, if there’s still questions, we’ll have, we’ll be here with the Wells Fargo team to have as many meetings as necessary. One of the, I think, I know one of the reasons in terms of deciding for the Voya Financial/Wells Fargo program was the fact that the county employees were gaining a financial advisor, a financial advisor team who could help them not only in terms of investment advice relative to their retirement plan, but any and all needs they might have beyond that. So, that was something that was not available, at least in terms of being local and being completely securities licensed to render that sort of investment advice. So, that is being gained.

President Ungethiem: And there’s no cost to the individual participant in this transfer from one to the other? They will pay no fees, they will pay, there’s no change over cost, it will be transparent to them?

Mike Quigley: Correct. That statement was not accurate. There is no transfer fees— President Ungethiem: Okay.

Mike Quigley: — of the assets from Nationwide to Voya Financial.

President Ungethiem: Now, another thing I want to make clear, Bill said there was $192,000 difference in fees between our current contract and the new contract. That $192,000 does not go to county government, that $192,000 goes to the individual participants?

William Kieffer: That’s correct.

President Ungethiem: Okay. The county does not gain from this. We simply are the executive body that took a look at the current contract, had two evaluations done on the current contract and determined that the current contract was in the, I think it was in the upper 95 percentile of contracts in terms of fees charged. We also looked at what the State of Indiana was doing with their 457 plan, and they recently made a change in their 457 plan, which is identical to the change that we are making here, for very much the same reasons. So, just wanted everybody to understand that we didn’t enter into this lightly. We didn’t do this on a whim. We had some due diligence. I think this whole plan, this whole thing started probably in May of last year?

William Kieffer: It was spring.

President Ungethiem: Yeah, it was spring of last year. So, it was a long term evaluation of what was best for the county. Other comments? Yes?

Linda Freeman: I’m just still having a hard time with all of this. That’s just maybe six months, when some of us have been vested for 20 or 30 years. There’s some people that have like half a million bucks, and, you know, it’s like I said, would any of you hand me your wallet so I could set it over there and tell you that it’s all o.k. and it’s all fine, when we weren’t informed of any of this? I mean, I understand you guys have the power to go, bam, it’s done, but the whole other side of the coin is, it’s our future that you’re messing with, and it’s our future and our funds that we’re concerned with. So, I mean, Joe’s son works for Wells Fargo. He abstained from the vote in November because of that, and if there were four players in the game that could have submitted, and we’ve got Wells Fargo as one of the study people and Morgan Stanley is one of the study people, I’m sorry, it just doesn’t really pass the smell test.

William Kieffer: There are only four vendors in the State that could propose it.

Linda Freeman: Right, but there again, Wells Fargo and Morgan Stanley were the two people that made the studies, correct?

William Kieffer: That’s correct.

Linda Freeman: Okay.

William Kieffer: If they have the same information.

Linda Freeman: Right, and then, but Wells Fargo is the one that ended up with the deal, and it may be the greatest deal since you could slice bread, but the whole thing is we have not been informed. I mean, this is the first time I saw this, because it was attached to the agenda today, and there’s a lot of people that are very, very concerned about this and we want some guarantees in writing that, you know, who’s paying the commissions? Somebody is going to be paying commissions to move all of this money. Somebody is gaining something, because I can’t imagine they’re moving $19-$25 million for….somebody’s going to get something out of this. The concern is, is it going to be us paying for it, even though you’ve said no, but I don’t have anything in writing, nor do any of the other people that may be concerned about it.

President Ungethiem: Would you do me a favor? Wait until you get the information that’s coming to you in writing and then come talk to me.

Linda Freeman: I can’t. You guys voted this in November, and you didn’t have the decency to make us aware of it. If it was such a great plan and we’re saving so much money, why didn’t you, you said that it’s been in the works, why didn’t you roll it out? Why after the vote in November was this not rolled out saying, hey, look, we’ve got this great deal for you guys? Bring it right out in the open, let some sun on it and let us see, but you didn’t do that. I’m sorry, I’m kind of disappointed. I’ve known some of you gentlemen for a while.

President Ungethiem: Yes.

Mike Quigley: I might be able to speak to a couple of your questions. First of all, that’s an inaccurate statement. There is no commissions for transferring the assets over. So, that’s not true. Secondly, secondly in terms of, there was a process in terms of formally severing the contract with Nationwide, and Nationwide evidently didn’t get the, or said they didn’t get the termination letter in time. So, they delayed that, delayed it a couple of months, and then we found out about those life insurance policies that I referenced earlier in my comments. Of course, that meant we needed to make sure we could accommodate those. Then a couple of other things that we weren’t aware of in the program that we needed to address in a positive manner for the county and their participants. So, that was part of the, if there was a delay in notification it was fine tuning some of these details that came up, and probably only would have come up in this transfer exercise. So, that’s at least some of the reasons behind what’s happened.

President Ungethiem: Okay.

Linda Freeman: One more.

President Ungethiem: Three is the limit.

President Ungethiem: Okay, the other side of the whole coin is, if Nationwide’s plans were so bad, or so expensive, then why were they not given a chance to rebut to the studies? Then, there again, why were not the four people, you say you vetted them, but they’re the people that have got our money now. So, that’s still, like I said, that just doesn’t wash very well with what’s going on in my—

President Ungethiem: Well, I would submit to you that Nationwide has had a number of years to get their prices in line, and when we did the evaluation we find out that they were in the upper 95 percentile of costs for providing this service. They’ve had a number of years to cut that cost down and they chose not to, because they for one reason or another decided they didn’t need to. That was their business choice to do that. We have had other situations of other insurance companies that have chosen to do that, and wound up losing a contract because of their practices of overcharging when they could have been somewhere in the middle of the pile. So, from that standpoint, if I look at it and say did we make the best financial decision, based on the information we had, I still think we have made the best financial decision, for not only the county, but for the county employees as well.

Linda Freeman: But, we had no, and I understand, you guys have the power— President Ungethiem: I understand.

Linda Freeman: — but there’s a lot of people with a lot of money. Are any of you invested in it?

President Ungethiem: Yeah, I’ve got money in it.

Commissioner Kiefer: Yeah.

Linda Freeman: Yeah, you’re fairly new though.

President Ungethiem: I’m the new kid on the block.

Linda Freeman: He’s sort of new in the county, he’s been on County Council.

President Ungethiem: He’s just been here 20 years.

Linda Freeman: Yeah, but he’s been city. How long have you been with the county?

Commissioner Melcher: I’m on my eighth year. Commissioner Kiefer: Nationwide has been doing— Linda Freeman: Eighth year.

Commissioner Kiefer: — this for—

Linda Freeman: City and county, true, but I’m saying currently a county employee, per se. Then you mentioned the health insurance, at least with the health insurance we were given the courtesy of at least saying, hey, we would be willing to spend more money on our premiums than for, and get the same service. We were at least given that courtesy before. So, there again, I’m just, I’ve got to say I’m just really disappointed. I mean—

President Ungethiem: We understand.

Linda Freeman: Okay, thank you.

Mike Quigley: I don’t think, Ma’am, this will make you feel better necessarily this evening, but as it happens that roughly a month following the Commissioners decision to choose Voya Financial for the Vanderburgh County 457 plan, the State of Indiana awarded Voya Financial with the Indiana Public Retirement System program, which will serve 300,000 Hoosiers. So, you know, I think the county’s vetting process was very deliberate in about six or seven months, but the State was about a year. I think that hopefully will give you and other participant’s confidence in Voya Financial and our ability to serve you, hopefully for many years to come.

President Ungethiem: Okay. Other questions, comments? We have a motion and a second.

Commissioner Melcher: Is there anybody else or any other employee that wants to bring up?

President Ungethiem: Okay.

Commissioner Melcher: Thank you.

President Ungethiem: We have a motion and a second. Roll call please.

Madelyn Grayson: Commissioner Kiefer?

Commissioner Kiefer: Abstain.

Madelyn Grayson: Commissioner Melcher?

Commissioner Melcher: Yes.

Madelyn Grayson: President Ungethiem?

President Ungethiem: Yes.

(Motion approved 2-0. Commissioner Kiefer abstained.)

President Ungethiem: What we are approving here is the two revised documents and the two new documents, and one of those is to make sure that we cover the life insurance issue that we missed earlier. Thank you, gentlemen.

Mike Quigley: Thank you.

William Kieffer: Thank you.

FOOTNOTE: The minutes were posted by the CCO without editing or bias.