In my previous post I pointed out an absurd e-mail distributed by ASPPA's NTSA organization head Chris DeGrassi, attacking a bill in Ohio that would allow higher education institutions some limited rights to control their 403(b) programs. I thought I'd follow it up with some specifics from the bill so you can make your own decision.
First, here is a highlight from the NTSA e-mail, sent from Chris DeGrassi (the full version can be seen here):
This bill is a terrible piece of legislation that exempts public entities from any purchasing requirements for 403(b) plans
403(b) providers will be picked at the sole and absolute discretion of public institutions, rife with conflicts and inherent abuse
This legislation will take away your business with absolutely no process or recourse
Here is the actual language from HB 483 (from HC0325X1):
Sec. 9.911. (A) An annuity contract or custodial account procured for an employee of a public institution of higher education pursuant to section 9.90 of the Revised Code shall comply with both of the following:
(1) The annuity contract or custodial account must meet the
requirements of Internal Revenue Code section 403(b).
(2) The institution, in its sole and absolute discretion,
shall arrange for the procurement of the annuity contract or
custodial account by doing one of the following:
(a) Selecting a minimum of four providers of annuity
contracts or custodial accounts through a selection process
determined by the institution in its sole and absolute discretion,except that if fewer than four providers are available the institution shall select the number of providers available.
(b) Subject to division (D) of this section, allowing each
eligible employee to designate a licensed agent, broker, or company as a provider.
I ask you - does this language "exempt(s) public entities from any purchasing requirements for 403(b) plans"?
Sure looks like a stretch to me. It says nothing of the sort, in fact it requires the institution to choose one of the following two options:
A. Select a minimum of four providers, or
B. Any willing vendor
It doesn't force an institution to scrap the any willing vendor language and it doesn't scrap procurement procedures.
The bill gives the institution the option to limit providers to at least four. You'll notice that the language doesn't say that the institution can choose any provider it wants without a process. The language makes it clear that there must be a procurement process ("...shall arrange for the procurement") and that there must be a "selection process."
So how exactly can the NTSA claim that the bill "exempts public entities from any purchasing requirements for 403(b) plans"? Does the NTSA believe that higher ed institutions lack the ability and processes to conduct an ethical procurement? Are Ohio Higher Ed Institutions so inept that they need the oversight of annuity agents as represented by the NTSA to oversee their procurement?
This is absurd.
If you are part of ASPPA I urge you to contact Brian Graff and denounce this blatant attempt to misrepresent Ohio legislation and to ask why ASPPA should continue to support the NTSA organization (which represents the opposite interests of most ASPPA members in my opinion).
Scott Dauenhauer, CFP, MSFP, AIF