MML Clip: N.J.’s $2.4B DC Plan To Issue Admin RFP, Make Investment Changes

At a May 24 meeting, the New Jersey Division of Investment approved rule amendments that will allow the roughly $2.4 billion New Jersey State Employees Deferred Compensation Plan to make investment changes.  The plan will issue a request for proposals for administrative services within the next six months, a spokeswoman for the NJDOI confirmed. The plan’s contract with its incumbent, Prudential, is set to expire this year.  The approved amendments will next be sent to the office of administrative law for publication and public comment.

The NJDOI manages four of the plan’s funds, which are referred to as the Common Funds in plan documents obtained by MMI. The four funds are closed to new participants. In response to requests from plan participants the NJDOI will seek to open two of the funds to new participants. According to the documents, “The DCP [Deferred Compensation Plan] Board has taken action whereby certain Common Funds will be opened to new contributions, concurrent with the award of a new plan administrator contract through the RFP process.”

In contract negotiations with Prudential the four funds were closed to new participants in Jan.  2006 in an effort to drive more participants to the investment options managed by Prudential. The plan assets have grown substantially since 2006 which has allowed the DCP board to approve renegotiating the plan’s administrator contract and to consider opening two of the closed funds. The proposed funds to be reopened are the $280 million Large Cap Equity Fund and the $100 million Small Cap Equity Fund.  Prudential will be invited to rebid.

“A ton of our participants have been asking for them to be opened,” Chris McDonough, deputy director of the NJDOI, told MMI after the meeting. The NJDOI also manages a Cash Balance Fund and a Fixed Income Fund. Further details could not be ascertained by press time. Bill Quinn, spokesman for the NJDOI and media relations for Prudential did not immediately return calls for comment. 

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