Village employees won’t have to change the company that’s been administering their deferred compensation plans — at least not for now. Employee complaints stopped the turnover of $7 million in 457(b) plan funds to a new firm.

The village council voted in December to move the voluntary employee retirement tax-free accounts from longtime oversight by Nationwide Retirement Solutions to a new provider, AXA Equitable.

The exclusive “takeover” contract moved all the accounts except certain firefighter accounts to the new company. Forty-seven different Nationwide funds were slotted to disappear and be replaced with AXA funds with similar characteristics.

But employees felt steamrolled and began to raise a stink when Village Administrator Tim Gillian announced the new arrangement in late January. 

“It’s our money,” said an employee who would not give a name. “To us it’s very suspicious that all of this money is just being turned over to a new company. Who is getting the commission on that $7 million?”

Eighty-one current employees invest in the funds, as well as 34 retirees. The village does not contribute to the accounts — which are similar to 401(k) plans in the public sector — but does administer them through payroll deductions.

Employees complained about the suddenness of the change and that the procedure for selecting a new provider was sloppy.

Mayor Anthony Calderone said a week ago he had been receiving complaints from employees about the switch. He acknowledged that the account was given to a colleague of a local Chamber of Commerce member after a late-fall presentation to staff. 

When asked in December about whether a bid process was used to select AXA for the turnover contract, Gillian said in an email: 

“The gentleman from AXA advisors made a presentation and on the benefits of the firm he represents over that of our current advisor.” 

“We reviewed his proposal and believe that AXA will provide more information and lower fees to those employees who use the service,” Gillian added.

Chamber of Commerce member Kim Goldschmidt works for an AXA subsidiary called AXA Advisors in Oakbrook Terrace. Goldschmidt did not return calls asking about the relationship between himself and AXA representative Kyle Zake. 

Zake, who also works in Oakbrook Terrace, has worked for the company for more than 11 years, according to his Linked In account page. He did not return calls and emails for clarification.

AXA Equitable is known for administering 457(b) plans for school districts and the company administers the plans for Forest Park Elementary School District 91 employees. A different representative works with D91 schools, according to District Finance Chief Ed Brophy.

Nationwide agent Brent Harpster said he started to get phone calls from angry employees asking if they could privately retain their accounts, some of which had been with Nationwide since June of 1980. 

Would the switch save money? Harpster said that depends. 

The contract with AXA says the company will charge no asset charges, withdrawal charges or administrative charges for the first year. All companies providing government-administered 457 plans, Harpster said, use slightly different formulas to determine fees. 

“No one does this for free,” he said, noting that a comparable fixed-rate fund by AXA offered 2.5 percent fixed interest while Nationwide offered 3.5 percent. 

Harpster said he would not receive a commission based on acquiring a new $7 million account. 

“I’d get a pat on the back, but all companies do compensation in different ways,” he said. Even if plan advisors didn’t get a direct bonus for scoring a municipal turnover account, the agent might be able to sell village employees other ancillary services like life insurance or investments. 

“If AXA has better investment returns, a higher fixed interest rate, and lower fees [than Nationwide], the employees will benefit by this change,” Harpster said. 

Calderone texted Monday that “the village is not making any change from Nationwide.” He also said the village “at this time” would not be adding AXA as a second provider. 

 However, the village still has a contract with AXA passed as an ordinance in December and signed by the mayor, giving AXA control of all 457 accounts except for the firefighters. It is unclear whether the village can cancel the contract or is on the hook to switch funds.

Calderone said after the Jan. 27 meeting that he would be asking the village attorney for advice about the contract. As of a week later, he said the attorney had not come back with an opinion.

Jean Lotus loves community journalism. She covers news, features, two school boards, village council, crime, park district and writes obits for Forest Park Review. She also covers the police beat for...

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