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January / February 2010
Volume 22, Number 1

News you can use

Analysis: Nationwide Deferred Comp Program Strong Benefit for County Employees, Despite Downturn

Recent headlines and the current economic climate highlight the importance of making sure personal and retirement investments are with a financially strong company.

As part of its oversight of its Deferred Compensation Program, the National Association of Counties hires an independent consultant to evaluate several different program aspects. These include the creditworthiness of Nationwide Financial, the parent company to its program administrator, Nationwide Retirement Solutions (NRS), and the competitiveness of the fixed-annuity investment’s return to our program participants.

In their analysis of Nationwide’s creditworthiness, the consultants noted that Nationwide continues as a strong organization, even though it was downgraded in 2008 due to general economic conditions and conditions specific to the insurance industry. In some of the indicators against which Nationwide was evaluated, the company continued to be very strong; in others, its position weakened from the prior year.

NACo and the NACo Deferred Compensation Advisory Committee will continue to monitor Nationwide as economic conditions change in 2010.

The NACo deferred compensation program, also known as a 457 program, is a voluntary investment program that gives county employees the opportunity to save regularly for their retirement on a pre-tax basis. One of the investment options available to participants is a fixed annuity that offers county employees the opportunity to earn an investment return at a fixed rate that is established quarterly by Nationwide. In addition, Nationwide annually sets an investment rate minimum.

According to the study, the 2008 return on this investment option placed highest among its competitors. The report was released at the Nov. 4 meeting of NACo’s Deferred Compensation Advisory Committee, held in Monterey County, Calif. This study has been conducted every year since 1989, and the NACo program has always come out on top. “

Our 29-year partnership with NRS continues to deliver a quality program that helps county employees save for a more comfortable retirement — this is more important than ever in today’s economy,” said Larry Naake, NACo executive director.

The competitive interest rate test concluded that Nationwide met its contractual requirement to equal or exceed the top one-third of its competitors. This study reviewed the fixed-annuity option offered by Nationwide and its nine largest competitors.

The consultants’ analyses are only one feature of NACo’s deferred compensation program that distinguishes it from others. As a result of NACo’s Deferred Compensation Advisory Committee, the NACo program is the only one in the country that receives oversight and is advised by county participants. It also benefits from the oversight and endorsement of 41 state associations of counties, including the Texas Association of Counties.