PERAPlus 401k/457/DC: New Recordkeeper, Same Fees (almost)

empower blurb

On December 3, 2021, the recordkeeper for PERA’s 401k, 457 and DC plans will change from Voya to Empower. This is a result of a request for proposals and PERA staff and the Board looking at the submissions. Your investing choices will remain the same, you’ll simply login to Empower’s website which should hopefully provide more and better functionality than Voya’s (and hopefully a bit better customer service as well). Once the transition is complete, you will no longer log in to your 401k/457/DC plan through PERA’s website, but instead directly to the plan website (details will be communicated soon).

The main question I had about this transition was whether it would change the investing choices and the associated fees. The good news is that, for the most part, there isn’t any change, you will have the same good investment choices with the same low expense ratios as before. There are some minor changes.

The first is in presentation, as they will now break out the administrative fee and the fund fees separately. For example, right now the fees for the PERAdvantage U.S. Large Cap Stock Fund are listed as 0.08%, which is comprised of 0.03% administrative fee and 0.05% fund fees for the underlying funds. This is not changing, they are just going to more explicitly show the 0.03% as administrative and the 0.05% as the underlying fund fees. There will now be a line item on your statement showing the 0.03% administrative fee where before it was included in the fund return listed (but you never really saw it). As a result, it may look like you are being charged an additional fee but, in reality, it’s just being more transparent about the fees that you are being charged.

As part of this transition, that 0.03% administrative fee will be waived for 2022 in the 401k plan only (not the 457), so that will be a small – but still welcome – decrease in fees for one year. Beginning in 2023, the 0.03% will return to the 401k as well. The $1/month fee for the 401k plan will remain the same, but the 457 will be increasing to $1.50 per month (which equates to $18/year, or $6 more per year than before). While not the direction I would like to see, the dollar amount is very small. And since most folks have the majority of their funds in the 401k over the 457 (if they have a 457 at all), the waiving of the 0.03% administrative fee for the year for the 401k will likely cover multiple years of the extra $6/year for the 457 if you have one.

All in all, I’m pretty happy with this change, assuming the improvements in the user experience and customer service come to fruition. While I’m still hopeful that fees can come down even more in the future, these are still very good fees and much lower than you are likely to find in any 403bs or 457s offered by other vendors in your district.

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