US - Two of the three firms that successfully convinced the Florida State Board of Administration (FSBA) to reopen the selection process for its bundled providers search have now been shortlisted as finalists.
Back in August, Valic, Horace Mann and SunAmerica were rejected as finalists for the mandates and subsequently came back into contention following a decision by the fund's trustees to reopen the selection process.
Valic has now been shortlisted for the bundled services provider mandate with significant services, whilst SunAmerica is a finalist for the moderate services option. The FSBA has shortlisted a total of nine firms to provide bundled services for its new defined contribution scheme, the Public Employee Optional Retirement Program (PEORP).
Other than Valic, the other finalists for the significant services mandate are Fidelity and TIAA-CREF. SunAmerica is joined by Prudential, Fidelity, ING Aetna and Nationwide on the shortlist for providing moderate levels of service.
Finally, the FSBA, which also runs the $102bn defined benefit Florida Retirement System (FRS), has selected Prudential, Fidelity and Invesco as finalists for investment options with no additional services.
Firms that were eliminated from the running include T. Rowe Price, Vanguard, Oppenheimer and A G Edwards in the no-service category; Safeco, Horace Mann and First Union, in the moderate service department; and Hartford and Safeco, significant services.
A spokesperson for the FSBA said that a final decision on how many and which type of bundled providers it will hire is expected at its November 14 board meeting.
For Valic and SunAmerica, being selected as finalists for the bundled provider mandates represents a significant victory, as the FSBA had originally rejected them. The pair, along with Horace Mann, were unhappy with the process used by the FSBA to decide upon managers, which resulted in a meeting between them and the fund's trustees.
Prior to the meeting with the fund's trustees, two of the rejected managers had threatened legal action against the FSBA, according to an FSBA memo. The spokesperson said that following the meeting with the trustees - Florida Governor Jeb Bush, State Treasurer Tom Gallagher and State Comptroller Bob Miligan - the selection process was reopened.
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