Making his now annual report to The 68th U.S. Conference of Mayors Annual Meeting in Seattle on Sunday, June 11, Nationwide Retirement Solutions President Duane Meek said the "landscape of retirement for public employees was changing rapidly."
Thousands Helped by USCM and Nationwide
While he noted "in an age when it is widely recognized that savings by Americans fall far short of the needs they will have in their later years; thousands of city employees will have benefited from the Conference's Deferred Compensation Program" which has been administered by Nationwide Retirement Solutions (formerly PEBSCo). He congratulated the mayors on their foresight for supporting this program.
More Needs to Be Done
Meek added, "yet there is more we can do." He said, "in the private sector, the world identifies with the 401(k) plan. One of its greatest benefits to employees is that the employers most often make a matching contribution to the employees account…. The employee accounts grow faster … and more employees participate. Participation in such plans averages about 75 percent. By contrast, deferred compensation plans in the public sector which include only employee contributions, rarely have participation levels exceeding 60 percent and often 40 percent is the norm.
Over Twenty Years of Success Serving Cities
The USCM Deferred Compensation Program administered by Nationwide Retirement Solutions currently serves over 4,000 local governments and over 325,000 public employees.
Landscape is Changing
Meek pointed out that "ours is a changing landscape. Policymakers at all levels are discussing pension reform. This includes Social Security, individual retirement accounts (IRAs) as well as pension plans. Meaningful legislation is likely over the next 5 years that would radically change the way people plan for retirement.
Public Employers Should Consider Matching Employee Contributions
Meek suggested that public employee plans can be enhanced by "the adoption of a 401a plan which allows employer dollars to be contributed to an employee's account. This can be established on a matching basis where the employer contributions are only made if the employee participates in the deferred compensation plan. By combining the benefits of a 401a and 457 plans, more will participate in helping to provide for their future and the dollars available to them will be greater." Already, Meek reported, "numerous states, cities and counties have adopted such a plan with outstanding results."
Transfers from Defined Benefit to Defined Contribution Plans Seen
Meek also reported that "this spring legislation was passed in Florida that will allow all public employees to take the value of their defined benefit pension plan and transfer it to a defined contribution plan. Such an option offers employees more choice and control over the investment of their pension dollars - - and more risk." He continued saying that "many other states and jurisdictions are considering similar changes."
He closed by saying "now more than ever employees need education on matters related to retirement. Ours is a company committed to providing education and choice. Our business is serving public employees and helping them make informed decisions on matter of retirement."
