Recent headlines and the current economic climate highlight the importance of making sure personal and retirement investments are with a financially strong company.

As part of its oversight of its Deferred Compensation Program, NACo hires an independent consultant to evaluate several different program aspects.  These include the creditworthiness of Nationwide Financial, the parent company to our program administrator, Nationwide Retirement Solutions, and the competiveness of the fixed annuity investment option  return to our program participants.

In their analysis of the creditworthiness of Nationwide, the consultants noted that while Nationwide continues as a strong organization even though in 2008 it was downgraded, due in part to the general economic conditions as well as some of those related specifically to the insurance industry.  In some of the indicators against which Nationwide was evaluated, they continued very strong; in others, their position weakened from the prior year.  NACo and the NACo Deferred Compensation Advisory Committee will continue to monitor Nationwide as economic conditions change in 2010.

The NACo deferred compensation program, also known as a 457 program, is a voluntary investment program that gives county employees the opportunity to save regularly for their retirement on a pre-tax basis.  One of the investment options available to participants is a fixed annuity that offers county employees the opportunity to earn an investment return at a fixed rate that is established quarterly by Nationwide.  In addition, on an annual basis, Nationwide sets an investment rate minimum (or floor) for the year.

According to the study, the 2008 return on this investment option placed highest among its competitors.  The report was released at the November 4, 2009 meeting of NACo’s Deferred Compensation Advisory Committee, held in Monterey County, California.  This study has been conducted every year since 1989, and the NACo program has always come out on top.  “Our 29-year partnership with NRS continues to deliver a quality program that helps county employees save for a more comfortable retirement – this is more important than ever in today’s economy,” said Larry Naake, NACo executive director.

The competitive interest rate test concluded that Nationwide met its contractual requirement to equal or exceed the top one-third of its competitors.  This study reviewed the fixed annuity option offered by Nationwide and its nine largest competitors.

The consultants’ analyses are only one feature of NACo’s deferred compensation program that distinguishes it from others.  As a result of NACo’s Deferred Compensation Advisory Committee, the NACo program is the only one in the country that receives oversight and is advised by county participants. It also benefits from the oversight and endorsement of 41 state associations of counties.

(For further information on NACo’s Deferred Compensation program, please contact Lisa Cole at NACo at 202/942-4270 or lcole@naco.org or NRS at 877/677-3678 or www.nrsforu.com.)