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What is the Fringe Benefits Consortium (FBC)?
History of the Fringe Benefit Consortium 403(b)/457(b) Plan
Historically,
403(b) plans available to school employees have been less than
adequate. They have high fees, penalties for leaving early, and
almost always charge a commission. School employees have lost
millions of dollars because of high fees over the years contributing
to high cost retail 403(b) plans.
In 2001 the San
Diego County Office of Education decided to do something about this
problem. Through their non-profit subsidiary the Fringe Benefit
Consortium they set out to create an “Institutional” retirement
plan. Basically they wanted to create a plan that would benefit
school employees, not the financial services industry. The purpose
was simple, use the accumulated buying power of several districts to
negotiate price discounts and other concessions from financial
service providers and pass those savings onto the school employees.
The result is a
retirement plan that is low in cost, free of surrender penalties,
and because the plan is operated on a non-profit basis, the fees will
only get lower as the plan grows bigger. In addition, each district
has an assigned representative that will help school employees
enroll into the plan and choose an asset allocation that works best
for them.
Riverside and
Imperial County schools have also joined the program so that their districts could benefit
from the same price discounts.
The FBC also
works closely with school districts to help ensure their retirement
plans maintain compliance with IRS regulations.
Who
Is Involved?
The San Diego
County Office of Education sponsors the FBC. The FBC offices
are located within the County Office of Education.
Several school
districts in Riverside County are members of the Fringe Benefits
Consortium and those districts have access to the same FBC services
as San Diego County districts.
Several school
districts in Imperial County are members of the Fringe Benefits
Consortium and those districts have access to the same FBC services
as San Diego County districts.
The County Schools Fringe Benefits Consortium (FBC)
was formed in 1982 to provide medical benefits to San Diego area
school districts as a non-profit government entity. At that time, 12
school districts covering approximately 2,500 employees joined
together to self-insure their health plans. Since 1982, 15 new
programs have been added and the Consortium has grown to 77 San
Diego, Imperial, and Riverside County school districts covering over
80,000 employees. In 2001 the 403(b)/457(b) Deferred Compensation
Program was created and offered to participating school districts to
provide a high quality, low cost retirement savings alternative.
The purpose of the FBC is to provide the best benefits at
the lowest possible cost. This savings comes from the joint
purchase of benefits made possible by the joining together of school
districts. Further savings are possible through self-insuring some
benefit programs and utilizing FBC staff for all
consulting/brokerage services. The FBC’s programs have saved school
districts and their employees hundreds of thousands of dollars over
the years. The County Schools Fringe
Benefits Consortium's webpage can be found at:
http://www.sdcoe.net/business2/?loc=risk-fbc&m=4&pi=risk.
Nationwide Financial is a financial services company
founded in 1926 and is the record-keeper for the FBC 403(b)/457(b)
Plans. It is one of the largest insurance companies in the United
States and is the largest provider of 457(b) retirement plans in the
country. Nationwide is rated AA+ (Excellent) by Standard & Poors.
Though Nationwide is an insurance company the investment options
offered in both the 403(b) and 457(b) plans are mutual funds.
Nationwide's website can be found at:
www.nationwidefinancial.com.
National Benefit Services, LLC (NBS) is a benefit plan
administration firm that was established in 1986 with offices in
Rancho Bernardo, CA and Sandy, UT. NBS partners with the FBC and
Nationwide Financial to assist in administering 403(b) and 457(b)
plans in the continually evolving retirement landscape. NBS’
expertise enables employees and school districts to more effectively
manage their retirement plans and maintain compliance with IRS
regulations. NBS' website can be found at
www.nbs-i.com.
Coming Plan Changes
New Final
403(b) Regulations Issued by IRS
On July 23, 2007
the Internal Revenue Service (IRS) issued final comprehensive
regulations governing 403(b) plans for the first time in 43 years.
The general effective date of the regulations is January 1,
2009--although the effective date of some portions of the
regulations is sooner. We are working with our partner,
National Benefit Services, LLC, to interpret the regulations and
assess the implications for the Program. A summary of the
regulations is available
here.
Additional information will be forthcoming.
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